Gareth Davies, chief of the National Audit Office – the government public spending watchdog – spoke to MPs about the tough economic challenges that face government in the years ahead, telling them that the public services have a ‘productivity problem.’
He said that the reasons for this included an ageing population; the crumbling public estate; out of date IT systems and the continued threat of cyber attacks; higher levels of inflation having an effect on the cost of larger infrastructure projects and problems with the retention of staff, particularly in key IT roles.
All of these issues are a concern for the emergency services, as just one element of the public sector although Mr Davies talked in broad terms throughout, name checking the NHS in some cases.
Opportunities for efficiencies
In a speech intended to highlight the need to keep a tight hold on value for money, Mr Davies laid out five opportunities to make public money work harder, as he put it.
Referring to the complexity of ‘mega infrastructure projects,’ and the risks that come with them, he said that they ‘are arguably too large for the risks to be manageable by the relevant departments and their arms-length bodies.’ HS2 and the New Hospital Programme were in his sights and he suggested that ‘better governance of our largest projects offers significant financial benefits.’
“I think a new approach to the governance of the small number of genuine mega projects is needed, reflecting the scale and nature of the risks involved. This is likely to require governance expertise from outside the relevant department. This would increase the chance of making better go/no-go decisions and effectively holding the project to account for cost control and delivery.”
Turning to talk about the state of public buildings, he said that poor maintenance of NHS hospitals was ‘significantly impacting on patient care.’ He called for a disciplined approach to asset management with optimised maintenance plans – both of which are key components of the government-wide efficiency drive he is recommending.
“Capital assets, such as schools, hospitals, prisons, roads and flood defences must be adequately maintained to meet their purpose.”
Not only was NHS estate under the spotlight in this speech, Mr Davies also highlighted its procurement practices. Referring to a recent report on NHS procurement spend, he said that the NHS spent some £3bn outside its dedicated procurement service. – this equates to just under half the value of NHS consumables being bought outside the system designed to deliver value for money.
He highlighted the benefits that will arise out of the recent Procurement Act, citing potential savings across central government up to £8bn before even considering the efficiencies available across the wider public sector.
Having already referred to IT issues at the start of his speech, Mr Davies went on to talk about the challenges and opportunities arising from digital transformation. He said there was a need to ‘replace antiquated IT systems, improve the quality and shareability of data, and recruit and retain scarce skills in high demand across the economy.’ The technology already exists to transform service delivery, reduce costs and improve the user experience, he said, adding that the efficiency gains could be enormous.
in his fifth area of concern he looked at fraud – tax evasion in particular. ‘Fraudsters, both organised and opportunistic, target public expenditure, often using new technology to do so,’ he said.
What can be done about it?
Having set out the problems, he had some thoughts on solutions to drive productivity ‘despite the inevitability of new emergencies.’
He started with data – better data with standards and quality – as the foundation stone for being able to take advantage of artificial intelligence approaches to drive productivity. He encouraged innovation and evaluation as key parts of a data led world, but added that scaling up was proving more ‘challenging.’
Along with data, he said skilled leadership was vital. for delivering the productivity gains that are required. While he focused on central government and civil servants in the main, the messages resonate across all areas of the public sector.
“We need leaders that have the capability to deliver what’s required, achieving the right blend of homegrown talent and expertise from outside.”
Concluding with a recognition that dealing with the productivity problem was a ‘big task’, he said that the government’s efficiency framework published in July 2023 was a good start for measuring and evaluating efficiency gains.
“We will only realise the full potential if government makes improving its own productivity a high priority, with serious cross-government weight behind it. Some of the savings can be realised quickly, others require up-front investment and will grow over time.”
The full speech can be found on the NAO website.
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