How to chop £70bn of costs from the UK's bloated public sector

Whoever wins the election, the public sector is in for the chop. MT outlines £70bn of potential savings.

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Last Updated: 09 Jul 2013

Last year, UK Government spending amounted to 52% of GDP, more than in famously statist Germany. With our budget deficit currently at an eye-watering £178bn, that clearly can't continue - so politicians have been talking tough about their plans to cut back our bloated public sector. But with an Election looming, we’re still waiting for any of the main parties to come up with specific and substantial plans. Moving a few civil servants out of London and cutting down NHS sick pay is a start, but we’ll have to go a lot further than that. Fear not though, for MT has stepped into the breach. In this month’s issue, consultant Andrew Wileman outlines how the public sector can learn from the private sector to take out some £70bn of costs…

Wileman reckons there are three big reasons why cost management is a much bigger problem in the public sector. The first is people. With no profit imperative, there’s less pressure on pay and performance, and it’s harder to sack people; most state services are monopolies, so excess returns can accrue only to the workforce; and the Government has little incentive to hammer civil servants when they make up 20% of the electorate. Procurement’s also a problem: Wileman says the public sector is so big that it ought to have lots of clout as a purchaser, but in practice, it doesn’t have the execution skills (as the NHS IT project showed). And then there are the underlying structural problems of expensive state pensions and rising healthcare costs.

But although the public sector lacks the private sector’s two biggest efficiency drivers – the profit motive and competition - Wileman reckons it can still learn a lot from the private sector’s approach. He breaks this down into five areas: leadership, tactics, people, suppliers and the internet. And he explains how cuts across six areas could save £70bn. Maybe Brown, Cameron and Clegg should have a read before they take to their stage for their TV debate...

Click HERE to read online, or HERE to read as a PDF.


In today's bulletin:

How to chop £70bn of costs from the UK's bloated public sector
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