Not for the first time, a British politician has turned, without acknowledgement, to the good old US of A for an idea. In his speech to this year’s Labour party conference shadow chancellor Ed Balls said:

because we all know there can be no post-election spending spree, in our first year in government we will hold a zero-based spending review that will look at every pound spent by government: carefully looking at what the Government can and cannot afford, rooting out waste and boosting productivity.

My advice, Ed, is don’t do it. Sorry, I’ll put that more cogently. DON’T DO IT.

At its simplest, zero-based budgeting (ZBB) takes every line of a budget, asks what would be the consequences if it did not exist, and seeks a justification for any spend beyond that. If you’re not familiar with ZBB, Wikipedia actually has quite a good article on it.

ZBB has been around for decades. It started in the private sector, where it seems to have been used to examine relatively limited support functions in companies.

Once the academics and politicians got hold of it, however, it became a major endeavour in the public sector.

As a public sector manager, I experienced the joys of ZBB myself with the following results

  • The whole thing became a major industry. I and my colleagues spent endless, fruitless hours trying to align detailed budgets with programmes, objectives and policies
  • Neither the data for ZBB nor the software to manipulate it was available
  • The nature of public sector ‘budget lines’ meant one manager was forced to justify spend on a few thousand pounds, another on a million pounds. Both budgets received equal treatment in analysis
  • On the well-known principle that turkeys do not vote for Christmas, no manager came forward with any proposal significantly different from the position that current levels of spend on their budgets were absolutely essential
  • When the politicians got hold of ZBB data to help them make decisions they found it virtually useless and the next year’s budgets for that organisation were hardly different from the last

ZBB was never used again in that organisation, although every now and then proponents who hadn’t sweated blood over the previous exercise had to be taken quietly on one side to be told the truth about it.

I have no doubt any advocates of ZBB will be sharpening their keyboards even now to rebut my experience. My challenge to them is two-fold.

First, read the 1997 US General Accounting Office (GAO) report called Performance Budgeting. Past Initiatives Offer Insights for GPRA Implementation and its devastating insight on ZBB.

Second, show me where and how ZBB is used successfully in the public sector in the UK. Not just rumours that someone in Ontario or Western Australia has found it helpful, but actual documented proof about current successful use here.  I’ll eat my (virtual) hat if you can.

Here’s my prediction of what will happen if Balls holds his zero-based spending review if and when he’s chancellor in a future Labour government

  • There will be major upheaval in the civil service to support the exercise, distracting them from more pressing tasks
  • It will cost a lot, more than will be admitted
  • Consultants (oh yes, them) will probably be bought in to complete the exercise
  • Balls will have even fewer friends amongst his ministerial colleagues, who will all be rooting for their department in the review
  • The whole thing will make very little difference, if any, to future government spend and it will be quietly dropped in the next year.

My helpful tip for Ed would be to check out the GAO report I mention above. You don’t even have to go to Appendix V on ZBB (pp. 46-51). Page 6 has all you need to know:

The implicit presumptions of…ZBB — that systematic analysis of options could substitute for political judgment — ultimately proved unsustainable.

Enjoy!

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In my recent post on How to spot dodgy research about the public sector I mentioned publicity about potential procurement savings published by a company called Opera Solutions (OS) “to which I shall probably return”.  Well this is it – the return.

I’m uncharacteristically cross with myself because I’ve established a modest track record in commenting on stuff like this (see the footnote to the post mentioned above) but this is one I missed first time round.  Still, a reprise of what others have already said and a few additional comments are not out of order.

The first hit today on Google about this so-called “research” takes you to a press notice by the UK government department of communities and local government (DCLG) back on 17 June.  Headlined Shining a light on council spending could save up to £450 per household it’s worth quoting

…cutting edge analysis of council spending data by procurement experts Opera Solutions has revealed that greater transparency coupled with improved analysis is the key to unlocking massive savings by driving down costs…The report argues that Local Government, by adopting new processes and making better use of spending analysis, could replicate these kind of savings across a wide range of back office functions, with no impact on quality of service and reduce spending by up to £10 billion a year. 

