Page last updated at 17:01 GMT, Friday, 27 November 2009

Tories want 'more for less' from public sector

Philip Hammond
Philip Hammond wants to boost public sector productivity

The Conservatives have set out plans to cut government running costs by achieving "more with less".

Shadow chief secretary to the Treasury Philip Hammond said a Tory government would improve productivity through a continuous efficiency drive.

But this could only be done through winning the "hearts and minds" of civil servants not by "coercion", he added.

Labour and the Lib Dems also have extensive plans to cut government running costs through efficiencies.

Prime Minister Gordon Brown has overseen a Whitehall efficiency drive and has ordered departments to find savings in low-priority programmes.

Further announcements are expected ahead of next month's pre-Budget report, including a review of Whitehall jobs to be moved out of London and a cut in the cost of senior civil servants.

'Efficiency drives'

But Mr Hammond said Labour had a "genetic inability to deliver deep-rooted public service reform" and its efficiency drives had merely placed an extra administrative burden on public services.

He claimed the Conservative approach was different, although he stressed it was not just about making civil servants work harder.

What will matter to us is whether or not a successful outcome is delivered at an affordable price - not who delivers it
Philip Hammond, shadow chief secretary to Treasury

"If efficiency gain is going to yield year-on-year savings and become a central part of what public sector bodies do, it has to become embedded within them, not imposed upon them. It has to work with the grain of those bodies, not against it.

"We need a 'hearts and minds' agenda: coercion is hard work and can only be maintained for a limited period of time. But win the hearts and minds and the dynamics change radically," said Mr Hammond in a speech to the Policy Exchange think tank.

An incoming Tory government would "oversee the task of turning the 'efficiency drives' of the past into an institutionalised culture change in the public sector of the future," he added.

The shadow chief Treasury secretary said the private services sector had achieved a 20% growth in productivity in the decade after 1997 but the public sector had seen a 3.4% decline over the same period.

If the public sector had delivered the same productivity improvement it would have cost £60bn a year less to deliver the same level of services, Mr Hammond claimed, adding that the Conservatives would channel some of their planned efficiency savings back into frontline services.

In his speech, Mr Hammond announced plans to set up an advisory board on productivity to help drive efficiency savings.

He said of the productivity figures: "The result is startling: we would today be enjoying the same quality and quantity of public services - with a saving to the taxpayer of some £60bn per year.

"That is the price we are paying, every year, for Labour's failure to deliver public service reform."

The latest proposals build on austerity measures outlined by shadow chancellor George Osborne at the Conservatives' annual conference in October.

'Customer control'

The shadow public services productivity advisory board will feature a number of figures - yet to be named - described as "very senior advisers with established credentials".

Another key Tory proposal is to move all government-owned property into central publicly-owned asset companies.

Government departments would then pay rent and the asset companies, using professional management, would be forced to squeeze as much as possible out of the government's real estate assets.

The Tories would also introduce greater competition within the public sector by allowing high-performing parts of it to bid to run other areas.

For example, a successful local authority planning department in one area could take charge of the planning responsibilities of a struggling council.

"What will matter to us is whether or not a successful outcome is delivered at an affordable price - not who delivers it," said Mr Hammond.

Further Tory plans include extending "customer" control over the public services beyond the schools, health and social care areas it has already identified.

Francis Maude, who heads the Conservatives' implementation team, which is briefing civil servants on what to expect from a David Cameron government if the Tories win the next election, is also working on plans to shake-up Whitehall.

Under his plans, ministers will be given more control over departments and top civil servants will have their pay linked to delivery of efficiency savings. Departments would also be ranked on performance.

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