Public sector must spend cash wisely

The public sector is collectively holding its breath. This week the
Chancellor of the Exchequer will announce the results of the 2002 Comprehensive
Spending Review, setting out the scale of investment in public services for the
next three years.

Education and health are set to do well, and David Blunkett has fought a
good campaign to win extra cash for the Home Office.

But whatever the exact pattern of winners and losers, the one certainty is
that the cash will come with a whole panoply of targets and mechanisms for
improved delivery. The only way to achieve high-quality, efficient and
responsive public services, declares the Prime Minister, is through investment
linked to reform and modernisation.

This is not news to a sector under pressure from the public, media and even
its own staff. Recruitment and retention difficulties, high absentee figures,
rising stress and low morale have emerged as dominant issues for most parts of
the public sector.

The ‘publicness’ of the public sector needs to be made clear when defining
the meaning of improved productivity. Universality and equity are fundamental
to any definition of the public sector and many of the goods and services the
Government provides are free at the point of use and therefore hard to value in
private sector terms. But equity and universality represent a cost the private
sector does not have to bear, so any re-examination of the goods and services
must respect the ‘publicness’ of the activities.

Many government initiatives are well intentioned and have produced good
first round results – audits and inspections, while resented, have improved
performance. And the Government’s four principles of reform – national
standards, devolution to the frontline, flexibility for public bodies and
staff, and greater choice over public services – underpin a focus on both
deliverables and workforce capacity.

But the danger is that simulating too many private sector techniques to
enhance performance could prove counter-productive. The public sector has to be
especially careful that it retains the public service ethic at its core and
that if it adopts short-term contracts or outsources services it works doubly
hard to keep that sense of organisational purpose.

The key issue is to reform the public sector as an organisation – how it’s
lead and managed and how workers are offered autonomy and empowerment.

There is a growing toolbox of techniques essential to creating great
organisations – ranging from better leadership to getting the right balance
between rewards and ‘sticks’ to address poor performance.

To win the delivery battle, the public sector needs to address these
so-called ‘softer’ people and organisational issues. Otherwise that extra
Treasury cash could seem like fool’s gold.

By Will Hutton, Chief executive, the Work Foundation

Comments are closed.