EmailThere was a mixed message from the Reorganising Government conference supported by the National Audit Office (NAO) and PricewaterhouseCoopers in London this week.
The subtitle of the conference was Merger, restructure or reform? and participants went away with no single answer, beyond a strong impression that the costs of disruptive change often outweigh any benefits, except the political satisfaction of ministers.
Keith Davis, the NAO's director of cross government studies, said public bodies should take a deep breath before they think about restructure or merger – and probably exhale saying 'don't do it'.
Earlier this year the NAO produced a study of Whitehall reorganisations between May 2005 and June 2009. There were more than 20 changes a year, at a gross annual cost of £200m, including the creation of the Ministry of Justice and new Department of Energy and Climate Change, the Office of Third Sector (subsequently remodeled by the present government as the Office for Civil Society) and the short-lived Department for Innovation, Universities and Skills.
Davis and colleagues remain unimpressed. Tinkering with the machinery of government had often been done whimsically, to suit the short run needs of ministers (and prime ministers), he said. The changes lacked a business case, appraisals of options, or estimates of costs and benefits, are often announced at short notice, and are implemented quickly.
The NAO report complements other studies proving how little ministers tend to think about the consequences of their wish to shift the deckchairs.
The NAO reckoned its own estimate of costs (£780m over the study period) undershot the mark. To that should be added civil service underperformance during change, loss of institutional memory and impact on 'third parties'. Changes to branding and communications are expensive, as is re-letting offices, paying off staff and swapping IT systems. 'Benefits,' Davis told the conference, 'were rarely stated, except in a high level way. The whole value for money picture was unsatisfactory.'
But a sub-theme of the conference was the prospect of new mutuals and social
enterprises taking over functions now performed inside government, and here the tone was brighter. The costs and pains of reorganisation would be washed away by the enthusiasm of newly-emancipated staff, exemplified at the conference by Yvonne Elliott, deputy director of business and strategic performance at City Health Care Partnership, an employee-owned community interest company that this summer took on health and social provision to the NHS in Hull.
Elliott said staff who initially had chosen not to transfer to the enterprise were
now coming over, apparently little concerned about pensions and protected rights. But City Health, like other NHS spin offs, has been offered NHS pension protection, along with a capital endowment and, for the time being, contractual guarantees.
In these circumstances structural change was presented as not only painless but life enhancing. And assistance with change is at hand. The session showcasing City Health in Hull was sponsored by Field Fisher Waterhouse LLP, which is building a practice on advising public sector staff on moving on and out.
The advisory industry tends to draw on experience from the private sector, but Quentin Cole, a partner in PwC's business recovery services team, who presented ways to identify organisational failure the first steps to improvement, did concede that politics – ministers, councillors and, not least, public opinion – introduces a different dimension to reorganisation.
Christopher Banks, chair of Directgov and chair of the Public Chairs' Forum, which represents the heads of non-departmental bodies) acknowledged the government's commitment to reforming the way the public sector works, but also how little business planning had preceded its 'bonfire of the quangos'. The NAO report on reorganisation had not, it seemed been much consulted by ministers before they ventured on their great cull.
The list of victims included the Learning and Skills Councils, which Banks (formerly a business executive) used to chair. He was dubious about the benefits of such upheaval yet upbeat, hoping that the 'independence and neutrality' of arm's length bodies could be preserved. Mutualisation was going to be an attractive option, he predicted, anticipating a report from the Public Chairs' Forum out shortly.
From Bubb's Blog
From Flip Chart Fairy Tales
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