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November 2018
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Quangos, Mergers & Costs

What’s the real cost of rationalising quangos? Forget efficiency savings argues Marc Cetkowski, Head of Government and Public Sector at global project management consultancy PIPC

It is hoped, of course, mainly by the coalition marketing machine, that the potential devastation caused over the next 6-12 months will be quickly superseded in five years time when the coalition parties stand on the re-election platform and announce -we made the savings…we bought the deficit back into control. But what of the localities and a plethora of half dismantled organisations left in the wake of needing to make cuts at break-neck speed?

Whilst the current model of service delivery could certainly work better, the Government’s rally for reform would be more empowering if there was sight of a master design, a public showcasing of how the new arrangements will deliver improved and more efficient services to people. In education, for example, we currently have significantly sized NDPBs, such as QCA, CWDC, TDA, and NCSL that form a major part of central government’s delivery chain and support network down into front line service staff. While not all of these agencies named are set to be obliterated (some are still under review), they will all be impacted by government’s austerity plans. This may lead to a better delivery model, but the worry must be that without a blueprint for the ‘end state’ design or how we’re going to get there, it’s a bit like setting sail for the New World but scoffing the notion that maps or a navigator might be useful for the journey.

The merging of existing quangos and the return of key functions back into central government departments requires careful assessment and planning – particularly during a period where civil servants with all the experience and historic knowledge may be receiving redundancy packages. How can the government ensure continuity of services to the people of England? ‘Localism’, the coalition will argue, will be the answer. In other words, central government bought us back from the brink in terms of the deficit but under ‘Big Society’ it was always going to be up to localities to decide what to do in response – to make it all work. Without this blueprint of what we are moving to, many predict we will soon arrive at a prolonged period of disjointed activity at most levels of government. This will be marked by inaction and navel gazing as some organisations and localities try to make sense of it all. This will result in inactivity and stagnation, but even this may be preferable to others’ knee jerk reactions causing medium and longer term damage to the service delivery chains across the main government service areas; leading to inconsistent and, in some cases, opposing models of providing services.

So, that’s part of the puzzle – creating and articulating a plan – but even when defined, what of the costs of getting us to the new model? The reality is that change in itself costs money; closing or merging quangos, downsizing organisations and departments, could well be more costly than the savings. The closure of the nine regional development agencies could cost as much as £1.5billion in pension payments; getting rid of the Audit Commission will cost something in the order of £490million in payouts and liabilities; and the Crown Prosecution Service has indicated that its merger with another body will cost around £40million. If the savings are there, then great; but let’s make sure that we know what they are and what the costs of reaching this utopia will be; there should be no excuse for a lack of detailed analysis or planning, a public scrutiny of costs versus benefits, cost savings versus the costs of transformation itself.

Even in the private sector we have seen this time and time again. We often hear of cost savings through consolidation and reorganisation – yet all too often the finance it takes to implement this scale of change is under-estimated. In the private sector, where accountability is king – over 50 per cent of integrations still fail to achieve the benefits promised. Without a plan or integration expertise, what does the Government expect the results to be in the public sector? Mergers and integrations are complex – the private sector would rarely undertake such initiatives without external support, yet the Government is about to embark on one of the largest change programmes in its history at a time when it’s cutting away the expertise to deliver such a change successfully; by which one could define as driving out the maximum benefits at the lowest cost to the tax payer.

One thing’s for certain, we are yet to see any plans or associated costs that, in a transparent and accountable way, provide the future service models that will support the Big Society challenge. Efficiency savings…….unlikely!

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