And secretary of state Eric Pickles added approvingly

“Let there be no doubt whatsoever – today’s figures show that there is significant scope for councils to make taxpayers’ money work even harder. We’ve always said that sunlight is the best disinfectant, and the availability of financial data has helped identify numerous ways that councils can reduce expenditure while offering the same or better services to residents”

The nature of Opera Solutions’ cutting edge analysis was exposed by Ben Goldacre in The Guardian newspaper.  He said

Every now and then, the government will push a report that’s so assinine, and so thin, you have to check it’s not a spoof.

Goldacre went on to explain

The meat of it, the analysis, is presented in a single three-line table. Opera took the recently released local government spending data for three councils, and decided how much it reckoned could be saved by bulk purchasing.

[Opera Solutions] did its estimates on three areas: for energy bills (a £7m spend), and solicitors fees (£6m), it thought councils could save just 10%. The third category – mobile phone bills – were tiny in comparison (just £600,000) but here, and here alone, Opera reckons councils can save 20%, by getting people on better tariffs.

He then did a hatchet job on the whole, my word, sham.  I won’t steal his thunder but click through and read what he says.  It exemplifies precisely the ten infallible signs of dodgy research I posted recently.

Predictably, the Daily Mail had already waded in uncritically to condemn the alleged waste by “clueless councils”.  But others, like the PublicNet web site, acknowledged Opera Solutions’ work wasn’t all it seemed.  They admitted

Publicnet is among a number of media organisations that published this story in good faith.

And on the WhatDoTheyKnow web site you can find a number of items relating to Freedom of Information requests to the DCLG from one Edward Rudolf.  The DCLG seem to be finding excuses to not answer his questions but he has a keenly forensic approach to the subject and you can sense he’s not going to give up.  I don’t know him but more power to his elbow.

I’m not sure what I can add to all this but here are a few tit bits.

  • For a company seeking publicity about their work, Opera Solutions are remarkably coy about letting people see their “research”.  On their web site you’ll find you have to give your contact details to access what they optimistically call one of their White Papers.  Ironic in light of  Eric Pickles’ statement that “sunlight is the best disinfectant”.  Somehow Ben Goldacre managed to open up access to the report on the OS web site so despite their coyness you can find the whole six page magnum opus here (but don’t hold your breath).
  • Also of passing interest on the OS web site is their characterisation of this PR-dressed-up-as-research as “Prepared for the Government of the United Kingdom”.  Sounds impressive doesn’t it?  I’ve prepared many things for the Government of the United Kingdom.  They never asked for them and, unlike the OS effort, I doubt if they took any notice of them.  Let’s hope Edward Rudolf’s FOI requests tease out whether this work was commissioned or unsolicited.
  • A general lesson for all of us from this unfinished saga is a reminder of how major parts of the media publish PR guff as news without engaging their brains to analyse the latest press release that suits their prejudices or fills a last minute space.

As I’ve said before, the sadness of this sort of stuff is that mud sticks.  Once again people without full access to the facts will find yet another reason to believe the public sector in general and local government in particular needs a good shaking up.

PS – this doesn’t purport to tell the whole story on this subject.  There is a lot more out there in cyberspace including a critique by local government lawyers of the OS publication, as well as a small admission by them that their claimed savings for local government were “extrapolated” [and some]


“Is this adding cost to your business?”

This is what BBC journalist Dominic Laurie asked Santander UK chief executive Ana Botín on Radio 4 today about her bank’s move to bring back their retail call centres from India to Britain (500 jobs will be created).

The question is a naïve one.  I say the question, not the journalist – they ask these things to get a response, not because they necessarily believe in what the question implies.

