David Cameron’s efficiency chief and former government advisor, Sir Peter Gershon, has told the Conservative leader to cut public payroll by up to £2bn within a year of the general election, which will potentially result in a loss of up to 40,000 jobs across the public sector.
In disclosing the party’s initiatives, Gershon tells how the party plans to achieve the proposed £12bn savings through controls on recruitment, IT expenditure and the adoption of outsourcing.
Gershon made some clear, economically-led efficiency recommendations in his last review when he was working with the incumbent government. It’s good that he’s back and speaking up on this issue again; putting outsourcing and shared services back on the agenda just when it really needs to be discussed.
The increase in tax on jobs has put added pressure on UK companies and public sector organisations alike. Cutting costs has become a major priority and outsourcing is an efficient way of doing this. In order to both compete and survive on a global market, outsourcing simply must be considered and it provides a central thrust of Gershon’s comments.
Potential savings through outsourcing range from 12.5 and 20 per cent depending on what is being outsourced. This will be an important tool in reducing the burgeoning budget deficit.
If government departments do consider outsourcing, they can potentially benefit at both ends of the spectrum. Firstly outsourcing will not only reduce costs but could provide progressive career paths and experienced workers if adopted correctly.
Previously outsourced work has been done sparingly and, without core tasks being outsourced, there has been no clear career path for workers leading to inconsistencies and limited experience. Outsourcing best practice must be followed for this to work.
If the government looked to commission work rather than trying to do it all themselves, there would be an increase in focus and quality of work outsourced, no initial rise in UK unemployment and a rise in the amount of cost savings made. One true benefit of outsourcing is its transparency; every stage can be evaluated and improved upon if need be, informed decisions can be made - something that would come across to the public.
It is somewhat hard to predict whether the predicted 44,000 public sector job losses are actual jobs or simply vacancies yet to be filled or retirements. We understand that currently we have the largest public sector the UK has ever seen, which will in itself have an effect on the number of real job losses.
Others manage to survive with many fewer public sector workers – so we should be able to. Outsourcing and shared services can help to reduce the public sector burden without significant job losses. Perhaps a happy medium is needed?