How I plan to apply the lessons of business to running government

DESPITE the progress made in cutting the deficit, this country is facing one of its most difficult economic situations. But my experience tells me that it is at these moments that you can generate the best results. It would be a wasted opportunity if we didn’t use it to make fundamental changes to the way we govern, and bring the best of the business world to the heart of government.

As the new chief operating officer for government, I want to do even more to drive savings from Whitehall. I also want to run government in a more business-like fashion and to – ultimately, and most importantly – make our contribution to the UK’s recovery.

Since its creation in May 2010, the Efficiency and Reform Group (within the Cabinet Office) has gone a good way towards delivering this. By placing tough controls on spending across government, the minister for the Cabinet Office Francis Maude – working closely with HM Treasury – has beefed up the government’s corporate centre.

Last year, the Efficiency and Reform Group supported departments across Whitehall achieve £5.5bn of savings, the equivalent of a staggering £500 for every working family in Britain. But Maude and I agree that there is still much more to be done. We are determined to work closely alongside the government departments. not least because some are implementing the most significant policy reforms for a generation, while striving for greater efficiency and reduced spending.

It’s not just about driving efficiencies and savings – we are also seeking to execute programmes to support UK growth across the country. There are many examples: from developing new commercial models for public service delivery; driving service delivery to “digital by default”; intelligent partnerships with the private sector; supporting sectors like the social investment market; an aspiration for small and medium sized businesses (SMEs) to achieve 25 per cent of the value of government purchased goods and services; creating more strategic supplier relationships and encouraging more diverse range of UK-based suppliers; and seeking to make the complex procurement process 40 per cent faster, reducing the cost of bidding for business.

The SME aspiration alone, if successful, will represent savings of approximately three quarters of one per cent of the UK’s GDP of £1.6 trillion. For example, a Leeds-based SME recently won the single supplier meetings and events contract for central government – it expects to deliver minimum savings of 10 per cent (£12m) over the term of the contract.

I have spent 25 years in the private sector and was privileged to lead highly successful public global companies in the USA and UK. One of my observations from this time is the need for rigorous, relevant, useful and informative management systems, and robust financial information. Measurement enables focused and coordinated work across complex federated organisations. For this reason, I am determined that robust and pragmatic business planning and measurement become part of our DNA in government.

But it is not only from the private sector that I draw my experience. I have spent some time working with the Cabinet Office, being one of the architects of a programme that generated first year savings of £800m. I then led the successful divestment of the civil service’s pension administration business, MyCSP – the first “John Lewis-style” mutual to leave central government. Both are a testament to the innovative approach the government is taking.

We are committed to deliver on our ambitious plans to make the government work better, and to help in a meaningful way to get Britain’s finances back in shape. The journey will be challenging. But ultimately, our vision is for an efficient, nimble civil service which is the envy of the world; where citizens, taxpayers and employees feel a real sense of pride, achievement and part of the UK’s future prosperity.

Stephen Kelly was this week appointed chief operating officer for government and head of the Efficiency and Reform Group.