Gone Yesterday But Back Today?
The government is proposing to cut public sector jobs over the next three years. It is part of a programme to increase efficiencies by 2.5 % per annum. But will these cuts be more imaginary than real? Okay, there may be a reduction in the size of the public sector pay roll, but if redundant staff is hired back the next day as consultants where are the savings?
Very frequently, job cuts in the public sector are coupled with the outsourcing of earlier in-house activities. There are some disturbing figures that back-up this trend. In 2000, total fee income for public sector consultants was £384 million. By 2003 this had increased to £1,279 million. According to the Management Consultancies Association (MCA), central government accounts for three quarters of this total and is now the largest purchaser of consultancy services in the country.
And who are the consultants and what are they doing? The same people doing the same jobs as they were doing on the public sector payroll last week but today, hired by a consultancy company and at a higher rate of pay. It is a bit like National Rail until recently, outsourcing its maintenance-using the same skills but hired through sub-contracted companies; the costs spiral but with little or no efficiency gains.
The fact this is a general trend across the whole of the public sector is borne out by other MCA data. These reveal the money is spent on IT consultants, HR advice and various strategy activities. Is this out-sourcing really necessary? In view of the training budgets of large government departments, their sponsorship of management development programmes and the large number of public sector employee that study for MBA’s, isn’t there enough in-house competence in these areas?
Any self-respecting organisation ought to be able to develop its own strategies without excessively relying upon external advice. What are the highly paid chief executives of local authorities employed to do? Equally, shouldn’t any high performing organisation be able to manage its own HR resources without the need to sub-contract out?
Out-sourcing only makes sense if there are noticeable cost savings or if it brings high value added skills into the business that are not readily available in-house. Where is the evidence to demonstrate that it does the former? Certainly little in terms of efficiency gains and that is why Gordon Brown wants the 2.5% savings. As far as buying-in skills is concerned, it should be unnecessary in most cases if effective strategic planning is in place. Granted there may be major IT projects that require external in-put, but to the extent presently used? And particularly, when the work is undertaken by those who were on the pay roll yesterday.
In my view, the whole trend is a reflection of a lack of leadership and senior management self-confidence in the public sector. It is the abdication of responsibilities to outside service providers that are seen to offer a quick fix to major organisational issues. But the outsourcing of what should be core organisational activities has further downsides. First it destroys the self-confidence and morale of the permanent staff. What is the motive for them to be committed and to perform to their optimum capacity? Second, it leads to the hemeraging of talent within the public sector. Careers in central and local government become to be regarded as stepping stones in a career route that ultimately leads to higher paid jobs with consultancy companies. And once this spiral is in place it is difficult ot break
As citizens, we are all affected by this trend to outsource and to buy in external contractors. It leads to a decline in the traditional ethic of public duty that has been such a great strength of public administration in Britain. It encourages public sector employees to think of their jobs in selfish, short term career terms rather than as long term committed public servants. My guess is that attempts to re-create this traditional civil service culture could lead to far greater efficiency gains than the short-term fast buck quick fixes offered by many of the management consultants.
© Professor Richard Scase