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Postcards from Scotland

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Posted 19/11/2010

I have earned my worry lines and crow feet through keeping the spark of caring and hope alive through a whole series of business and public sector spending lurches. It is that experience that informs the following observations and a sense of curiosity that I would like your help with.

Experience tells me that if you want to save money you stop doing something, carry out other activities more efficiently, get process sorted so that you get your work right first time and most important of all have a strong view on the forward march. That is to say - be clear on how you want the future to look and on where you will create future opportunities and orchestrate your resources accordingly.
 
By a country mile, the worst examples of the waste of public money where I have had a ring side seat and have watched tear inducing wastage have involved facile reorganisation of public services. I will illustrate but before so doing let me ask you to post me, through this blog, your own worst examples, with some critical details, of the waste of public money. Why I am particularly interested is not that I am a masochist who likes to dwell in awfulness, it is that I am aghast that in the media and political commentary on cutting expenditure and restructuring the public services, I have not picked up a whisper about the very waste of reorganisation.
 
Example one, careers services largely to children in the process of leaving school was for years provided as a local authority service. It was determined that they would be better as stand alone, charitable companies. After 7 years it was realised that the quality of service varied so much that they should be brought together. So, the 70 odd companies and over a 1000 people into were merged into Scottish Enterprise to create Careers Scotland. That is where I came onto the scene to orchestrate the process.
 
As an idea it was sound enough but the cost implications when the rubber hit the road had not been thought through. By law people doing the same job in the same organisation need to get the same pay and rations – pay moves up, not down. As there were not enough jobs for everyone a costly redundancy exercise followed. A new IT system had to be created for the new organisation. And most eye watering of all public money had to be shovelled into meeting deficit/equalisation payments in the new pension provider pot.
 
Improvements were made to the service, no doubt. But the crunch, five years later was the decision that Career Scotland did not fit into Scottish Enterprise and that it should now become part of Skills Development Scotland. What IT, pension and redundancy and other costs were incurred, I do not know. By that time I had moved on, but I am sure that those costs were considerable. As each of these moves and transfers have taken place what costs were incurred and what was the gain to the public or recipients of the service? My judgement backed by some arithmetic tells me that the multiple costs did not result in matching gains in output.
 
Example two: I was part about 10 years ago, of a small group of senior people that tried to design and engineer the transfer of Glasgow City Housing stock to a new housing manager, the Glasgow Housing Association and in the process the City’s vast housing related debt, of small third world country proportions, would be written off and the new association would be free to borrow on the strength of its assets and income flows. I can not do justice to the complexities of what followed. But a decade down the road it would be interesting (or heart breaking?) to see the balance sheet between the costs of write-offs and other costs against the gains that have been achieved for the citizens of Glasgow who live in public housing schemes?
 
Example three: a small example but a good parable in its own right. For 25 years the Scottish Consumer Council, a company limited by guarantee had won an enviable record as a champion of consumer rights. Three years ago, to strengthen its position, new powers were given to the organisation to investigate private companies and public bodies. In so doing a new UK body, a quango, was established with Consumer Focus Scotland as part of the family. At this time I joined the board.
 
New leases were entered into, new IT and staffing costs met as the new structure was designed and became operational. In October of this year the Coalition Government’s bonfire of the quangos put a squib under Consumer Focus and decided it should be no more. Its work was to be not stopped but transferred into the Citizen’s Advice Bureau. Help ma bob.
 
An axe can be wielded with skill and to good effect and money does need to come out the system. What I would like to collect from you are short examples of where reorganisation has itself been the cause of the problem and the contributor to cost out of all proportion to the gains.

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