Bundred: protecting key budgets 'a mistake'

1 July, 2009 | By Dan Drillsma-Milgrom

The chief executive of the government’s public services watchdog has slammed Labour and Tory commitments to protect budgets for health and education as a “big mistake”.

Speaking at a fringe event at the Local Government Association’s annual conference, the Audit Commission’s Steve Bundred said schools and the NHS were inefficient and should be subject to the same funding constraints as the rest of the public sector.

“Both political parties have pledged that whatever happens they will protect health and education. I think that’s a big mistake,” he said.

“Health and education are the two services that have been most generously funded over the past decade but they are among the most inefficient services.

Speaking to LGC after the event organised by the New Local Government Network, Mr Bundred said any savings should not be limited to back office services but instead taken from the frontline.

“It would seem perverse to assume that there is no scope for greater efficiencies in those services or that any scope would be limited to the back office,” he said.

“We have seen that there are huge variations in unit costs between comparable bodies at the front line and those services should not be exempt from the demand for greater savings.”

The commission has published a report claiming schools were wasting £1bn each year. LGC report

The event was attended by housing minister John Healey and Mr Bundred explicitly stated he was glad Mr Healey was present to hear his comments.

Mr Healey refused to be drawn on where cuts would have to be made but signalled his support for allowing local councils a greater say over the provision of public services so they could “make those kind of judgments”.

Readers' comments (3)

Anonymous | 1-Jul-2009 10:48 am
Although I believe the Audit Commission could downsize by 40% without serious impact I must support Steve Bundred's argument that Health and Education should be last on the list for protection rather than first. Schools have billions in reserves, they retain teachers and even some heads who should have been removed 10 years ago. Health has been restructured so many times in the past 30 years that no-one understands who is responsible for what. And we need to add in another of the most protected organisations in universe - the Police.
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Anonymous | 1-Jul-2009 12:10 pm
Health and Education might be inefficient.

Although the Audit Commission wouldn't know.

They are becoming more vocal because the hundreds of millions it costs to run the Audit Commission per annum has not only led to no improvement, it has actively damaged services. They are aware that they are fighting for their right to exist, and therefore have to shout loud and hard.

They have INCREASED costs in the organisations that they inspect and then make recommendations that drive waste further into the system.
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Anonymous | 1-Jul-2009 2:16 pm
Employee costs are very significant in Education and the NHS as well as other public services. In the labour market place at the moment, an accountant would find that potential job opportunities - where they exist - are offering salaries reduced by around 25% compared to last year. In Education, the NHS and some other areas of public services, salary expectations have not fitted into this profile. One way to achieve this flexility must be to move to personal pay - staff will do well in the good times and in the bad times realism will be achieved.

But things could be worse than this. If tax levels do not recover then rationalisation and reconfiguration of public services must occur. That is they get smaller in total and practices and methods using lean management are used to significantly improve efficiency and economy in ways which have not been tried so far because everyone is uncomfortable with the idea.

So Steve Bundred is right. Yet in what he says he reveals the fundamental weakness in the Audit Commission's regulatory approach. Once again the focus in what he says is on performance indicators and comparison between bodies. That is fine, it may show up some outliers, but to really bring about change processes and the people who work within them need to be the focus of attention. That means applying methods like Lean Six Sigma - much as Toyota do.

Time for big and difficult change.
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