Cutting in the right place isn't as easy as it sounds

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Many years ago, when I was working as a Systems Analyst designing computer systems, I ended up talking to an administrator in one department and looking at all the information she collected and collated into reports. One report was particularly complex, and was going to pose problems in ensuring that all the data was available in the right place and format to produce it; as things stood it was taking her a week or so every month to locate and compile the information. I asked what happened to the report when she had produced it and she pointed to the cabinet where it was filed. In response to the follow up question about who looked at it afterwards, the reply I got was along the lines of “No-one. But the Director asked for it once a few years ago and we didn’t have it. So now we make sure we’ve always got it.”

It's a small example of the way in which large organisations can accumulate tasks and activities which serve little purpose, but the people performing them don’t have the authority to stop them, and those who do have the authority usually don’t even know they’re happening. And it’s one of the reasons why there is almost always scope, in any large organisation, to eliminate certain activities (and the people performing them) with zero impact on the overall performance. So when someone – like for example, the Chancellor – claims that there are too many people in the civil service and that the number can be easily reduced, part of my reaction is to think that she’s probably right. In principle. What she does not (and cannot) know, however, is how many are surplus to requirements and which ones they are. One of the consequences of that is that an arbitrarily imposed top-down target almost invariably ends up removing at least some of the ‘wrong’ people, whilst those busily engaged in preparing obscure reports ‘just in case’ carry on regardless.

The ‘savings’ aren’t easy to quantify either, and depend at least partly on the method used to identify those who will get the chop. If the reduction is achieved by removing some of the oldest people, then in a hierarchical organisation like the civil service they may well turn out to be both the most senior and the most highly-paid, for whom a redundancy package and early retirement may look attractive. And since both the redundancy payments and the pensions come out of different pots, the ‘savings’ can appear to be quite high. But whatever the Chancellor may say about targeting ‘back office’ functions rather than front line operations, that isn’t the way arbitrary targets work out in practice, and the total savings at a macro level may well be considerably less than they appear looking at a single budget line.

In essence, her thinking doesn’t seem to be that different from that of Musk, even if not so scattergun an approach or so deep a level of cuts. But both of them start from the assumption that public spending adds no value, and is an ‘overhead’ on the rest of the economy. The US administration is even thinking in terms of redefining GDP itself to exclude government expenditure, which is a somewhat drastic approach. It's neo-liberal economic claptrap, of course. The public sector contributes a great deal to the well-being of citizens. Once upon a time, a Labour government would have seen that as a good thing.