Cuts

By any account the Gershon proposals are ambitious. According to UK Chancellor Gordon Brown they are the result of a 'rigorous' review of public sector expenditure. But, say critics, plans to save £21.5bn a year and eradicate 100,000 back office jobs in central and local government are unachievable and result from optimistic guesswork, not informed calculation. Paul Gosling reports

The context for Sir Peter Gershon's public sector efficiency review is that next year's expected UK general election may be fought over public spending and the performance of public services. Sir Peter - outgoing chief executive of the Office of Government Commerce - may have sunk the Conservative opposition's battleship before launch by recommending massive savings, but saying that any more would harm the quality of public services.

There is no doubt the Government is committed to implementing the job cuts that generate 10% to 15% of the savings. The announced merger of the Inland Revenue and Customs & Excise - as Revenue & Customs - anticipated the Gershon report and will lead to the loss of 16,000 posts. UK tax partners at three of the Big Four firms have questioned the ability of the new department to function effectively after this scale of job reductions.

The Department of Health pre-empted Gershon with plans to axe half its advisory and other arm's length bodies. Some £500m a year is to be cut from spending on health quangos, losing 5,500 jobs on top of 1,400 job losses in the department's own administration.

But radical though these measures are, along with others in all government departments, they are dwarfed by the cuts in the Department of Work and Pensions, which is to lose 30,000 staff and transfer a further 10,000 employees from processing functions to client liaison. Even allowing for reduced unemployment, cutting a quarter of departmental jobs will be challenging. Some commentators put it more strongly.

Colin Talbot, professor of public policy at Nottingham University, has become Gershon's most prominent sceptic. 'This is one of the most amazingly shoddy pieces of work I have ever seen,' he says. 'It's pathetic given the way it has been hyped up. There is just half a page on each department. What has happened, as usual, is that the Treasury has given a figure and departments have come up with the same figures which nobody has thought through properly.'

Not only does Talbot doubt that the headline £21.5bn savings are achievable, but, he points out, much of any claimed savings may be unauditable. Some 40% of the total is what Gershon refers to as 'non-cash savings'. These constitute the nominal value of productivity improvements - the importance of which help explain the Government's drive to change the way public sector productivity is evaluated. And the big cash savings are to be achieved from improvements in procurement and working practices despite years of previous reforms.

But implementation problems stretch further. Some 20,000 jobs are to go in Scotland, Wales and Northern Ireland - where there is actual devolution, or intended in the case of Ulster. It will be even more difficult to impose £6.45bn of projected annual savings on local government. Perhaps the Treasury will simply take the sums off councils' grant support and cap those authorities seeking to make up the shortfall in council tax rises - but this would lead to the mother of all battles with local government.

Moreover, most of the savings are projected in the increasingly devolved activities of education, social services and social housing, making it impossible to guarantee that any savings will be achieved. The UK Government may quickly learn that its current 'New Localism' philosophy fits very uneasily with the centralisation necessary to achieve the widespread business process re-engineering which Gershon has unleashed.

Paul Gosling is contributing news editor of accounting & business and a freelance journalist who specialises in public services, management and finance.