After years of shrinking departmental budgets, how can civil servants rise to the further challenge of the 2015 Spending Review? Jess Wilkins reports from a CSW round table which sought to address that very question
Following five years of public sector retrenchment, there are now big questions about how to deliver the billions of pounds of savings the government still has planned. A Spending Review process is underway in which each department had been asked to model cuts of both 25% and 40%. But how will these cuts work? Will they lead to more “salami slicing” of departmental budgets, or will they precipitate a fundamental rethink of the way the civil service is organised?
It’s a question CSW asked Sir Jeremy Heywood, when we interviewed the cabinet secretary last month. In order to squeeze out yet more cost, Heywood replied, the civil service would see “a combination of fundamental transformational change in some places” and simply continuous improvement in others. He added that while he saw no great enthusiasm at the top for machinery of government changes, you would “see a lot more joint units, a lot more shared services, and a lot more digital platforms that are common across departments”. Extra efficiency “could come through better digital processes, it could come through pay restraint, or it could come through closing down particular lines of work, and so on. It’s got to be the whole menu of options,” the cabinet secretary added.
With this in mind, CSW teamed up with NS&I Government Payment Services to convene a round table discussion about the Spending Review challenge, and address the question of how – in an era when a lot of government waste had already been drastically reduced in the last parliament – departments could save money while maintaining high quality public services.
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The big questions
Unsurprisingly, given the scale of the challenge ahead, the tone of the discussion sometimes verged on soul searching. The Spending Review had precipitated questions not just about how to cut budgets, but more fundamental musings about the very purpose of the civil service.
Such questions were particularly pertinent for Marcella Maxwell, head of the Welsh Government’s Paying For The Future programme. “This is no longer about making the status quo better, or tweaking around edges – essentially doing the same thing but trying to do it cheaper,” she said. “You can do that, but I think it is moving beyond that now to actually looking and saying if you are looking at grants, for instance, ‘Why do we need to do grants?’ or, ‘What is the relationship with our stakeholders?’ It’s that whole thing. Are we here to deliver or are we here to do policy? So I think that it is the really quite big questions that we are asking.”
Senior civil servant Ian Richardson echoed these sentiments. For him, the key question was one of effectiveness: if civil servants are dutifully channelling their energies into seeing through certain policies which are ultimately ineffectual, it’s all for nothing, he said. “I’m sure this issue of effectiveness is where the big winners are. What could we stop doing? What is plausible? Where do we need to focus ourselves on?” Richardson asked.
He also bemoaned the negative connotations of the word “cutting”. “We’ve got to be more positive,” he said. “Those of us who are looking for savings must be a lot more aware of how the service can be improved.”
Other officials around the table agreed, with a number of participants discussing how the Spending Review also offered the opportunity to transform services for the better – so long as the civil service managers who were overseeing significant changes brought their employees with them.
While acknowledging the “huge challenge” of implementing transformational programmes, Sharon Houghton, acting deputy director of the In Country Transformation Programme at UK Visa and Immigration, said: “Although the initial reaction of our staff is ‘this is just to save money’, actually we can make their jobs better, we can make the environment they work in better and we can make the service we give better.”
Whitehall should also look outside for lessons about how to cut deeply and effectively, it was suggested. Emma Dolman, deputy head of commissioning services for the Ministry of Defence, pointed out local government had begun intense budget cuts years before central government had. Councils had previously had such a “burning platform”, they had been forced to make radical cuts while central government had been able to “make small reorganisations and live within their means,” – something Dolman thought was almost certainly going to change with this Spending Review.
“I think we could learn something from how councils got through that commissioning approach by looking at where they can collaborate elsewhere, and where they can just think fundamentally different thoughts about how they can provide services differently,” she said.
The death of departments?
As the conversation progressed, attendees entertained the idea of a Spending Review – and indeed a Whitehall – that was far less structured around departments. Rather than asking each department to model 25%-40% cuts and then adding the savings together, what could be achieved by saving across all government departments, asked Nigel Mayer, service change lead for the Ministry of Justice’s Evolve Programme.
“Finances are still so deep cut,” he said. “We’re still thinking in terms of individual departmental budgets. We’re not thinking about how savings could be achieved for the taxpayer by sharing services or obliterating silos.”
Mayer conceded that this idea became more difficult when seen from the point of view of ministers, given the old adage that every prime minister needs departments in order to reward his followers. However, he added: “Maybe one of our challenges should be moving away from departments into shared thinking. We have a Cabinet Office now which is big and bold, but maybe a lot more can be done in that way: a corporate centre, rather than individual corporate centres,” he said.
