Thursday, March 09, 2006

Gershon: PR Stunt Or Costly Delusion?


We’ve long believed the government’s £21bn Gershon efficiency programme is an elaborate PR stunt (see here and here). We now think it might be even worse: it’s quite possible that those involved have deluded themselves into thinking it’s actually…well, “real”. And they're burning yet more of our money in a hopeless quest to prove it.

Earlier in the week, the programme’s top man was grilled by the Public Accounts Committee about that highly sceptical assessment from the National Audit Office (see previous blog). John Oughton is head of the Office for Government Commerce and reports direct to Tony and Gordo on how things are going.

You will recall the NAO’s stinging verdict: "The Government's reported efficiency gains totalling £4.7 billion... should be regarded as provisional and subject to further verification, given the degree of risk that efficiencies may not be measured accurately."

So what did the fluent Mr Oughton- described by one underwhelmed PAC member as “smooth”- have to say for himself?

Well, according to him, we’re firmly “on track”: measurement issues are being sorted, baselines firmed up, and e-auctions activated. Thunderbirds are Go.

No surprise there, you think. But he also let slip an extraordinary fiction at the heart of the entire project: almost all of the £21bn projected "gains" were planned to happen anyway, even if Gershon had never been invented. Gershon was less about initiating new savings programmes than adding up figures from across Whitehall on programmes that were already in place.

Now you and I see that as clear confirmation of a PR stunt: Gordo wanted to announce an "efficiency programme" so he could claim all those extra billions of tax were being spent "wisely". And all he really wanted was another of those "eyecatching initiatives" conjured from arranging the numbers in a different way. Just like all those double counted spending programmes he's always gone in for.

Fair enough.

The trouble is, some people- and I got the strong impression Oughton and his sidekick might be among them- actually seem to think the project is real. So the whole thing has taken on a life of its own, with all the expense that goes with it.

Mr Oughton himself gets £125 grand a year, and the entire OGC costs £35m pa (2004-05, net). But of course, that's just for starters. All across Whitehall, Gershon has spawned an industry, with its own dedicated departmental teams and of course hundreds of consultants. The true cost is probably well north of £100m pa. It's almost certainly employing some of the civil servants shaken out of other roles because of the "savings" themselves.

At the end of the PAC session, Sir John Bourne, the Comptroller and Auditor General and the man responsible for the NAO report, was asked if he thought the £21bn efficiency target would be hit. Choosing his words carefully, he said "If it's achieved, it will be something that's never been achieved before. There's a mountain to climb."

Indeed there is Sir John.

PS A couple of other points that came up. First, less than half of the "savings" made so far are "cashable"- which means they are not actually savings at all (see here). Second, Gordo's use of a £2bn "savings" figure in his Budget statement last year turns out to have been even more fraudulent than usual- the figure was more or less plucked from the air, with no underlying auditable calculations to support it. PAC members want the NAO to audit any future such statements, and we'll certainly be scrutinising whatever puffed up figure Brown produces in his forthcoming Budget.

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