Public Services: Gershon Review (Hansard, 17 May 2004)

§ The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)
My Lords, in the Budget, we announced that the Government expected the whole public sector to deliver efficiencies of 2.5 per cent a year, over the three years of the 2004 spending review. Since the Budget, departments have worked with Sir Peter Gershon and others to develop efficiency proposals for consideration in the spending review. Agreed efficiency programmes will be announced alongside the spending review, and John Oughton, the chief executive of the Office of Government Commerce, has been asked to take overall responsibility for their implementation.

§ Baroness Noakes
My Lords, I thank the Minister for that reply. He will recall that, in his interim report, Sir Peter Gershon identified savings of up to £15 billion. He also said that he would report again on what he thought departments could achieve by 26 April. Will the Minister say what the Office of Government Commerce or Sir Peter Gershon have reported as achievable savings? Will he commit to publishing that report?

§ Lord McIntosh of Haringey
My Lords, Sir Peter Gershon referred to scope for efficiencies; he did not use the words "savings" or "waste" as such. He was referring in particular to savings that come about from improvements in information technology and from investment in skills. As I said in my Answer, the full agreed efficiency programmes will be announced alongside the spending review, not before.

§ Lord St John of Bletso
My Lords, with regard to the Government's target of £20 billion savings over the next three years, how effective has the Government's e-government programme been in providing greater efficiencies? What assistance has been given to the Office of the e-Envoy to meet those ends?

§ Lord McIntosh of Haringey
My Lords, the Office of the e-Envoy has played a great part in securing the savings that have already been made, to which, I think, the noble Lord, Lord St John of Bletso, was referring. In particular, the Office of Government Commerce has responsibility for taking forward issues that are still important, such as procurement, in information technology.

§ Lord Newby
My Lords, can the Minister confirm recent reports that, as part of the Gershon process, the Government are considering outsourcing certain functions of government to the Indian subcontinent?

§ Lord McIntosh of Haringey
My Lords, I am not conscious of that. Of course, consideration is always given to outsourcing, but I am not conscious of any particular proposal relating to the Indian subcontinent. I shall write to the noble Lord, Lord Newby, on that point, if I learn anything more.

§ Lord Roberts of Conwy
My Lords, what part does improved productivity in the public services play in achieving the savings?

§ Lord McIntosh of Haringey
My Lords, if we had a useful definition of productivity in the public service, it would, no doubt, play an important part. As the noble Lord knows from the discussions that we had on the matter last week, existing definitions of productivity in the public sector are not only wrong but perversely wrong and lead in the wrong direction. That is why the National Statistician has appointed Sir Tony Atkinson to consider the matter. When he reports, we can perhaps revisit the issue.

§ Lord Hylton
My Lords, can the noble Lord the Deputy Chief Whip tell the House how and why the 516 headquarters staff of the Home Office have increased so much that they can no longer fit into the new headquarters in Marsham Street?

§ Lord McIntosh of Haringey
My Lords, I shall ask the Deputy Chief Whip to answer that question when he is asked about the subject. It sounds to me as if there was a mistake in the provision, rather than a mistake in the staffing of the Home Office.

§ Baroness Oppenheim-Barnes
My Lords, without wishing to sound too disingenuous about the difference between savings and efficiency, can the Minister say how the Government became so inefficient as to create such scope for improvement in efficiency, as a result of the report?

§ Lord McIntosh of Haringey
My Lords, I thought that I had addressed that issue. The Office of Government Commerce has saved or produced efficiencies of something like £1.6 billion, since it was established in 2000. Some of that is a reduction in inefficiency, but a substantial part—perhaps the majority—is due to improvements in procurement. The improvements in procurement are an ongoing process that, I think, will never reach an end or achieve perfection.

§ Lord Howell of Guildford
My Lords, does the noble Lord agree that one area of the public sector in which we have a useful definition is inflation? It appears that the public sector inflation rate is 7 per cent, which is miles higher than the overall inflation rate or the inflation rate in the private sector. Can the Minister explain how that is arrived at? What steps can be taken to curb that dangerous trend?

§ Lord McIntosh of Haringey
My Lords, I certainly cannot confirm those figures. The so-called figures for public sector inflation have exactly the same defects as the so-called definitions of public sector productivity to which the noble Lord, Lord Roberts of Conwy, referred. They are nonsense. There is nothing in them, and there is nothing to be learnt from them.