Telling the truth about SME life today

16-point business plan: How to cut Britain’s debts

The great unspoken in this election campaign is the true level of likely spending cuts and tax rises that Britain’s next government will have to implement. The BBC’s economics editor Stephanie Flanders calls it “a conspiracy of silence”.

Whichever party holds power, says IFS director-general Robert Chote, they must find titanic savings in public-sector spending – Labour (£47bn); Lib-Dems (£51bn); Conservatives (£57bn – bigger because they’re promising tax cuts).

Chote’s elegant analysis is that: “Given that this fiscal repair job is likely to be the major domestic policy challenge for the next government, it is striking how reticent all three main UK parties have been in explaining how they would confront the task.”

We want your views on how the UK must confront this awesome task. To start you off, here’s the proposal of one former mid-ranking civil servant, who ran the finances for a large public body.

Start with the principle that salaries are 60-70 per cent of total cost. All that the rest of government does is spend. After ten years of being awash with money, they all believe that money grows on trees. Think MPs and expenses.

“On the revenue side, HMRC morale and infrastructure is broken. They are probably missing £30bn or more of take because they cannot keep up. Their systems are so shoe-string now that they slip further and further behind.

1. Market testing the salaries and pension contributions

Some 5m public servants at an average £25,000 = £125bn per annum labour cost. As has been done elsewhere, say five per cent reduction for those under £20,000 and ten per cent reduction for all others to save costs. Potential saving: up to £15bn p.a. 

2. Move to defined contribution, not defined benefit pension schemes

No immediate savings on present un-funded schemes, but longer-term pay-back as future payments will decrease and be more certain.

3. Move to open source instead of Microsoft

Stop TV advertising and press advertising completely. Spend the money on re-training the people you let go to cope with a new life. Saving: £2bn.

4. Move from IBM to SMEs for all information technology

Big databases are beginning to crack. Consider regionalising HMRC and breaking it up. Small companies can do work for less and will do it better. Saving £5bn.

5. Moving from centralised databases to vendor relationship management

Stop the NHS central IT database project. Re-build HMRC from scratch with a different name. It is not fit for purpose. Use technology sensibly rahther than letting big IT vendors bamboozle and beguile ministers and senior civil servants. Savings £2bn.

6. Introduce business cases for investment over £25,000 on a standard template

The template to grow longer and deeper for amounts in excess of £25k. Improve project management governance, and be prepared to say No. Defer all projects with no business case. Savings £10bn.

7. Review

Civil servants, local authority legal people, lawyers, citizens and SMEs review legislation of last ten years. Repeal all the unnecessary laws. No new legislation for a year. Make Friday the “un-do the bad legislation day.”

8. Repeal the red tape of the last 25 years

Re-consider the audit and scrutiny agenda. English hospitals get 150 different audit visits a year. Is there a risk this harms performance We could do fewer.

9. No EU gold-plating

Savings for last three 6bn.

10. Re-define the nature of the relationship between citizen and state

Whitehall departments have not changed in 150 years. We now have the internet. As a citizen, I have an NI number, a CHI number (for NHS), a unique tax reference number etc etc. When I die, I still have to tell 40 government agencies. Housing benefit is still a 40-page form. Sir David Varney wrote that this was unacceptable in 2005. Result: nothing. Savings £15bn.

11. Procurement

Agile procurement for projects, software and quicker iteration.

12. Outsource public service design 

Outsource to citizens, designers and other technical or systems experts.Do not allow civil servants to procure or commission anything for a year without the finance director’s approval. If they need something, where can they buy it” Is there already a procurement framework in place elsewhere The citizen will tell government what they need. Stop all government procurement for a year while the citizen and SMEs tell them what is of value or not.

13. Make the government bodies buy the keenest contract

At the moment there are probably 1,500 heads of procurement for 1,500 public bodies. All should be able to compare prices achieved across departments, using simple tables. Think Asda/Ryanair price comparison tables. There has to be more transparency. Possible savings: £10-15bn.

14. Cut UK government travel by a third

This would save £2bn. There are a lot of conferences of questionable value as well.

15. Re-distribution

Accelerate the re-distribution of jobs out of London, and reduction in office occupation. This has been worked on for ten years but without conviction.

16. Consider the benefits and costs of all public bodies

Non-departmental public bodies are legal entities with all the attendant costs. There are also thousands of advisory bodies that have been created in the last ten years with questionable benefit. Possible savings £1bn.


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