The KPMG “Payment for Success 2010″ report, advises that a radical programme of empowerment for customers and  suppliers incl. rights-to-bid for any other organisations services, management buy-outs, freedom of budget management will provide enormous savings. This might give an insight into how the Westminster Govt will try to introduce a market economy into public services.

While this is perhaps too radical - or politically motivated - a step it is interesting how they quote reports showing massive savings from Business Process Improvements, for example the Lean approach. To make this work requires realigning not only the business processes, but how budgets are handled as well.

It argues that most UK public service providers currently lack the incentive and autonomy to realise the huge productivity improvements that are possible. The paper entitled “Payment for Success  – How to shift power from Whitehall to public service customers”  identifies seven critical issues in the way public services in the UK are currently provided and goes on to suggest how to change the system by incentivising providers to offer public services in a more cost effective and efficient manner – Neil Rimmer, IDeA

The scale of these variations in unit costs is supported by many efficiency studies done across government. For example, the Government’s Operational Efficiency Programme review in 2009 consistently pointed to potential savings of up to 30% – based on benchmark comparisons. It reported that frontline lean programmes had shown in pilots that they could reduce costs by 30% or more, whilst protecting customer service. For example, the NAO has recently said that DWP can reduce costs by 15-30% via its lean programme. Similar figures have been identified by pilots in justice, defence and HMRC. The OEP reports that Government uses 31% more office space per head than good practice and that public sector case studies show the potential for 30% reductions in back office costs. Given that the Gershon review 5 years earlier identified similar potential savings, there is clearly a problem about realising such potential savings.

KPMG-Payment-for-Success-Report-2010

Tags: bpr, budget, outcome, outcome budgeting, savings