Out with “Less is More”?

Last September, in the middle of the political conference season I first wrote
about the possible influence on an incoming Conservative government of the
Canadian “Programme Review” initiative that took out 20% of the public sector
budget. It may be worth just going over the facts here before the hype gets in
the way.
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In the 80’s the Canadian government started to run up a huge budget deficit
that the Canadian people were pretty unconcerned about and that successive
governments had not really discussed. One of the first things that the Canadian
government did, when they finally decided to tackle the deficit in the 90’s, was
engaging in a policy debate. This is just what David Cameron and George
Osborne were on about this week, they are starting the discussion and debate
because, as the Jocylon Bourgon, one of the architects of the Canadian approach
put it “Debate elevates public understanding of policy options and improves the
likelihood of sound public policy decisions.” (“Program Review: The Government
of Canada’s Experience Eliminating the Defcit, 1994-1999 A Canadian Case
Study” http://www.cigionline.org/sites/default/files/The%20Government%20of
%20Canada%20s%20Experience%20Eliminating%20the%20Deficit%201994-
99.pdf). One of the other lessons that Bourgon highlights is that this debate
must be “tempered by evidence. This study found no indication that the
Government of Canada took account of the actions of other countries. As a
result, Canada did not change its policy course for ten years.”
So, where does that leave us today in the UK? Well, on the 8th June 2010 in the
Queen’s Speech Economy Debate the Chancellor’s speech (http://www.hm-
treasury.gov.uk/speech_chx_080610.htm), contained the passage:
“(under the Ancient Regime) The Treasury told departments what they were
getting and precisely what they should do with the money. No room for
innovation, no acknowledgement that some of the best ideas for doing things
differently might come from the front line and not from the centre. And the
result of this top-down, centre-knows-best approach? Falling public sector
productivity and the largest budget deficit in our history. Less for more.
We cannot afford to continue in that direction. Instead we need to look to
Canada and their experience in the 1990s when they too faced a massive budget
deficit. They brought together the best brains both inside and outside
government to carry out a fundamental reassessment of the role of the state.
They asked probing questions about every part of government spending. They
engaged the public in the choices that had to be made. And they took the whole
country with them. This Government will do the same.”
In other words, we will follow the Canadian example, which has proved it works
– at least in the Canadian context.
What the Canadian Government did was to review all its programmes in order to
make sure they delivered what government should deliver. Ministers were made
responsible for delivering the policy in their departments. Tellingly, departments
were not given targets because: the centre had no way of knowing what was
reasonable, second they did not want departments to just cut to the target and
stop there, and; thirdly - and in my view most importantly - they felt targets
would produce cuts not alignment to the policy.
At the core of the process were six questions:
1. Does the programme or activity continue to serve a public interest?
2. Is there a legitimate and necessary role for government in this
programme area or activity?
3. Is the current role of the federal government appropriate or is the
programme a candidate for realignment with the provinces?
4. What activities or programmes should, or could, be transferred in whole or
in part to the private or voluntary sector?
5. If the programme or activity continues, how could its efficiency be
improved?
6. Is the resultant package of programmes and activities affordable within
the fiscal restraint? If not, what programmes or activities should be
abandoned?
Departments looked at what they did and kept addressing these six questions till
they were sure they had made sufficient savings. So engrained did the questions
become that they were used for years afterwards to assess departments’
proposals for reallocation or for funding new initiatives.

In the Queen’s Speech Debate, this week the Chancellor outlined our
government’s version of “Programme Review”. Saying “Each Secretary of State
will appoint a Minister with specific responsibility for driving value for money
across their department.” “... we will embed strong financial discipline at all
levels of government, by placing an obligation on public servants to manage
taxpayers’ money wisely and by strengthening the role of the departmental
Finance Director.”

And his version of the questions are:

1. Is the activity essential to meet Government priorities?
2. Does the Government need to fund this activity?
3. Does the activity provide substantial economic value?
4. Can the activity be targeted to those most in need?
5. How can the activity be provided at lower cost?
6. How can the activity be provided more effectively?
7. Can the activity be provided by a non-state provider or by citizens, wholly
or in partnership?
Interestingly, the Chancellor says that “Departments will be asked to reduce
administrative spending in central Whitehall and quangos by at least a third.”
Which, is different from the Canadian view that, as they did not know what the
potential savings are in departments, they would not set targets.
Bourgon said that the success of this approach in Canada was down to the open
way it was approached, rather than a closed budgetary round. “The purpose of
the exercise is to reconcile fiscal capacity with demands for funding, including
funding for new government priorities. Eliminating a sizable deficit involves a
realignment of the role of government in society. As such, it requires a more
open and inclusive approach, one that engages the “whole of government.”
In last September’s conference speech George Osboune, the then Shadow
Chancellor, said “we are in this together”. This week, as the Chancellor, he looks
like he is actually going to follow through on his promises.