Public sector efficiency target of £11bn puts pressure on HR

Pressure is mounting on public sector HR professionals to carry out a “fundamental rethink” of how services are delivered to cut spending by £11bn within two years.

Last week, Whitehall departments, the NHS and the Police Service identified the efficiency savings to be made by 2012-13 as part of the Budget 2010. It was the first time departments have committed to specific plans to reduce costs, although details on how this will be achieved remained light.

Meanwhile, the government repeated calls for councils to reduce overlap and speed up the introduction of shared services across local authorities, police and emergency services, which could help rein in tens of millions of pounds nationwide.

Richard Crouch, lead on organisational development at the Public Sector People Managers’ Association (PPMA), told Personnel Today: “The kind of savings targets being talked about now mean a fundamental rethink about the role of local government and the public sector, what services are provided and how that’s done.”

He added HR “could not afford to hang around”, and should act now to establish shared services across local authorities and other organisations, as well as helping to redesign service delivery and staff terms and conditions.

At the PPMA’s annual conference last week, local government chiefs outlined the need for HR to take command of transforming services as councils readied themselves for swingeing back-office cuts.

IoD’s blueprint for public sector cutbacks

A potential blueprint for how to achieve up to £25bn per year worth of cutbacks in the public sector was published by the Institute of Directors (IoD) last week.

It included a radical restructuring of procurement, as many public sector bodies use identical or similar products and services – such as HR, legal services and IT – but they are not being bought centrally, creating duplication.

Director-general Miles Templeman said: “There is a lot of talk among politicians about the need to introduce efficiencies into the public sector, but very little detail on how this will be done.”

Paul Martin, chief executive of Sutton Council, said the creation of a shared Sutton and Merton HR service last October – which resulted in 10 job losses – would allow the function to save £500,000 in the coming financial year. “I really think [shared services] has accelerated the change programme,” he told delegates. “It’s produced a mandate and a sense of purpose, drive and energy that wasn’t there before.”

Andy Albon, HR director at Birmingham City Council, also present at the conference, told the magazine: “There’s no doubt you can save money on back-office services.” He added: “I would far prefer to see how we can bring small public service employers together and provide common services to them, before we start looking at the [private sector] market.”

Elsewhere, Christine Barton, the lead on HR at the Association of Chief Police Officers, said police forces – tasked with delivering £346m worth of savings in the next three years – were in the midst of setting up more shared services in HR, IT and finance. She called on HR to lead this change, making their own efficiencies and preparing employees for different ways of working.

The Local Government Association (LGA) added that the increase in shared services was “inevitable”, and “had to be explored with rigour” by HR staff if the UK economic deficit, now standing at £167bn, was to be addressed.

Mike Emmott, employee relations adviser at the Chartered Institute of Personnel and Development, said the HR profession was prepared for reform, and had been “limbering up to do it for a while now”.

Additional reporting: Tara Craig

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