Tuesday, February 12, 2008

Waste On Waste

Processing those Gershon efficiency audits

News today that Brown's Gershon... ahem... efficiency programme has generated yet another additional cost. This time it's the £432m paid to 7,717 civil servants made redundant under the plan.

Most chokingly for taxpayers, the mandarin in charge, John Oughton, himself got a £612 grand golden goodbye when he took early retirement from his post as the chief executive of the Office of Government Commerce last year at the age of 54.

We've blogged the useless Gershon programme so many times it hurts. But let's just remind ourselves of the key features (see here for more detail):
  • Launched in 2004, Brown reckoned it would generate £20bn pa of "efficiency savings" by 2010, including a net job cut of 70,600
  • Last October Darling announced the £20bn had already been achieved
  • The truth is that only a quarter of these announced savings are "reliable", so the £20bn translates into around £5bn (according to the National Audit Office- see this blog)
  • Even where the cuts are genuine, service standards have slumped- eg hospital stays have been cut but emergency readmissions have soared
  • Unintended consequences have been even more expensive than usual with such half-baked government programmes: eg the cuts fueled fiasco at the Rural Payments Agency cost taxpayers £0.6bn, and the cuts fueled fiasco at HMRC is potentally costing us billions (the black market value of those lost bank account details is c £200 apiece)
  • The programme has spawned a whole new Whitehall bureaucracy, complete with its own mandarins (the chief of whom has now copped that £600 grand early retirement package), accounting gremlins, and mountainous reports

And on top of all that, we've now been landed with £432m redundancy costs.


Our fag packet says this whole nonsense is now very close to costing us money.

Top-down programmes to tackle government waste sound like they have to be good idea. But history tells us they very rarely work. Yes, you can cut costs: that's easy. But those unintended consequences have a nasty habit of delivering even bigger bills than the ones you've avoided.

Government is by its nature inefficient. It is a tax-funded monopoly with no competitive pressures to keep it fit. There are no alternative providers trying alternative approaches, and to whom customers can switch.

The failure of the Gershon programme highlights once again why our main priority should be to find ways of dismantling our Big Government wherever possible. These grandiose top-down efficiency drives simply don't work.


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