The Department for Work and Pensions presides over the biggest budget by far, and unfortunately the fastest growing one, owing to rising unemployment. It is a huge clerical factory, employing 100,380 staff to give out a wide range of different benefits to a large number of people. There are another 12,000 staff identified as helping with these tasks but now accounted for elsewhere in the public sector.
My experience of managing industrial plants tells me two things. You need to manage quality well, and to keep morale of staff high. If you see the error rate rising too far you have problems. You need to improve your systems, upgrade your equipment, and idiot proof your processes. You need to involve and motivate your staff, and get them to buy into doing things right first time, taking a pride in a job well done. It needs to be worth their while. To be world class these days you aim for an error rate of 100 parts per million. I would be seriously worried about anything above 500 parts per million. If sickness and absence rises above 3 days per staff year in the offices you have a morale problem.
At DWP the apparent error rate has come down a lot, but is still a massive 6000 per million transactions. The absence rate is 9 days per staff year. In other words, the taxpayer pays for almost a million staff days when employees do not turn up. Some are genuinely sick and deserve their break. It is unlikely, however, that sickness rates across such a large workforce can be so high compared to private sector organisations without there being something wrong with the culture and incentives.
In 2008-9 the department spent around £100,000,000 on external consultances, and a total of £174,000,000 on external consultancies, temps and interims. This is far too high for comfort. The existing staff should know how to run the place better. The senior management and Ministers should try asking them and engaging with them, rather than calling in so many outsiders to reorganise. They might also get a bonus with more of the staff coming in for more of the working days, reducing costs further. If absence fell from 9 days to 4 days, that gives the taxpayer an additional 500,000 days of work each year, or a saving of around 2000 staff.
The department does not fail to spend on IT. That budget should be better used to idiot proof, streamline and improve systems. The current budget runs to £873,000,000. You could probably do it for less in this climate and get more out of the enhancements.
The best cut of all will be in getting out of work benefits down by getting more people back to work. Welfare reform is an urgent priority. We need to tackle this before it overwhelms us and the public accounts. The total budget of £156,648,000,000 includes £50,000,000,000 in benefits for people who are out of work. This is rising alarmingly. Clinton style reforms worked well in the States. What has been stopping reform here?