Banking & FinanceEconomyReform

Fundamental change: Pat McLoughlin

The Report of the Special Group on Public Service Numbers and Expenditure Programmes (An Bord Snip), recommended that fundamental changes need to be made to public services with 17,300 jobs to be cut and departmental streamlining undertaken in order to make savings of €5.3 billion.

Often referred to as ‘The McCarthy Report’ because it was chaired by University College Dublin economist Colm McCarthy, the special group consisted of five other expert members. Roscommon man Pat McLoughlin, Chief Executive of the Irish Payment Services Organisation (IPSO), was one of the members with extensive experience in delivering public services.

McLoughlin observes that the public sector has expanded in the good times and is critical of the fact that from 2001 to 2009 there was an overall increase of expenditure of approximately €2.25 billion in the public sector with 49,000 new public sector employees, 82 per cent of which were in middle and senior grades.

He likens senior public servants who refuse to accept that reform is essential as having turned from “suckler cows to sacred cows.”

These sacred cows, according to McLoughlin, are people who do not want to reduce the number of government agencies. The number currently includes 33 vocational education committees (VECs) and 34 local authorities that the report suggests should reduce to 22. Those who refuse to look into the location of their services and work practices and analyse whether their services could be delivered differently, either by working with the private sector or with other government departments, also come in for some criticism.

“It’s the lack of interest in looking at the broader picture to see if there’s a better way of doing things,” he says.

McLoughlin feels that there are a lot of people within Ireland’s public sector “wanting to hold on to what they have” rather than adapting to a modern economy where “major advances” have been made in technology, the roads network and communications. He says that their philosophy is “what we have we hold.”

Benchmarking

Controversial pay increases were awarded to public sector staff by the Public Service Benchmarking Body and the Review Body on Higher Remuneration from 2003 to 2006.

McLoughlin comments: “If benchmarking is to be effective it should mean that if the rate for a job increases and the economy can afford it, people can legitimately expect to be paid an additional amount.” But the current situation, he feels, is that “we are now paying ourselves more than our competitors for similar jobs in public or international services.”

He insists Ireland’s public sector “has the ability to change because at the end of the day we are a very open economy and we have to compete.” He also believes the Irish economy is paying for the state’s policy of widening its services rather than putting money into job creation.

Local government reform

The report recommends that the Department of Community, Rural and Gaeltacht Affairs (DCRGA) should be closed and its functions spread across different departments and that the Department of Arts, Sport and Tourism should be “critically examined.”

According to McLoughlin, this would reflect emerging priorities for the Government: “When we looked at the specific jobs that were being done within [the DCRGA], we felt that they were mainstream agencies and that their remit should be within that particular area. We set out an agenda of where those services could be migrated to in terms of government departments.”

McLoughlin clarifies: “We are not saying the Cabinet should be reduced.

We simply said that those government departments should be either closed or reviewed. It is up to the Taoiseach and the Cabinet to see how might the system be configured differently to deal with a modern Ireland.”

The report calls for one “streamlined” Department of Enterprise where the county enterprise boards, the business innovation centres, the Western Development Commission and the enterprise functions of Udarás na Gaeltachta, Shannon Development, Bord Iascaigh Mhara, Leader and Teagasc as well as sector-specific agencies such as the Irish Film Board should be merged within a re-constituted Enterprise Ireland.

“What’s important,” according to McLoughlin and the other members of the special group, “is that if someone is interested in setting up a business, they can go to one port of call, to a government agency that can help them with their proposal, that can help get them finance or the support they need, rather than to send them to a multiplicity of agencies.”

In recommending the formulation of one Department of Enterprise, the special group had information available on the cost per job created and the amount of jobs created by the different agencies, “so it wasn’t simply pie in the sky.”

“We took a serious look at job creation in the past and the record there was,” he adds.

