War on Waste

So we are to have a ‘war on waste’ in the public service, in order to help the dire pressures on the government’s Budget. When have we heard that before?

Quite often, is the answer. In the early 1970s, the Marks and Spencer Chief Executive, Derek Rayner (later Sir Derek, then Lord Rayner) was brought in by Prime Minister Edward Heath to improve public service efficiency. Rayner was known for his tight management controls and strong management practices at M&S, which was reckoned to be Britain’s best-managed business at the time, and the hope was to introduce these busness principles into the public sector. But public spending, and borrowing, continued to rise through the Heath era, and inflation soared to over 20%.

Rayner also advised Margaret Thatcher on improving government efficiency. In 1979, she established the Efficiency Unit to explore ways of saving money in departments. The Unit would also attempt to change the practices, culture and skills of the civil service, hoping to change the way the whole Whitehall structure worked, and make it more businesslike. But the results of this ‘change from within’ project were disappointing. For example, there were efforts to cut down the number of civil service meetings, and even economise on the tea and biscuits that were served at the longer ones. But the blob responded by making meetings longer so they could justify breaking out the rich teas. And when Rayner left, things pretty much reverted to normal.

By 1982 it was obvious that this ‘reform from within’ strategy had made precious little difference to Whitehall efficiency. It was time for a different strategy — Strategy Two, to quote the title of an Adam Smith Institute report by Madsen Pirie. In it, he argued that the only way to bring real reform to public services and state owned companies was to get them out of Whitehall control. In other words, to privatise them, and let the chill wind of market competition do your reforming for you. It was a strategy that was pursued with vigour after Margaret Thatcher was re-elected in 1983.

There was one more attempt to reform the civil service from within, in 1988. Rayner’s successor as the Prime Minister’s adviser on efficiency, Sir Robin Ibbs, conducted a full review of Whitehall and made recommendations in the Next Steps report. His main proposal was to strip Whitehall departments down to a core of policymakers, with other officials being transferred to work in free-standing agencies.

It made a lot of sense, and for a while it worked well. To take but one example, the time taken to issue a UK Passport fell dramatically once the Passport Agency had been separated from Whitehall and could take more control of its working practices. But over the years, the ‘core’ civil service continued to grow itself and to add agencies, boards, committees and quangos that were very much in the Whitehall circle.

Another part of the current government’s new strategy to make the civil service more efficient is to establish ‘Challenge Groups’, with outside experts, to confront civil servants with different ways of operating. Like Derek Rayner’s Efficiency Unit, it is unlikely to achieve nor save very much — particularly since there is no senior minister whose job depends solely on making it work. Again, one can expect the ‘outside experts’ to be absorbed by the existing culture, a sort of Stockholm Syndrome, but this time a Whitehall Syndrome.

During the 1980s, the Adam Smith Institute promoted the ‘different ideas’ strategy, but on the outside track rather than the doomed-to-failure inside track. Its Better Government Competition invited the public to propose ways in which public services could be made to work better. A surprising number of entries came from former civil servants, who of course knew their stuff. 

One entry — this was before Robin Ibbs’s Next Steps had appeared — was precisely to split agencies away from Whitehall and give them more results-driven independence. My friend Edward Leigh, who was a minister at the Department of Trade, invited me in to explain the idea to him. When I arrived, the table was groaning with Permanent Secretaries, Under Secretaries and who know what else. “They insisted on being here,” Edward explained. And they spent the next hour rubbishing the proposal and telling me why it couldn’t be done and why we would be a laughing stock if we published it.

With that, I was determined that this entry would be declared the winner of our competition, as it was. Whereupon, of course, that very thing happened. But today it makes me think that the ‘Challenge Group’ experts will get precisely the same treatment — with civil servants finding clever ways to dilute, ridicule, or ignore any sensible proposals. Or even file them, so they will never appear in public again.