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While inheriting and accepting many features of the outgoing government’s strategy on productivity and efficiency, the Coalition Government has, at times, seemed less than enthusiastic about the delivery of corporate functions through shared service centres.

In the context of many reports of failing shared services projects in the public sector, it would have been astonishing if the government had not wanted to assure itself about these projects before setting out a strategy for the future.

In July 2011 the government published short paper setting out it’s views. Government Shared Services : A Strategic Vision summarises its findings and conclusions.

The government has set out an approach to consolidate back office “transactional services” in HR, Finance, Payroll and Procurement between and across Central Government organisations and Arms Length Bodies (ALBs).

It suggests the existing shared services operations, while not delivering optimum results, have already delivered savings (£13m per annum at the Home Office, £20m at Ministry of Justice and £35m per annum at Department for Work and Pensions) through moving back office transactions to shared service centres. It is relatively common for shared services projects to encounter difficulty in establishing a baseline position on service quality and costs and there are no details provided on how these figures have been derived.

The government’s new vision consists of -

• A Central Government oversight function to lead a new governance structure to accredit independent Shared Services Centres (ISSCs),
• A small equitable market (maybe 2 providers) of accredited ISSCs will be available for Government Departments and their ALBs to choose between,
• ISSCs will operate independently from customer organisations, delivering “outcome based services” using standardised simplified processes against established performance benchmarks.
• ISSCs can adopt different business models (i.e. public, mutual, private), leverage capability and financial investment needed to deliver services and can operate virtually or from integrated delivery centres.
• Departments can make a case to continue to use their own “standalone” corporate services if they can match ISSC performance using the agreed benchmarks.
• If a department can show better performance than ISSCs, they may be able to begin offering services to others but a Department may be compelled to become a customer of an ISSC, or at least meet the same standards, if they are falling shot of performance standards.

The Cabinet Office Efficiency and Reform Group Shared Services team will be working on a migration plan and a strategic outline business case for November 2011. Overall, the paper does seem to set out a pragmatic approach to the challenge, recognising that one-size might not fit all and providing some flexibility for the larger organisations to continue providing in-house services.

In relation to the shared services delivery model, the government has suggested it will learn five important lessons from the experience of early shared services adoption in government -

• Independence is important to incentivise a better quality of services at a lower cost.
• Delivery of shared services is not a core Government skill and bringing in operational and commercial expertise is vital to improving current capability.
• On-boarding to a bespoke service can be expensive and issues on charging between public organisations can act as a barrier, e.g. smaller organisations need an affordable solution.
• Shared Services comprises a range of key components that influence cost and require standardisation – infrastructure, IT platform, ERP solution, business change, business processes.
• Strong governance is essential and efficiency gains are proportional to the level of mandation in the use of shared services.

While these lessons look fine (if not very new), does this strategy make sense in its broader context?

Read the rest of this entry →

Photo:Jenny Downing, Flickr

The Coalition Government has published it’s Decentralisation and Localism Bill. In the Essential Guide to the Bill, the government rejects the idea that decentralisation is simply a smkokescreen for cuts. It also rejects suggestion that local people are incapable of effectively managing public resources. It reflects that central government has a history of waste and inefficiency and has no right to lecture local government or communities.

It also highlights the potential for local solutions to be more innovative, agile and resilient than monlithic programmes, which it says have to wait “… for the apparatus of government to creak into action.”

Responding to concerns about a “postcode lottery”, the government response is that decentralisation will allow communities to do different things in different ways to meet local needs, increasing variety in service provision based on choice by local people rather than nationally-imposed “one-size-fits-all” policies.

In press breifings, the Government suggests the legislation will help build the Big Society by radically transforming the relationships between central government, local government, communities and individuals.

The Bill reflect the original statement in the Coalition Agreement -

“We share a conviction that the days of big government are over; that centralisation and top-down control have proved a failure. We believe that the time has come to disperse power more widely in Britain today; to recognise that we will only make progress if we help people to come together to make life better. In short, it is our ambition to distribute power and opportunity to people rather than hoarding authority within government.”

Using the phrase “a gold standard for decentralisation, the Government describes six essential actions which is will drive centrally to deliver decentralisation down through every level of government “to every citizen” – Read the rest of this entry →

On the back of the Comprehensive Spending Review (CSR), government departments are challenged to make significant savings to their back office functions. The government has set an expectation of a 34% reduction in administrative costs across government with a savaing of £5.9bn per year.

