Ivan McKee: Government should be tighter and leaner

The Scottish budget and ongoing tricky negotiations might be dominating the headlines for the next few weeks, but to the public finance minister that is background noise. Ivan McKee’s eyes are on the real prize: public service reform.

While the topic might not be the most glamourous – even the words ‘public service reform’ can cause eyes to glaze over – to McKee it is absolutely vital. He jokes that ministers “probably need a better strapline for it”, because these reforms will be crucial in shaping the future of Scotland. It’s about how services will be delivered long into the future, and how we pay for them.

“The size of the prize is enormous, if we get it right,” McKee says. “There are a few parts to it. One is how we, in a time where finances are constrained – we’re always constrained, but especially now – make the money we’ve got go further. That’s frankly about getting more of it through the system, which can be a complicated system, to the frontline.

“On the nuts and bolts of that, we’ve made real progress in terms of what we’re doing to understand – and again, this isn’t very exciting stuff, but it’s really necessary – that of all the money that we spend, how much of it gets stuck to the sides of the pipe as it goes through and how much it actually gets to where it needs to get to. Streamlining the process, and not spending money on things we don’t need to spend it on so we’ve got more to put to where it’s needed, is really important.

“The second part of it is about how we join up services so that the people interacting with them are seeing something that talks to what they need, that’s person-centred, and we haven’t got agencies and different bits of the public sector either falling over each other or getting in each other’s way or asking for the same information multiple times or giving out conflicting messages.”

We need to go faster on it and do more, absolutely, but this isn’t something where we’ll wake up one day and say, ‘that’s reformed’

That might sound simple, but the failure to deliver the scale of reform needed so far proves it’s a task easier said than done. Multiple reports by public sector watchdog Audit Scotland have criticised the Scottish Government for not pushing forward this agenda enough, and most recently the body has been sounding the alarm for the risks this delay now poses.

Auditor general Stephen Boyle delivered perhaps his most brutal assessment to date earlier this year, warning about “unsustainable” finances. “The Scottish Government continues to work hard to balance its annual budgets,” Boyle added, “but making in-year, one-off savings to fund recurring costs doesn’t tackle the issue; it exacerbates it. It’s critical that the Scottish Government moves at pace to reform the design and delivery of public services.”

The big turning point was supposed to be the Commission on the Future Delivery of Public Services – better known as the Christie Commission – which called for “urgent and sustained reform”. A foreword written by none other than then-finance secretary John Swinney committed the Scottish Government to providing leadership and “taking actions necessary to equip Scotland to meet the long-term financial and demand challenges ahead”. That was 13 years ago.

McKee, who picked up the reform baton after re-entering government in May this year, accepts that change has not happened at the pace or scale required. But he rejects the idea that nothing has happened since Christie. He points to the restructuring of the police service and the creation of integration joint boards in health and social care as examples, as well as highlighting pilot projects in other portfolio areas which are now starting to be scaled up.

^{The late Campbell Christie chaired the Commission on the Future Delivery of Public Services. Credtt: Alamy}

“It’s really important to look at this as a process, not an event,” he adds. “Everyone says ‘why’ve you not done reform yet?’ as if it’s a big button we press, and it’s all done. It was always going to be an evolving thing. We need to go faster on it and do more than we’ve done, absolutely, but this isn’t something where we’ll wake up one day and say, ‘that’s reformed’ and tick that box and move on. It’s a forever process because we’re forever getting better at things, and it’s important to recognise that as well.”

To help speed things up, one recommendation from Audit Scotland is for the government to set milestones for delivery. McKee agrees this is important, but he also pushes back a little on that call because “we don’t know the answers to everything yet”. “We’re going to learn things as we go. We’re going to try things, pilot them as we’ve done already, and the things that work, we double down on and do them at scope and scale. It will be an evolving programme as we get more clarity on what works, what doesn’t, try this, try that, roll that out at scale, invest here and so on.”

Resourcing is another major issue, with Audit Scotland stating last month that the government “does not know what additional funding is required” to move the programme forward, a concern echoed by parliament’s finance committee. McKee argues that, given part of the purpose of reform is to “free up cash and move it to the right place”, it won’t require a lot of extra money.

He does accept, though, that it will have impacts within portfolios, particularly as prevention spend often requires cash moving to a different portfolio – for example, funding for home adaptations for older people will mean less money is needed in hospitals because it allows a patient to get home sooner.

