After every election, the public sector is reorganised. It never seems to save any money.

After every election, the public sector is reorganised. It never seems to save any money.

Police Officers

BBC News – Radical police shake-up outlined.

After every election, vast swathes of the public sector are reorganised. And yet, within four years, the opposition — whoever they are — is able to point to a litany of inefficiency, bureaucracy gone mad, pointless red tape and wasteful duplication. Today, the police are being told they will be reorganised. A couple of weeks ago it was the health service. Other public sector bodies should expect the same.

We recognise that there have to be cuts. We are carrying a public sector sized for the economy in the hey-day of Tony Blair. We clearly cannot afford to carry on doing everything that we were doing, or, at least, not to the same extent. Lest we forget, it was not the public sector that got us into the economic trouble we found ourselves in. If Blair et al had had the Vince Cable-like foresight to take steps to avoid the crisis, they could have done it by dealing with our under-regulated financial sector, not by cutting public services.

But we are where we are, and we can’t simply go back. Cuts of some kind are inevitable.

But reorganisation? I’m not so sure.

Politicians, I feel, like reorganisation for two reasons. First, it gives them a feeling of being in charge — they can make their mark on history, leaving a legacy that will endure long after they are gone. Second, it makes them feel like they are running the nation like a business. Businesses reorganise, so should government. And, since businesses are driven by a profit motive, it is self-evident that reorganisation will deliver savings to the public purse, which can either go into more public services, lower taxes, or paying off debt.

Except, except.

First, since every government reorganises, even when the party in power stays the same, no reorganisation is permanent, and therefore no one gets to leave a mark in the history books. Or, if they do leave a mark, it is in pencil, to be rubbed out by the next owner of the book and replaced with their own mark. Nothing is more transitory than public sector reorganisation.

Second, businesses rarely reorganise successfully to reduce costs. Business reorganisations are as fraught with spiralling costs and new inefficiencies as public sector ones, although the losers are conveniently forgotten about. This is to some extent inevitable: public sector organisations tend to continue whether they are successful or not, and the ones which are axed are often not the ones which were inefficient. Private sector organisations that are unprofitable go under and vanish from our memory.

Business reorganisation, when it works, is done to meet new challenges and opportunities in the market place, which, under the now (in)famous BCG matrix, helps them develop the new rising stars which become cash-cows. A proportion of reorganisations can fail, as long as the business keeps its cash cows going, and creates its next generation from somewhere. The reorganisation itself is a costly process which creates duplication. But it is often out of this duplication and time of tension that new, creative, solutions to old problems emerge.

In the public sector this dynamic is not at work. First, there is no market place. The NHS cannot suddenly come up with an idea to beat crime, and move into police work. The Fire Service cannot muscle in on Education’s territory. Public services exist because we need them to exist, not because it is profitable that they exist. If the police spend their time trying to replace the fire service, then they are not catching criminals. Second, there is no profit. Any public sector organisation which underspends its budget faces having that budget subsequently reduced. It can reinvest its money in better services, but it cannot use that reinvestment to give bonuses to its staff — encouraging more efficient working — nor to develop new products for its future diversification.

Perhaps there is a case for a matrix working, self-diversifying set of public sector organisations without portfolio. A sort of generalised charity or trust, which moves to find holes in the public sector market place and fill them. Perhaps not — it would be another reorganisation.

We now face a very real possibility of the entire savings from the cuts being ploughed back into the costs of reorganisation, or, worse, real cuts which are not 25% but 50% in order to pay for the reorganisations. But our problem was not that the public sector was incorrectly organised, but because it was more than we could currently afford.

If we must cut, let us cut. But no more of this rearrangement of the pieces into another, no-more-efficient, and no-more-permanent solution which will be in turn abolished by the subsequent administration.

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