The CSR plans for Department for Education, Ministry of Justice, Foreign Office, the Home Office, Cabinet Office and Department for Culture, Media and Sport have all set ambitious targets for administrative savings by 2014-15.

External commentators have commented that these targets will be hard to meet, Deloitte suggesting cutting costs by 20% was “extremely hard” and delivering more that 25% for private or public sector, would be “exceedingly difficult”.

It is clear the public sector will have to identify and implement new ways of working to deliver back office functions such as finance, human resources and IT services with substantially less resources. Read the rest of this entry →

With the Comprehensive Spending Review (CSR) nearing completion, most public sector organisations are expecting major reduction in the operating costs and many are waiting to see if they have a future. For those organisations with a certain future, the need to identify efficiencies, remodel services and deliver savings will be a driving force over the next few years.

Until recently, the government had been a supporter of shared service solutions which allowed public sector organisations to save costs in corporate and back office functions. Many of the UK’s  local authorities and NHS organisations have been continuing with shared services projects while commentators have been expressing doubts about their value.

The reputation of shared services is at best, mixed. Many private sector organisations are extolling their virtues and making strong claims for improvements in service quality and cost.

Often however, informed professionals in IT, Finance, HR and facilities regularly express doubts about their track record, not all of which can be attributed to a lack of imagination or a reactionary desire to defend the status quo.

But where does the government stand on the matter? Is the tide coming in or going out? Read the rest of this entry →

The BBC’s Panorama programme entitled “Because We’re Worth It” explored the issues of top public servants pay, the recent government interventions and perceived value for money.

While the programme included a pretty superficial session where members of the public ranked public servants value in Trafalgar Square, it also contained some valuable insights into factors driving earnings for top public servants.

BBC researchers used the Freedom of Information Act to collate earnings information for over 38,000 top public sector roles and have published the data on their website.

The BBC explained it’s research revealed some enlightening facts about the pay of top public servants including the following -

• 220 civil servants earned more than the Primer Minister
• 385 teachers earned more than £100k and 17 headteachers earned more than the Prime Minister
• 97 people at the BBC earned more than £160k
• 428 quango heads earned more than the Prime Minister
• the highest paid local government CEO earned £299k

Attractor has said before it is pretty meaningless to compare public servants earnings to those of the Prime Minister. Career politicians and other public servants inhabit different environments. Other commentators have highlighted the pay of senior politicians excludes the potential external earnings available in this field, before, during and after their elected service.

Panorama also highlighted the fact the Prime Minister’s pay had been reduced by both Gordon Brown and David Cameron from £197,000k to £142,000 over the last 18 months. Reducing pay in this way significantly shifts the number of top public sector roles that attract earnings above the Prime Minister …. from less than 1,000 to over 9,000.

While this sends a clear political signal on national pay restraint, and responds to similar moves made in some areas of the private sector, expecting this to translate across public service was probably no more realistic than expecting all private sector CEOs to take pay cuts.

So what else did the programme and the BBC data reveal? Read the rest of this entry →

With the Trade Union Congress (TUC) calling for coordinated industrial action to resist cuts by the “demolition government”,  the language used by Andrew Rawnsley in the Guardian begins to look less extreme.

Rawnsley compares the current situation to those implemented after the First World War. From 1921, the “Geddes Axe” saw major reductions in the armed forces, a 35% shrinking of the civil service plus controversial scrapping of education and housing reform which the Labour Party used to effect – forming it’s first government in 1924.

At present, budding signs of increased confidence and nascent recovery in the private sector are being completely overshadowed by fears over spending cuts.

Rawnsley reports the gradual realisation in government that global spending reductions of 25% will mean far more than trimming uneccesary fat through “efficiency savings”.

Reductions on this scale would require a scaling back of government activity which has real meaning and benefit. According to his sources, negotiations inside government, especially between the major spending departments and HM Treasury are very bitter.

The final report of the Commission on 2020 Public Services suggests public services must be more closely shaped around people with departmental silos removed and decision making and commissioning brought much closer to citizens and communities, with political institutions and accountability reshaped to support this. This is absolutely the right prescription for the future.

For around four months, central government departments have been wrapped up with introspective review, working in existing silos to determine where savings can be made. There is real danger that “silo thinking” will prevent government from finding solutions which might actually deliver what they want and need. Read the rest of this entry →

Despite what many people think, employees in public service generally work hard for the benefit of their clients. People at many levels (not just doctors, nurses and teachers) are really dedicated to providing service and improving lives and society.

