Magazine article Public Finance

Seeing through Gershon

Magazine article Public Finance

Seeing through Gershon

Article excerpt

We are led to believe that there is deep scepticism over the public sector's ability to achieve the £21.5bn in efficiencies set out in Sir Peter Gershon's report.

A CBI survey found that '90% of firms doubt that the target set by the 2004 Gershon Review will be achieved. This is a hardening of opinion since last year, when 86% of companies lacked confidence'.

But in a debate on the Gershon Review in March, the chief secretary to the Treasury robustly defended progress with a series of statistics, although he did refer to challenges with the technical measurements involved.

The debate also raised the fundamental question of whether efficiencies were to be deemed 'net' - ie actual savings against the state of play at a particular point in time or were to be measured under 'spend against projected growth' in the public sector.

Siemens Financial Services commissioned a research project among the people tasked with driving efficiencies - namely, public sector financial managers.

Our research, from a focus group of 20 senior financial managers, indicated an interesting polarisation among those interviewed: from the deep sceptic (around one third of respondents) to the positive 'can do' attitude (approximately half of respondents), with the former suggesting around 50% of the Gershon targets would be a more realistic goal.

There was consensus, however, when it came to which measurements of efficiency improvement should be used. All respondents felt the situation was opaque and lacking in proper 'rules'. Some of the comments illustrate this frustration.

'Employment must surely be measured net - everyone knows that we have had a period of gross overemployment.' 'Measurement must be against current spending - or its realterms equivalent - otherwise the efficiency process is completely meaningless/

From these we can hear the clear clarion call for an agreed basis on which to calibrate efficiency savings.

On a positive note, what do public sector financial managers see as the most effective methods for achieving Gershon goals? All respondents cited improved analysis and accounting of spending and more joined-up enquiry handling as major routes. Threequarters also highlighted improved workflow/business process management and a greater use of modern financing techniques as key tools in the streamlining process.

On the last point, we asked for a more precise estimate of actual growth in the use of alternative financing such as leasing. …

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