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Last week, and in advance of the Budget, The MJ and public property specialists Governetz Public Property invited a panel of leading private and public sector experts together to discuss the impact of spending cuts on Whitehall. Jonathon Werran sums up their comments. With moves at deficit-reduction now firmly under way, we asked the panel how they saw the public sector reacting to the impact of spending cuts in the next six to 12 months. The participants David Werran Chief Executive Governetz (joint chair of debate) Michael Burton Editor The MJ (joint chair of debate) Mark Abinger Director of Professional Services Babcock PLC Sir John Bourn Former Chief Comtroller and Auditor General The National Audit Office Mike Taylor Partner King Sturge John Parmiter Partner Roger Tym and Partners Stephen Weigel Chief Executive Tandridge DC Shyamal Lallah Director of Consultancy Governetz Simon Lydiard Head of Procurement Department for Transport Andrew Edwards Head of Delivery Peterborough City Council Nicholas Werran Director of Research Governetz An expert said his main experience is that: ‘If you're trying to make enormous cuts very quickly and get the departments to come up with figures, when you look at them afterwards, many of the savings claimed turn out not to be made at all.' A contributor argued that judging from their own experience, many of the measures announced on 22 June and subsequently in October's Comprehensive Spending Review (CSR) will not actually reduce expenditure by as much as anticipated. The Government must seriously address levels of public expenditure in the short-term in order to buy the time necessary to get long-term proposals underway. ‘The idea of rushing it through and getting it all fixed in the next CSR would really be to torpedo it.' A panellist spoke of his worry that government spending watchdogs are too hung up on the ‘theology' of how savings are measured. The Government must be direct in showing where savings have been made. ‘In my job, if you can't prove it, you haven't done it. The important thing is, can you take it out of someone's budget? ‘However, money saved is not always counted against efficiency savings. I have a fear that the coalition's intentions are very pragmatic, and I have a real worry there are elements of the bureaucracy which are by no means as pragmatic. We must not let bureaucracy get in the way of making savings.' The role of asset sales in delivering savings was another issue covered in the lunchtime debate. A panellist said: ‘One of the things we have is a good knowledge and understanding of all the assets we hold across local government, police and the PCT, and how they're being used. It's a stage process. The first stage is to make the most of what you currently hold and make sure you're spending wisely if you're doing anything with those assets. He added: ‘The big prize is to look at how we work differently – public and private sector – how we can co-deliver locally, and how we can develop products you can sell on to others. The opportunity is not to time-shift but to place-shift our problem by working more together.' For the rest of the short-term savings, a panellist suggested looking across the Irish Sea for a ready example of what could be achieved. ‘Look at Ireland, where public sector salaries have been cut by 15%, total benefits have been reduced and they are actually spending less money. The easiest way to do it is to reduce people's salaries and benefits. ‘You don't have a lot of arguments, you don't have a lot of bureaucracy or problems with the unions if you're determined to do it and really want to take the money out.' Public disquiet on the scale seen in Greece appears unlikely in the UK context. But an expert said ministers must ask questions about the nature of society, suggesting: ‘We have to think about the impact of society, impact of attitudes – not every country can take this.' Another comment was: ‘If you want to achieve savings quickly it costs even more money to do that – redundancies for example.' Although criticised in the press, early flexible retirement in which staff volunteer to take retirement at 60 strikes a fair balance. ‘People don't lose income and the organisation keeps its knowledge and reduces costs.' With the Government reviewing all major contracts agreed in the last six months line by line, a panellist says: ‘If the future looks difficult for the public sector, the Government must accept that the future it is equally difficult for the private sector.' There has been a far greater openness from the Government in sharing spending information publicly. For their part the private sector, in their role as prospective customers, should be far more honest in telling government about the impact of spending cuts. This represents an opportunity: ‘The Government is absolutely open to good ideas that can enable us to deliver public services cheaper. There has never been a more appropriate time to present those ideas.' Although the Treasury has muttered darkly about government use of consultants, given the pubic sector's reliance on buying in highly technical skills and services, there will have to be some continuity of service. ‘People whose successful experience lies in the private sector will promote the use of the private sector. Of course people won't be called "consultants", there will be some other name for them.' One panellist identified an opportunity for smart local authorities with sharp political will and executive delivery skills to leverage the relocation of central government activities. ‘We could get a fit between local government efficiencies and central government efficiencies. Picking up the issue of ‘clustering', a contributor suggests local authorities could serve as catalysts encouraging new industries, assisting SMEs and reviving the manufacturing industry. ‘The benefit would be having incubation centres with accommodation. What better way than to relocate with other agencies supporting their development?' Given the inter-dependent nature of the international sovereign debt crisis, ‘think global, act local' might indeed prove the best guideline in planning for a successful and sustainable recovery. What now for the spending cuts and public property? In the aftermath of October's Comprehensive Spending Review, Public Property EXPO, held at the QEII Conference Centre, Westminster on 23–24 November 2010 will examine all of these issues. Leading experts and best practice case studies will give guidance on how to navigate the myriad challenges ahead. Recession busting rates provided for the public sector. See www.governetzpublicproperty.com for more.

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WHITEHALL

How will Whitehall handle the cuts?

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