It’s naïve because the cost of a call centre (or any other part of a business taken out of context) is no measure of the total cost of serving customers.  Consider the number of contacts to these places that represent failure demand – demand for service arising from something going wrong for the customer rather than right.  Eliminate that demand and you cut the costs of your call centres.

Add the naïve approach on costs to the geographical removal of an integral part of the process of serving customers to a location 1000s of miles away with a different culture and often to an “outsourced” organisation and you can have big problems.

Not surprisingly, Ms Botín cited customer feedback as the main reason to relocate Santander’s retail call centres to the UK.

This blog has recorded numerous examples over the last year or so of bad call/contact centre practice, for example

Luckily, taking customer/citizen contact centres out of the country is not by and large part of the agenda of the public sector in the UK, although the motivation is more often political than an understanding of customer needs.  And that’s not to say we don’t have bad public sector call centres in the UK as our own experience (and some of the examples above) tells us.

Footnote: according to The Independent newspaper today, telecomms company New Call Telecom said it was moving one of its call centres from India to Lancashire.  “New Call Telecom transferred its business to Mumbai three years ago, but increased costs [my emphasis] has prompted it to move to Burnley.”


…but it pours.

If there’s one thing that’s almost as bad as the faux survey carried out by PR people for companies seeking to generate publicity (see my post on Public sector workers unemployable – shock, horror), it’s the research carried out by think tanks seeking, er, to generate publicity.

This last week brings the latest example to knock the public sector, from the Policy Exchange (“David Cameron’s favourite think tank”) – Public and private sector terms, conditions and the issue of fairness.

This effort was widely reported in the media over the weekend.  Google News lists 142 articles so far.

The premise of the research is that

public sector pay is higher and continued to grow faster than private sector pay during 2010 and that significant reforms will need to be made to limit job losses in the public sector and to achieve equity and fairness in the labour market.

As with many of these things the conclusions and the inevitable recommendations (end national strike balloting in the public sector; replace the two-year pay freeze with a paybill freeze; reform public sector pensions) are reached after a cursory trot around a complex series of data sets.

Without spending a lot of time on the detail and seeking the views of those better qualified than me in the field of labour market statistics, I don’t have a snowball’s chance in hell of providing a reasoned critique of this work on the day (as I write) that this came to my attention thanks to the BBC Radio 4 Today programme.

In the meantime, of course, 142 – as we know thanks to Google – mainly UK media outlets have summarised and punted the findings in a mainly uncritical way, with the main countervailing viewpoint coming from the TUC who are just about as objective as the Policy Exchange, but in another direction.

And it’s out there in the public consciousness.  That vague feeling that yet again the public sector has been proven to be (choose your adjectives) bloated, inefficient, out of touch, unsustainable, etc. etc.

It’s a shame because reform, in all sorts of things, is needed in the public sector.

It’s just that a first examination of this particular work doesn’t provide the conclusive evidence that would lead to the particular proposals the Policy Exchange comes up with.

For example

  • Much of the analysis is based on a remuneration premium the authors claim public sector workers enjoy compared with the private sector.  Put simply this is a higher pay rate per hour for similar work
  • The main comparisons are made for 2009 and 2010 when the gap in pay rates between the two sectors is said to have widened for all levels of pay (except interestingly at the highest managerial level where the private sector has the edge)
  • Tucked away towards the end of the publication, and uncommented on for this purpose, is a table showing longer term trends in the public/private sector pay relationship between 1997 and 2010 demonstrating that between 1997 and 2003/04 the private sector enjoyed the pay premium.  This is followed by the authors’ own projections which show that if the current public sector pay freeze is maintained the current public sector premium will decrease and give way (or return) to a private sector premium by 2016/17, i.e. in five years time.  Which suggests there is some truth in my own conclusion that public and private sector pay relativities are both cyclical but at different times (see for example my earlier post on New year, hard times – public sector pay revisited)
  • In order to make sense (or not) of the analysis, you’ll need without much help from the authors to get to grips with some subtle statistical definitions like median gross, mean, median, hourly median, nominal change, and 10th, 25th, 90th etc. percentile
  • You’ll also have to take on trust that when they compare particular categories of worker in the two sectors, for example, housekeepers and related occupations, therapists, and security managers they are comparing apples with apples and not apples with pears
  • Interestingly, taking the comparability of these occupations at face value the evidence is not always as conclusive as the authors suggest.  For example, the median annual pay for sports and leisure attendants in 2010 was all of £162  more in the public sector, a whopping 1.6%, while the median pay of electronics engineers was actually a modest £3,500 or 8% higher in the private sector. Am I getting my percentages confused here or are they?
  • Some of the occupations exemplified do not allow easy comparison.  For example, how many policemen (sergeant or below) (sic) are employed in the private sector?