The issue was familiar to the Home Office’s Sharon Houghton – albeit on a smaller scale. The Home Office comprises lots of departments, she said, covering everything from visas and immigration enforcement to borders and the Passport Office. “Actually they all offer very similar services, and are dealing with the same customers, albeit at different stages in their lives,” she said – explaining that part of the transformation programme she was overseeing was to try to better join up all those disparate arms.
“It may well be that they stay branded the same, so you might have a Passport Office, and a UK Visa and Immigration – but underneath that it will be the same,” she said.
Mayer stressed the importance of the citizen’s point of view: “What is it they want? What do they need?” he asked. “It may be, as you say, that they like to have different labels [for what each part of the service does], but frankly what goes on beneath the surface, they don’t care. They just want an efficient and effective outcome.”
Data with destiny
If departments weren’t going anywhere in a hurry, one step in the right direction was better sharing of data. The Home Office was “very keen” on data-sharing, Houghton said, as it would help solve customers’ problems far more quickly.
“At the moment, we ask for evidence from our customers to support their income or their residency. These are all things that another government department could tell us, and very quickly and very cheaply. Therefore a case might take three weeks to decide, because they’ve not sent you the right evidence, and you have written it out again and they have sent it back in again. If we’re all automated, the caseworker can get a virtual file in front of them that has all the information they need. So you talk about productivity and reducing costs – it’s just common sense. But to get to that position is so challenging.”
Digital systems delivered via NS&I GPS meant that departments could swap sensitive information securely online and in real-time, said NS&I GPS’s business development manager Steve McWatters. A service user, such as a benefit claimant, could use an NS&I GPS portal to enter their details. NS&I GPS could then securely pass the details entered onto the relevant department, such as HMRC. HMRC can then look at the details securely, check it with other relevant departments, such as the DWP, McWatters said.
When asked by Alasdair Grainger, head of commercial and corporate finance advisory at the Department of Energy and Climate Change, whether worries over data breaches – such as the concerns that have hampered the care.data scheme – would be an issue with the kind of arrangements NS&I GPS were working on, McWatters explained that the way in which the information was being shared online ensured citizens’ data was protected.
“The data passes through the secure government network, keeping it safe,” he said, adding that in the future this would help departments cut costs as they no longer had to give out “blanket benefits”, instead, they could pinpoint the claimant in need of benefits and pay it directly to them.
Martin Jones, CEO of the Parole Board, discussed how his department was beginning to feel the positive effects of better data sharing. Jones explained that about 75% of people who have been through the criminal courts get a fine. Most of these, he said, were motorists who had been caught on speed cameras, and tended to comply with paying the financial penalty.
“But there has been work recently on better data sharing with HMRC and the DWP on trying to automate the payment if the defendant is unemployed or claiming benefit. And what you’re finding is a significant increase in the payment rate. It’s almost just the threat that we’re going to [take it automatically]... then they say, ‘We can pay the money’ – perhaps because there is money they’re not declaring to the system.
“The thing that is holding us back is rubbish IT within the courts service, preventing us having the right data links in place. But within two years we will be in a very different place, and one where we can just press the button – no cash in the system – and we get automatic deductions from benefits. It’s really powerful.”
According to Dax Harkins, director of B2B at NS&I GPS, better data sharing could also help cut out fraud and error, particularly for departments managing the allocation of large sums of money. For instance, an automated system would allow you to verify the eligibility of a benefit claimant before they are provided with a taxpayer-funded service. “And there are lots of other areas that you could apply it to,” Harkins said. “It could apply penalty quicker, for example, or be used to stop people claiming prescriptions when they’re not supposed to.”
A number of different departments had shown evidence of fraud which ran into “big figures” he said. “Can we tighten up any leakage from that? Can we close the system and make sure it is being used on the correct area? They are some of the biggest areas of spending and a number of departments are looking at this. The benefits of clamping down on this could quickly surpass any operational savings,” he said.
Future gazing
As the event drew to a close, the conversation returned to the philosophical bent with which it began. Discussing the radical changes ahead, the Welsh Government’s Marcella Maxwell said that she and her team were trying to look beyond the context of the Spending Review to wider global challenges.
“This is about having a clear idea of what the civil service is for: what do we want for the future, how we you get there and what do we need to do? If you [focus it on the long term], you engage people in it more because you’re not just talking about the money here, you’re talking about why we need to change.
“I think our approach is probably, yes, there will be a Spending Review and that will be tough, but what are we doing as an organisation to modernise, to get into shape? We are not doing this on our own, either – which is why it’s so important that we start learning across government departments. I don’t think we necessarily get enough of that, so this conversation is really helpful,” she said.