I blogged a couple of weeks ago about cutting back the administrative layers in the Department of Education and mentioned that back in the mid nineties I was responsible for managing the Department's running costs. What I learnt then about the possible approaches to budgetting in government may well explain why Mr Hoskin's suggestion is so important.
Departmental budgets can be huge numbers. Back in the 1990s the running costs budget for the Education Department was £90 million and it is several times larger now.(The actual figure is difficult to uncover as the expenditure groupings have changed since then.) Traditionally, we had always come to our budget via an exercise which involved every individual management unit in the Department. It worked something like this:
- Each management unit looked at current and projected staff numbers for the forthcoming year.
- They then looked at non-staff costs, usually by reference to the current budget, and adjusting them according to policy or procedural changes
- The forecast staff numbers and non-staff costs were sent to the Finance Department
- Finance reviewed the figures and held a number of 'challenge' meetings with senior staff in the management units to test the robustness of the assumptions that had been made
- Finance turned the staff numbers into costs, added in overheads and assembled the whole into a budget, which was then challenged again by the Treasury
I'd lay odds that this is pretty much how Departmental budgets are still done.
Now, zero budgetting proper is a pretty scary proposition for a civil servant. It's tantamount to asking you to justify your own existence. Many of us might think that's a good idea. But in the interests of keeping the whole thing ticking over, maybe something like that half-way to zero system we had in the old Education Department might be a good place to start. It introduces a sense of financial discipline and once that is in place zero budgetting becomes a much more acceptable proposition.