The announcement on cuts was as bad as expected, with massive reductions across the public sector and pre-election pledges for international development and health, amongst others, honoured.
People keep asking me about likely consequences of budget cuts, the danger of losing good staff and whether and how IT will deliver. So here goes..
In our response to Tuesday’s emergency budget, we expressed our disappointment that the Chancellor missed the opportunity to identify the multiplier effect of IT investment, especially in the public sector.
Socitm response to the Budget 22nd June 2010
It was pretty clear to everyone beforehand, that the first budget of the new Coalition Government was going to be a difficult one - difficult for them to write given the austerity theme, and difficult for the rest of us in its impact.
Socitm was looking for specifics about the importance of technology, since technology lies at the heart of :
If IT is seen as just a support service, then we will miss huge opportunities. Arguable, technology is the only 'silver bullet' in the armoury of the new government, and given many of the new ministerial team are IT-savvy, I was optimistic.
In practice, the budget does not go far enough in recognising this and no doubt our expectations were too much. There was an opportunity for bold statements about the multiplier effect of IT investment, especially in the public sector. It was a time to talk about new models of public/private collaboration using IT to drive public sector productivity and lower costs. It was a time to help the technology industry in the UK to modernise and see beyond the lucrative public sector deals on which some have relied in the past.
Some areas were well-trailed before the budget - such as the council tax and public sector pay freezes and other tax changes. Some cuts will not be unwelcome in the public sector. Cutting regulation, the 'performance measurement' industry and the number of quangos we have to deal with, for example. Austerity drives creativity and innovation, and we have seen this over the years in local government where funding has always been tighter than elsewhere. It is now widely accepted that some of the most effective, efficient and innovative applications of IT can be found in councils across the country.
One concern is about the effect of sudden changes. Cuts to grants alone have a ripple effect across the public sector and suppliers, and the cost of resulting realignments can be significant. Also, whilst reducing the number of quangos who have over time become involved in public administration is generally welcome, something will need to fill the vacuum they leave behind them (albeit a small one in some cases!).
There is another key to all this (besides the technology) and that is in leaving local public services with the freedom to decide how change should be managed. In the past, successive governments have set up national policies and programmes and then prescribed how the new measures need to be implemented, applying layers of regulation, audit and performance management to ensure this happens.
The impact of public sector cuts on our communities can be mitigated by supporting local public services to change. Welfare measures announced in the budget are a key component of the proposals for reducing the deficit. These will require focused action to reform public services, to drive collaboration and encourage innovation.
Opportunities created by a public sector network, cloud computing, shared services and other infrastructure developments will need to be exploited, and these represent a significant challenge to the IT industry and to those working in IT in government.
This reform is about automation, self service and a more flexible and efficient workforce. Initiatives need to be scaled back, overheads reduced and assets freed up. A stronger commercial drive is also needed to increase income and create better value arrangements with the private sector. Collaboration demands that public services in any given locality share information, assets and resources to deliver more citizen-focused services. At the same time, citizens and businesses can interact more directly in how local services are shaped and personalised, achieving better targeting and reduced costs.
The budget proposals to abandon the 'broadband tax on landlines' are sensible, but do not address the lack of access which exists in some areas which will be a barrier to directly delivered modern public services. Indeed, the proposals appear to fall short of a commitment to achieving universal access - the words used are "working towards" - and their economic feasibility lies untested.
So if the budget is to be successful - that is, if it delivers savings in a way which are seen as necessary and acceptable by the public - then there needs to be a new era of trust between local and central government in how front line services are protected whilst dramatically falling unit costs are delivered. This in turn will rely heavily on technology to transform what we do and how we do it.
In the aftermath of the £6bn cuts package, including the freeze on all new IT expenditure over £1m, you, like me, may be finding it difficult to think beyond the immediate implications.
Well, with the cuts announced it’s all over bar the shouting...if only that were true! It’s always risky to say too much too early or to do too much too soon in the face of quickly implemented large scale change, although that’s a lesson neither the press
It is interesting to read some of the press, including the 'technical' press, some of whom have been at the forefront of criticising many of the large IT systems that are now about to be 'scrapped'. In fact I seem to remember some of them have called for this type of action in the past - although not specifically on economic grounds. With Labour still maintaining that spending is the way out of our debt problem and the coalition having reached a negotiated conclusion that immediate and radical savings (cuts) are the only way to start it seems that only time will tell...quite risky, but what can you do?
For most of us (well the non economists) there is something counter intuitive about spending your way out of debt - certainly my credit card provider would not agree with the theory, although the way they still try to push credit on me you'd be forgiven for thinking they have had a change of heart! For those of us who are trying to run commercial organisations at this or any other time we know that the 'spend' message is a little more subtle than it first appears. If the spending is the type of spending that creates opportunities and jobs and increased revenue then it has genuine merit. However, if the spending is focussed in areas where nothing new is actually produced then it is never going to dent the debt. From a commercial company perspective the answer would seem to require two seemingly opposite but actually complementary areas of activity. The first is the identification of savings and this may need to be radical and tough but this surely must operate with a parallel policy of investment in areas that are designed to create opportunity and generate income. Even the most basic logic dictates that cuts alone will ultimately fail as a strategy.
Another area in the programme of cuts is that of renegotiating contracts with private sector contractors. Again, hardly a strategy that gives a high confidence factor in terms of its likely success. That is, unless the government(s) acknowledges that significant contributory factors have been very poor government procurement processes (all flavours of government) often combined with programmes that are too large, overly complex and poorly specified.
Anyway, as they are saying, 'the David will be in the detail' so I'm sure we all await with interest the parallel investment strategy, the growth plans and the 'hope factor'. Whilst cuts are hard to live with they are relatively easy for the politicians to target whereas the investment and growth strategy will be far more comfortable to live with but it's much harder work for the politico's to develop. Let's hope they learn very quickly!
Lots of press coverage has used the word 'draconian' with regard to the announcements and a real worry with hastily implemented 'draconian' measures is the high probability of unintended, but equally 'draconian' consequences. The coalition needs to learn from the last crowd who got the implementation of 'fag packet policy' down to a fine art, the consequences of which will continue to play out for some while to come.
A final word about where IT fits into all of this. There seems to be a great danger that both baby and bathwater are about to be jettisoned on the basis that because the hoped for efficiencies appear not to have been delivered under the previous administration it is somehow the fault of the technology itself! I believe nothing could be further from the truth. The effective implementation and running of the correct technologies is still the business critical bedrock of any real efficiency, transformation, service delivery improvement and the delivery of key business objectives. Just because the IT industry is saying this (well they would wouldn't they) doesn't mean it isn't true. It is certainly something the Society wholeheartedly endorses.