Government should be tighter and leaner. The frontline is very, very different

However, there is the danger that such movement between portfolios could be misconstrued as budget cuts. This is why he has pushed hard to ensure there is some central funding for public sector reform in the budget, which will help to free up resources in portfolios “without dropping the ball on fixing the symptoms” before the benefits are felt.

Occasionally he has had to remind some of his government colleagues of this bigger picture. “It’s human nature, if you’re given a job to do, you’ll go and do your job. And yeah, you’ll understand that you need to engage with others, and you need to work together and they’re all signed up to that – of course there are – but they’ve got their own pressures to stay within their budget limitations, which they find difficult.

“Moving from that environment to an environment where there is more working together is absolutely critical, but we’ve got to enable that. You can’t just say to people, ‘you need to do this’. You’ve got to make that road with as few roadblocks on it as possible… Where it isn’t happening, we need to make it happen because we can’t have people stuck in their silos.”

Securing parliamentary support for the reform programme will also be vital, though McKee says MSPs of all parties get it. “You won’t find anybody that says Christie doesn’t work and it’s not right, we shouldn’t do it. Everybody is signed up to that agenda conceptually and the criticism we will get – and that’s the nature of politics – is ‘why are you not doing more of this?’ That’s the direction that we want to move faster on.

^{Photo by Anna Moffat}

“We will get criticism where people think the things that we’re trying to do are maybe not what they would choose to do, which is fair comment, we’re not going to agree on everything. And to be honest, you’ll also get opportunism where people criticise you whatever you do. But I think that there’s enough common sense and enough buy-in into the principles, and enough recognition of the need to change things, that we will always find partners that are happy to work with us.”

Labour has made reform a key part of its budget pitch. Speaking to Holyrood last month, finance spokesperson Michael Marra said the Scottish Government must shift its focus away from inputs and towards outcomes, because public services are “nowhere near good enough given the money that they’ve had”. He said the Labour UK Government’s “significant investment” had created “the first opportunity in a long time” to start thinking about changing how public services are delivered to improve outcomes. One structural change the party is pushing for is a reduction in the number of health boards.

The Conservatives, too, are taking the time to consider what reform should look like. Leader Russell Findlay used one of his first major speeches to call for a review of the public sector landscape, with a view to reducing the size of the state overall.

Asked whether ministers would be amenable to such ideas, including reducing the size of the public sector, McKee said: “It’s important to separate out the frontline from what I call the back office. We did work over the summer and published some data just this month about the cost of corporate services across the public sector, and that’s a number somewhere north of £4bn. It’s not an insignificant number. You need some of that, because you do need IT systems, management, accounts, HR. But the issue is, can we do it with less? And I think we absolutely can. Government should be tighter and leaner.

If we get this right, it can mean a lot more money

“The frontline is very, very different. The fact that we’ve got more doctors, more nurses, more teachers, more midwives, more police officers per head of population, significantly so, than they have down south is something we’re proud of…

“The question about is big government good or bad – the public sector needs to be as big as it needs to be to deliver great public services, but no bigger. Where we can do things better with less resources, that’s absolutely where we’re going. If the question is, should we be cutting frontline public service, then the answer is absolutely not.”

Part of this is ideological, but part of it will be about what is acceptable to the electorate. Christie warned back in 2011 that a “radical shift” in service delivery and spend “is likely to be controversial”. With an election just over a year away, I ask whether McKee is truly open to making some of those controversial – and possibly unpopular – decisions.

“Yes,” he replies, though he hastens to add that getting this right will mean the public will benefit from “a more efficient, joined-up service with more resources”. And in fact, he argues that the biggest obstacle to reform won’t be pushback from the public, nor from opposition parties, but from people in the public sector itself.

“I’m engaging very heavily with them, I’ve had a lot of meetings with the agency heads, either collectively or individually, and we’re doing more work to pull that group together… There are folks out there running a body in the public sector, who say ‘no, I’m not interested in that because I’m in my silo and I’m very happy’. That ain’t going to be the future.”

But for the majority of people who deliver public services, McKee believes this reform will improve their working lives. “It makes people’s jobs more fulfilling, more empowered and more able to make a difference,” he says.

As far as he is concerned, if he is successful in this endeavour, it’s a win-win for everyone. “If we get this right, it can mean a lot more money [for the frontline] and making the service much better. But how we get from here to there is obviously the hard bit.”