Watch Out, Oughton's About

Issue section: 
(290)

The Treasury's money saving schemes hide the real public finance leaks.

It should become clearer this month how much substance there really was in the deal brokered between leaders of the main unions and New Labour apparatchiks at Warwick before the Labour Party and TUC conferences. On Guy Fawkes Day, the vast majority of the country's 350,000 civil servants will take part in a day of action over government plans to slash anything between 80,000 and 130,000 posts from key departments. How leaders of the Big Four unions can square this with assurances that New Labour would be more 'union-friendly' in the run-up to a general election will be interesting to watch.

The government apparently sees an attack on the civil service as the ideal way to revitalise its mission to privatise everything in sight. And if they are allowed to get away with that, it would make worthless any pledges that might have been made on such issues as the 'two-tier workforce', equal pay and pensions. A bruising defeat for unions like the PCS, Prospect and the FDA would expose the members of every other union to a new PFI onslaught, not least in the NHS.

A department has already been set up, linked to the Treasury, called the Office of Government Commerce. Until recently this was headed up by Sir Peter Gershon, a former 'procurement' executive at GEC-Marconi and British Aerospace and the man who drew the blueprints for the Treasury team to slash jobs in the civil service. His job has since been taken over by a civil servant called John Oughton, whose job it is to achieve £21.5 billion worth of savings in the civil service over the next three years and who will report to Tony Blair and Gordon Brown.

According to the Financial Times, Oughton 'has efficiency and procurement in his blood'. A former Director of Procurement Policy at the Ministry of Defence under Margaret Thatcher (at just about exactly the same time as Gershon was working for private arms manufacturers) Oughton also spent more than five years in John Major's Efficiency Unit before moving on effortlessly to Tony Blair's Efficiency Unit. Oughton's appointment was warmly welcomed by Gordon Brown, who said that he was 'delighted... he brings a wealth of expertise and experience to the job... is a worthy successor to Sir Peter Gershon... and will play a key role in promoting efficiency across the public sector.'

More reassuringly, many civil servants might feel, is that between 1981 and 1983, Fanning also spent some time at Cadbury Schweppes, where he worked on projects including the Cream Egg production line and the forecasting for Schweppes drinks production. No, I am not making this up.

The government focus on 'procurement' is aimed at getting a grip on government spending. But the experience of previous initiatives of this type is that the main winners have been the consultancies hired to draw up the efficiency measures and the private companies contracted to carry out functions previously done by government departments. In a series of reports by the government's own advisers in the Office of Fair Trading and the National Audit Office, these are precisely the failings which have been identified, not least the way in which government procurement habitually goes in the direction of a small number of large contractors.

A more recent and particularly illuminating example is the government's estimate for the cost of running the NHS's giant new IT system. In the middle of October, the Guardian revealed that the budget for this, initially put at around £6 billion, had since shot up to £40 billion, about half of which would be needed to train staff to operate the equipment and keep it in good order. Nobody had thought about this beforehand, presumably. Nothing to worry about, though, says health minister, John Hutton - the money won't be coming out of the exchequer, it will need to be found by local managers through 'savings' (ie cutbacks) in other areas.

In the same week, it was also reported that the man put in charge of the NHS IT project, Richard Granger, had been in the US addressing delegates at a conference organised by a firm called Cerner, one of the key sub-contractors on the electronic booking side of things. Granger has been in the US a lot recently, according to the Guardian, not least because 'the majority of the £6 billion he has agreed to spend on IT systems and services is with US firms', although in the case of Accenture (advisers to both Enron and the Inland Revenue) they have headquarters in the 'tax-friendly' Bermuda.

Apart from tightening up on procurement, another one of Gershon's schemes is to outsource government 'back-office' functions to offices outside of London. But that hasn't been going too well either. When the Inland Revenue outsourced 600 of its offices in March 2001, it was a little bit embarrassing when it came out (mainly thanks to Paul Foot) that the Revenue had managed to flog the lot to a firm called Mapeley, which is also based in Bermuda and probably not entirely because of the nice weather.

Another problem is that the government remains one of the biggest property developers in London. Despite its plans to shift around 20,000 civil service jobs out of the capital, it continues to build and acquire more office space, all of which it plans to occupy. According to the Financial Times, this is a real problem because the go-ahead for most of these buildings was given years ago and property consultants now query the government's ability to cut staffing in London - some of these buildings still have up to ten years on their leases and it could cost more to break the lease than to move out.

One member of the Office of Government Commerce was forced to admit that introducing the changes planned for the civil service was a bit like trying to turn a supertanker. Opposition to the government's proposals is widespread, right up to top level, where as another wag noted 'Sir Humphrey is still alive and kicking'. The thing which makes the government's focus on efficiency more urgent than ever is, of course, the war in Iraq which has already blown a huge hole in the public finances.

An obvious alternative to the emasculation of the civil service would be to withdraw British troops from Iraq without delay - but neither George Bush nor the arms manufacturers would be very happy with that.