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Newsroom & speeches
18 October 2006
I am delighted to be here today. This is one of the largest conferences focusing on public sector reform in the UK, and I have already been able to see the diversity of suppliers, products and services in the exhibition. This is a unique event – and for me, as Chief Secretary to the Treasury, it comes at a unique time.
We are in the foothills of the Comprehensive Spending Review. It is going to be a tough challenge. Efficiency will need to run right through it if we are to be successful. That imperative is creating a real dynamic for reform, for the transformation of public services. These are opportunities which are within reach and which we are determined to grasp.
It is important to be clear about the fiscal constraints over the next few years. They will be much tighter than in the last few. The rate of growth of public spending is going to be much lower. Our task is to continue to improve public services without the rise in public spending which we have delivered over the last few years. That places a very high premium on efficiency, and on leveraging our investment in technology to realise greater benefits.
I can confirm today that we are continuing to make good progress towards the Gershon targets, with £9.8 billion of annual efficiency gains reported by Departments after year 1 of the three year programme at the end of March, against the overall target of £21.5 billion. We’ve also realised workforce reductions of just over 45,500 against the target of 84,000 by 2008 – with almost 9,300 of those reallocated to frontline roles – as well as some 7,800 posts relocated out of London and the South East.
We will provide a full, further update in the Pre Budget Report. I am confident that departments and local authorities have achieved additional gains over the last few months, which we are currently verifying and validating.
Our work on the Comprehensive Spending Review, culminating next year, will build on this. We have identified scope to deliver savings across departments of 2.5% a year over the CSR period. Having frozen administration budgets over the current Spending Review period, we will go further over the next period with a nominal reduction in those budgets.
I have two examples that illustrate the kind of gains we are seeing. First, an improvement on productive time. Ambulance trusts have employed over 800 Emergency Care Practitioners to treat emergency patients in-situ, providing more immediate care for them and reducing the need for patients to visit Accident & Emergency. The result is a saving of over £15 million this year.
Second, is an example of improvements in transactional services. The Pensions Service has streamlined its call centres and worked with local authorities so that pensioners can claim three key benefits – pension
credit, housing benefit and council tax benefit – in a single phone call, whereas previously they had to make separate applications to the Pensions Service and the local Council. It’s a much better service and its realising substantial efficiency savings.
I could talk also about procurement, where savings have already built up to more than £3.7 billion – but I will leave that to John, who has led this effort from the Office of Government Commerce.
Efficiency sometimes requires tough choices, but it is the friend of public service. We have to be able to give taxpayers confidence that the resources they are contributing to fund public services are being used to the best possible effect. Only in that way will we able to win the argument for the resources which enable strong, high quality public services. We have been winning that argument, and a strong record on efficiency will allow us to continue to do so. This is not efficiency for the sake of it. It is efficiency with a purpose: to improve public services across the country.
Alongside my responsibility for public spending, I chair the Cabinet sub-committee on electronic Government. That means I have a ministerial interest, as well as a longstanding personal interest, in using technology to improve public services and secure best value for taxpayers.
Last November, we published the Transformational Government strategy, setting out how we will do that. Sir David Varney is undertaking a review of service transformation, and his report will be finished in the next few weeks.
He is looking at a wide range of issues, including how to make better use of online provision to make services more accessible round the clock. He is examining how we can learn from call centre best practice in the private sector to improve the quality of service provided by call centres, simplify the processes for call handling, improve support to front-line staff and rationalise the number of call centres.
The prize is making the channels through which services are delivered more responsive to citizens’ and businesses’ needs. That is vital.
We have already seen important gains – for example in the JobCentre Plus Internet Job Bank, which is the most used job search service in the UK, with details of 400,000 job vacancies and delivering over 4 million job searches a week. With DirectGov and the BusinessLink websites, as one-stop access to a range of government services. With online self assessment for income tax, online booking of driving tests and a growing number of successful examples.
But we need to go further. David Varney has pointed to Service Canada as showing what can be done. It has a ‘whole Government’ approach to eService delivery, a ruthless focus on what citizens actually want, rigorous measurement to track progress, and a cluster of impressive online services – costing less to deliver than the old ways and providing a better quality of service. That must be our ambition too.
Reflecting the reality of modern society, this is about people getting the services they want, rather than we in Government providing what suits us. That is the goal of the transformation we are aiming for.
Our fundamental challenge is to leverage our strengths and position to best effect – not just in government, but across the economy and throughout society. As a leader in education, in technology, in financial services and across a range of creative industries, we are very well placed to succeed.
We need to connect the vision and the innovation exemplified by the internet, with hard and tangible economic benefits. Because productivity growth underpins strong economic performance and sustained increases in living standards, and is critical to seizing the opportunities and meeting the challenges of globalisation. And there is a growing body of evidence that shows how effective use of the internet, and of technology more generally, can contribute powerfully to productivity growth.
A lot of attention has been paid, understandably, to technology-enabled outsourcing of jobs from the UK to India and other developing countries. The impression has been given that globalisation is a problem for employment in the UK. But look at what has happened in financial services, where London’s standing as a world centre has strengthened in the past decade. Net UK exports in financial services have risen from $8 billion to $19 billion, employment has risen to well over a million jobs.
I believe it is vital to make the most of IT in Britain, building on access to world class skills, benefiting from strong competition and an open and flexible market with the best regulation, to allow optimal investment in new technologies. Our policies on skills, competition and regulation must work effectively to drive up productivity.
That’s why, in the last Budget we set out our strategy to promote the long-term strengths of the UK in the global economy, and we are working to strengthen our leadership on inward investment, with an ambitious strategy for marketing the UK. And today the Chancellor is meeting leaders in the financial services industry to discuss strengthening further UK competitiveness in that sector.
What I want to celebrate today is the opportunity that technology has given us – a huge opportunity to use the Internet and communications technologies to transform our economy, to open up trade, to galvanise innovation and encourage enterprise. It will be no surprise to you that in my current work at the Treasury on the Comprehensive Spending Review, as we look ten years ahead, two of the five major challenges are globalisation in the world economy and the increasing pace of technological change – alongside climate change, demographics and continuing world insecurity.
And over the past five years, there has been a transformation in the way we have embraced new technology – both as government and as a society. From a low starting point, Britain has become an international leader. We must strengthen that lead further, and maintain Britain’s position at the leading edge of technological innovation.
Success in this endeavour will present us with big prizes, in productivity gains and real social progress. To improve our services, both their quality and their value for money for taxpayers, we need to embrace technology, not to shy away from it. With a spirit of cooperation, based on a principle of democratic involvement – with partnership between organisations, across borders, around the world – we can be confident of securing better public services with strong public support in every part of the country.
Thank you.