Was there ever a think tank with a political or ideological affiliation that found evidence to contradict its fundamental beliefs?  There was a reason that Private Eye many years ago dubbed the first ever Prime Ministerial think tank, “Ted Heath’s wank tank”.  Crude but telling.


No wait.  Don’t go away.  It’s not the end of this blog.  More about saying goodbye generally.

You see, I was challenged (see footnote) to write about Leaving or seeing a colleague leave public service due to the cuts.

I don’t want to get too personal about this.  This is not about Fred or Sue or even me.  It’s about all the reluctant goodbyes I’ve seen over the years – remember, there’s the cuts today but there’ve been cuts on other occasions as older readers who lived through the Thatcher years will remember.

There’s a way to go and a way to let them go.

So here are some of the lessons I’ve learned.  All are based on what I’ve have seen or experienced.

Employers and managers

Have the guts to speak to them personally.  Don’t let them know by letter or even worse e-mail.

Don’t call them in and start your We’ve got to let you go speech with “This is going to be a difficult meeting for me.”

Don’t say “They’ve screwed enough out of this organisation.  There’ll be no farewell gifts.”

Once you’ve been persuaded that it’s appropriate to mark their departure with a modest presentation don’t give them all the same inappropriate farewell gift of an alarm clock.  (Both this and the previous point happened to colleagues of mine in a London Borough)

Do something – whatever it is – to make your reluctant leavers at least feel you’ve done what you had to as decently and ethically as possible.

Don’t ask them back to do voluntary work (as an English police force just has by asking redundant officers to sign up as special constables).

Reluctant leavers

It’s not you.  It’s the system.  And even if you feel you’ve been picked on who’s the better person for it – you or them?

Don’t lose your dignity and self-respect.  You will get through it.

If you’re given more than one option think the pros and cons of each through carefully.  The first you think of taking may not be the best.

If there’s any support going from your employer take it, whether it’s a brought-forward pre-retirement course, outplacement support or anything else.

Maybe most difficult of all, but get over it.  After you’ve ranted and raved (in private) lock any remaining bile in a small box in your brain and bring it out sparingly until it disappears for ever.

This is Topic 7 of a response to a suggestion for topics to blog about made by Ingrid Koehler of Local Government Improvement and Development. 


Ouch, this is going to hurt.  To mix my metaphors I don’t really like raking over old wounds.

Knox d’Arcy are a company who claimed in August 2010 that

The UK’s councils could do the same amount of work with 500,000 fewer staff if they matched the productivity of private firms

The claim niggled me because I couldn’t find significant supporting evidence for the statements in what was not much more than a brief press release at the time.

So I blogged about it, initially under the title The Curious Case of Council Productivity.  That unleashed a torrent of comment, mostly on the Local Government Improvement and Development web site, where I’d cross-posted my thoughts.

I copied all the comments to this blog in its longest post yet, The curious case of council productivity – what do people think?.  The almost universal answer to my question, expressed in many different ways, was Not much.

Spurred by this response I looked into the topic a bit more and then posted my conclusions under the straightforward question “500,000 council jobs could go” research – is it right?

