Saturday, January 29, 2005

Government waste: the James Review

I’ve now read the Tories’ own waste review, the one that comes up with a savings figure of £35 billion. Unfortunately, a very large chunk of the total comprises the supposed savings identified by Gershon (see earlier post). As the Times commented:

“The James document…contains a potentially crucial flaw within it. Of the £35 billion in savings that the Tories insist they could secure, some 60 per cent, or £21 billion, comes from pocketing the money that will allegedly be drawn back by the Gershon recommendations. This is a contestible assumption. Sir Peter attempts to reduce the running costs of public administration, not eliminate a range of programmes. His savings would come from ‘back office systems, procurement, transaction services and policymaking functions’. He would, for example, cut costs by ‘ending multiple buying by many purchasers from a single supplier’. That money could be handled more effectively is indisputable. Whether the savings will be of the magnitude Sir Peter envisages is more dubious. His is a supersize version of the efforts made by Sir Derek Rayner for Margaret Thatcher. That drive cut the cost of running Whitehall by just 0.4 per cent” (leader, The Times, 22 January 2005).

As described on the Reform website, there is a world of difference between chiselling away at costs, and addressing the fundamental structural problems with our public services.

We need to put the customers in charge, not the politico-bureaucrat-producer cartel. Parents need to choose the schools for their children, and patients need to choose their healthcare providers. The only sustainable role for the state is in setting minimum safety/fair dealing standards, and subsidising those who are genuinely unable to pay their own way.

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