Dedication and working hard may not be the same as doing the right thing or working “smart”. Many problems are obvious to anyone working inside or alongside the public sector.

As Craig Dearden Phillips has suggested, it’s difficult to reject many criticisms of public sector delivery and it seems fair to give the Coalition Government some time and a little latitude to get things right.

The aims of this Coalition, to be a radical, reforming government are more “political” than “economic” and, in that sense, criticism from the left seems wholly accurate. At present the UK has no universal consensus …. just a “political deal” which makes rapid change possible.

Even those who could support radical reform might criticise using “the financial crisis” as a screen for action going further to rein back the state than most people would have supported – had politicians been open about their plans. The arguement is made, however, things changed during the election making more radical action necessary.

The “Big Society” sounds fine (like motherhood and apple pie) and there is a more thought-through arguement for localism and decentralisation which Liberal Democrats have campaigned for over many years. But, while looking to reform public service delivery, the government is facing strong criticsm directed on how it is taking things forward -

• Polly Toynbee, perhaps unsurprisingly, views the whole programme as “a big fat lie” with disastrous consequences to follow,
• The coalition attempt at crowdsourcing ended with no changes to government departments’ policy,
• Research by the National Council for Voluntary Organisations (NCVO) highlights the serious challenges facing charities, indicating there are dangers in relying on them to pick up responsibilities from government,
• The Centre for Social Justice criticises the Treasury for failing to identify the benefits to society that public expenditure is seeking to achieve, suggesting Ministers are “flying blind” with confused guidance about objectives and how to choose between options. 

So is it just delivery that is flawed? Having agreed a programme of decentralisation, have the Conservatives and Liberal Democrats done enough to turn it into a compelling vision? Read the rest of this entry →

As a further sign pressure in the UK for the public sector to deliver savings is increasing, the Cabinet Office’s new Efficiency and Reform Group now has control of the the Office of Government Commerce (OGC) and Buying Solutions.

Including the authors of earlier efficiency reports – Sir Peter Gershon, and Dr Martin Read, the Group aims to deliver a significant programme of change.

Referring to the creation of the Efficiency and Reform Group, Francis Maude, Minister for the Cabinet Office was quoted as saying -

“We want a slim but strong centre that can drive down the cost of government, so protecting as best we can the crucial front line services on which our citizens depend”

The newly strengthened group will have the power to make sure departments work together to tackle waste in areas including ICT spend, procurement, advertising and marketing spend, and Civil Service expenses and recruitment.

There was speculation before the election that OGC would be brought closer into the government, in part to address criticisms that it lacked political clout. The move clearly reflects the points made at the Operational Efficiency Conference in November that it was far easier to address issues within the sphere of Whitehall departments than in the wider public sector.

The impact of the efficiency programme for local government and NHS organisations will probably take longer to materialise – and will probably reflect the “devolving” ambitions of the coalition government.

Attractor has already commented on the potential impact of a simplified approach to Civil Service terms and conditions and on the potential for outsourcing Whitehall’s back office functions and the calls to increase outsourcing and shared services. The actions of the Efficiency and Reform Group stretch to a far wider remit however. Read the rest of this entry →

The UK’s coalition government has made few changes to government departments – but the underlying “machinery of government” is under scrutiny.

According to reports in Personnel Today, the government is planning a cross-government HR framework – aiming to “eradicate duplication” and “simplify HR functions”.

The new Efficiency and Reform Group is looking at the creation of  “a single coherent HR policy” to be used by all Whitehall departments by March 2012. The Cabinet Office is considering a simpler approach to Civil Service pay, terms and conditions.

By focusing savings and streamlining efforts on back-office functions, the aim is to protect front-line services. Francis Maude is quoted saying - 

“Good government can cost less. It won’t do just to carry on as before. By joining forces and concentrating our efforts where the money actually gets spent, we can make sure the maximum amount gets taken out of government overheads, not front-line services.”

That sounds good though in reality the vast majority funds “actually gets spent”  delivering programmes and services rather than in the back office. There are potential savings to be made by the adoption of shared services and outsourcing for back-office solutions – though savings are by no means guaranteed. Even assuming savings are delivered, the financial benefit is likely to be small compared to the overall financial challenge facing the government. Read the rest of this entry →