Recently we hosted UK civil servants for a webinar on the topic “Prioritisation of organisational activities”. The webinar sought to support government agencies grappling with budget cuts by drawing on Nous’ experience, where we previously undertook significant reviews of Australian Government agencies. The webinar was led by Tanya Smith, a Nous Principal in Melbourne who conducted many of these reviews, and Peter Horne, the UK Nous Government practice lead. We are pleased to share key themes from the webinar.
By Peter Horne and Tanya Smith
UK Government departments and agencies facing budget cuts can look to their Australian counterparts for guidance on how to navigate their way through uncertain waters.
In the recent Autumn Statement, Chancellor Jeremy Hunt said: “We have to take difficult decisions on the public finances. … Departments will have to make efficiencies to deal with inflationary pressures in the next two years.” The Chancellor's message echoed a similar sentiment in Australia last decade.
A previous government in Australia committed to reduce the national public sector. To do this, it initiated Functional and Efficiency Reviews (FERs) of all departments and large agencies to assess their activities and performance against outcomes, and to align resources around priorities. This meant looking at ways to improve efficiency and deliver savings while improving effectiveness.
The FERs, commissioned by Australia’s Finance Minister as well as by the relevant portfolio minister, were conducted by independent reviewers.
Nous was engaged to undertake six FERs, each of which was overseen by an independent lead reviewer. With most of our recommendations implemented, the reviews identified £2.7 billion of savings in the four years following the programme, with an additional £8 billion projected across 10 years.
Nous used a first-principles approach and focused on both programme and operational expenditure, avoiding salami slicing or the risk of cuts in programmes that are re-instated a couple of years later.
While each review was tailored, they all centred on three key questions:
To assess the operations of agencies under review, we deployed four analytical frameworks:
While each FER was unique, some common themes emerged:
For these Australian agencies, working with an external partner made a huge difference in pushing the thinking, challenging assumptions, injecting new ideas and building capability. Our approach was to form a joint team with the department involved and work in partnership so we could play to each other's strengths and ensure the advice was sound, well-contextualised and practical.
We believe there are important lessons for the UK civil service about how to design, conduct and support these types of reviews. This includes the need to clarify and confirm scope early, to maintain a strategic focus with a conceptual frame, to use data to achieve high intensity, and to gain strong engagement from the centre of government.
With budget pressures likely to persist in the UK, finding ways to achieve optimal performance in government agencies will be more important than ever before. FERs offer a valuable example of how it can be done.
Get in touch to discuss how we can work with you to conduct functional and efficiency reviews.
Connect with Peter Horne and Tanya Smith on LinkedIn.
Prepared with support from Ben Milner.
Published on 24 November 2022.