My conclusion was

…on the basis of the information available it is possible (I stress possible) that the conclusion local government could shed 500,000 jobs and still provide the same level of service is based on 173 interviews and 36 day long observations in two councils in 2003 and 2006, in both of which at least some councillors disputed the conclusions they were given

I would love to be proved wrong.

As a footnote, I should say I do believe there is scope for major improved efficiency and effectiveness in local government specifically and the wider public sector more generally.

But the way to identify those improvements is detailed work and prioritisation by each council.  An extrapolation of what in all honesty is a tiny survey to a conclusion that half a million jobs are dispensable across hundreds of councils helps no one.

And that was an end to my active interest in the matter.

I kept my eye on the web site of the company concerned.  Eventually a link to download their report appeared – but only if you provided contact details.  Given my critical comments on their work and the way they publicised it I decided not to take that option.  I suspect I would not have changed my view of their conclusions.

Tomorrow, something more edifying with the No. 3 in my web search Top 10 – another of my lesser known heroes of improvement.


This post is Part 3 of a response to a suggestion made by Ingrid Koehler of Local Government Improvement and Development.  If you don’t see it on this page, Part 1 is here and Part 2 here.

Coincidence is all.

In my snappily titled post Leadership is the key: redemption lessons expanded – No. 1 I mentioned a senior manager whose catch phrase was

I don’t care about processes.  I’m interested in outcomes.

Lo and behold.  As I check for the topics the aforementioned Ingrid K suggested bloggers like me might write about in 2011 I find

Why process still matters.  The importance of good governance in an outcomes based world.

And that’s all I need to set me off.

You won’t have known “my” senior manager and wild horses wouldn’t drag his name from me.

But I’ll bet you could name at least one boss you’ve had, may still do, who struts his stuff (it’s usually a male and they usually strut) shooting from the lip with this macho nonsense.

How do you always get an outcome?  Answer – by doing things in a series of steps one after the other.  That’s all a process is.  Getting the process right is essential to achieving a good outcome.

A small example.

I worked somewhere once where expensive consultants were brought in on a central government-funded programme to improve procurement.  They ran a workshop for admin staff responsible for placing orders with the in-house procurement team.  How did people place an order for a bog standard 5-wheel adjustable ergonomic office chair?

The expensive consultant explained the rudiments of process mapping.  Within a few minutes the road engineers had shown it took 8 actions in their department to order a chair, the social workers 13.  To put it another way, the social workers had to take 63% more actions than the road engineers to achieve the same end.

This is macho man(ager)’s cue to pile in with a cutting observation on trivial examples.

But hold on.

Work is by and large made up of routine activities carried out 10/100/1000 times a day/week/month.  They consume by far the greater part of an organisation’s resources.

If even a tenth could be carried out with 63% fewer actions the potential savings would be major.

Savings to help reduce budgets and improve customer service.  Keep the library open that might otherwise close.  Repair those potholes that feature in the local press every week.

Ingrid Koehler also links process with good governance.

Governance is often taken to mean the big stuff.  And so it should.  The probity and transparency with which councillors make decisions.  How big budgets are allocated and spent.

But if you accept the purpose of a council is to meet its customers’ needs (substitute citizens, taxpayers, residents, service users as your ideological preference dictates) then governance is also about ensuring as little resource as possible is used that does not add value for those customers.

Finally, Ingrid doesn’t just refer to outcomes but to an outcomes based world.

Oh, yes (sigh).  Outcomes are fundamental.  Of course.

However, too often central government tries to hold councils accountable for outcomes over which they have little or no control.

It’s OK for the proportion of domestic waste recycled but not for climate change.

It’s OK for the number of road accidents where highway design and traffic management is a root cause but not for the overall number of young people killed or injured in road accidents.

In other words, many of the issues that councils deal with are complex social problems with multiple and sometimes, if we are honest, unknown causes.  That sounds like another post.

But getting processes right is still fundamentally important.