The collapse of UK front-line public services under austerity: the case for ABC

English: David Cameron speaking at Eland House...

English: David Cameron speaking at Eland House, home of the Department for Communities and Local Government. (Photo credit: Wikipedia)

This evening, when I checked the stats on my various blogs, I was surprised to see that the following article was attracting an increasing number of hits, once again:

As I re-read the above blog, I was fascinated as to why it was so popular. I do not want to revisit the plight of teachers nor the collapse in education standards compared to international benchmarks. However, I am interested in generalizing across central and local government, looking for evidence-based policy; further I want to see both objective and subjective evidence. It’s not acceptable for ministers to rely on ideological motives alone, based on short-term political gain.

Before, I go on, let my declare my own political bias, I am a one-nation conservative, who favors small government and is passionately anti-bureaucracy.

As I think back over our blogs over the last three years, there has been widespread evidence of failure in David Cameron‘s leadership and government,  across both central and indirectly across local government too. As predicted, front-line services have been slashed and quality standards plummeted.

Yet I still maintain that there is enormous waste in central and local government; also there is an huge challenge to reduce EU bureaucracy, as well.  There are far too many levels of management, not enough consolidation. There are still massive opportunities to cut costs:

  • Taking a strategic approach to problem solving
  • Reducing political intervention
  • Eliminating restrictive work practices favored by trade unions
  • Deploying national service centers for front and back office operations;
  • Outsourcing all operational activities, apart from policy-making
  • Off-shoring non-strategic activities
  • Deploying private sector best-practice in procurement

It seems bizarre that the political classes and the bureaucrats are still wheeling-out their same old cronies, from the big consulting firms, who have been criticized by the Public Accounts Committee (PAC). Independent cost-effective, professionals, like interim managers, are very much seen as canon-fodder, commoditized to contract labor, typically described as contingency labor.

Some years ago, I was a specialist in strategic cost management systems. One popular technique was Activity-Based Costing (ABC). ABC simply analyzes all service activities into value-added and non-value-added. In the case of the previous example, with teachers, ABC would determine the percentage of teachers’ time effectively deployed on front-line services, viz. teaching.  ABC gives focus for waste reduction or consolidation and rationalization.

This blog has likened David Cameron to a political butterfly, flitting from one pretty flower to the next, e.g. gay marriage. Both my fellow-blogger John Gelmini and myself feel that David Cameron’s Government has been far too weak on public sector reform. Rather than using techniques like ABC and rationalizing non-value added services, Cameron’s ministers have let the ax fall on front-line services. George Osborne‘s treasury projections, as a baseline into the next government, call for continued austerity. Many feel that there will be a push-back as the economy picks up and Osborne’s projections will not be sustainable.

This blog has consistently argued in favor of:

  • Evidence-based policy
  • Broad vision statement
  • Comprehensive strategic evaluation of options
  • Radical reform
  • Effective delivery

Let me turn this to two open question:

  1. If the UK Government deployed Activity-Based Costing, what percentage of the of budgets on critical areas, like education and health etc. should be deployed on front-line services, adding value?
  2. Should the UK Treasury set targets for percentage of budgets deployed by front-line services?


Any thoughts?

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6 responses

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  6. Dr Alf is right ABC should be deployed to see how much value creating activity there is in public services and there should be a more strategic approach based on evidence rather than political rhetoric.

    Then there must be proper productivity measures and performance measures so that we can see the effectiveness of the value creating activity in terms of delivery and results.

    Those measures need to be matched against customer insight measures which would be monitored independently by reputable market research firms who would publish their findings on line to prevent civil servants and ministers fiddling the figures or the police as they admitted to the Public Accounts Committee,”adjusting the crime figures”.

    We could then see the proportion of value creating activity,the results of the activity in terms of pupils passing exams,getting employment,crime rising or falling under a particular Chief Constable versus others and we would know what the end users thought of those services given their cost overall.
    Services outsourced of off-shored should be subjected to the same treatment .

    Thus in places like Hertfordshire where I live,Serco which runs practically all county council services would be held jointly accountable with the CEO of the Council.

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