As explained, the report calls for the 34 local government authorities to be reduced to 22. However, after looking at what the special group considered to be “reasonable” populations it concluded: “We could certainly get away with a lot less [than 22] depending on what the Government might decide.”

Crowded pitch

There are currently 29 county councils, five city councils, eight borough councils, 75 town councils, eight regional authorities and two regional assemblies within local authority administration. In addition there are a huge number of local delivery mechanisms. “For example there are 600 disability and mental health agencies that are all either government grant-aided or rely on fundraising.”

McLouglin also points to the 330 community service projects, 182 community development projects, 107 family resource centres, 42 citizen information centres, 59 money advice and budgeting services and 60 partnership and leader companies and says: “It’s a very crowded pitch.”

There might have been a need for these agencies when they were initially formed but over the years “because they had to build and develop, they have a very high cost of overheads so they are either grant-aided by government or they are receiving money from fund-raising,” he reflects.

He believes that there is “huge scope” for these agencies to look at their overall costs and merge with similar bodies in order to share services.

“We have had a major restructure of the health services at a statutory level,” McLoughlin remarks. “If that’s what government believes is the right way to approach then why not take a similar look at the number of NGOs [non-governmental organisations] and smaller organisations and the costs associated with them?”

Savings

Procurement is a good example of an area where “there’s a major potential for savings,” he says.

“Havin
g 34 local authorities procuring separately isn’t the best value” therefore McLoughlin suggests “reducing the supply chain”.

Pointing to the private sector he comments “[the] retail [sector] in Ireland has changed their supply chain fundamentally. They have a very small number of warehouses who deliver to the various retailers around the country and have high turnover. They have identified what inventory they need to manage at any particular time rather than having a lot of stock on hand that needn’t be there.”

Drawing a comparison between Dublin City and Leitrim local authorities, McLoughlin pointed out that despite Dublin City’s population of 506,000 and Leitrim’s population of 29,000, Dublin has six strategic policy committees and Leitrim follows closely with five.

He said that rationalisation of local government is ultimately a matter for the Government with the Department of the Environment due to issue a white paper regarding how the “whole system of local government should be reformed.”

Calling for a 50 per cent reduction in the 703 Garda stations and a review of the current defence portfolio, McLoughlin points out that “our army barracks were inherited from when we were governed by Britain. They were developed to try to control the people within the country, the police stations the same.” He wants the “best expertise within An Garda Síochána and the army” to reconfigure their buildings to suit a modern Ireland.

Swift action

McLoughlin sees the creation of the report as “very useful” and urged the Government to take swift action.

“From our experience of the late eighties, the faster that adjustment is made, the better it is overall and the more competitive we can become as an economy,” he says.

Asked what changes he has seen in the delivery of public services over the years, as former Deputy Chief Executive and National Director (Hospitals) of the Health Service Executive (HSE), he notes that he has witnessed many changes most notably the move away from institutional care for children and people with disabilities and mental health. ”That was the most pleasant aspect,” McLoughlin comments.

When the report was first published it was described as a ‘menu of options’. However, McLoughlin warns: “If An Bord Snip decisions don’t get taken the McCarthy report will become a staple diet for the country.”

24-26d Profile: Pat McLaughlin

Pat McLoughlin is the Chief Executive of the Irish Payment Services Organisation (IPSO) where he “influences the modernisation of payments away from cheques and paper-based instruments to electronic payments.”

He was educated in St Mary’s College, Longford, and has a BA, an LLB and an MBA. He has “worked most of my life in the public health services”.

Formerly Chief Executive of the South East and Eastern Health Boards, head of the Planning Commission with the Eastern Health Board, and Deputy Chief Executive and National Director (Hospitals) of the HSE, McLoughlin has also dabbled in private consultancy.

McLaughlin is currently chairing the Local Government Efficiency Review Group, established by Environment Minister John Gormley to review the cost base, expenditure and numbers employed in local authorities.

A native of County Roscommon and currently lives with his wife in Kilkenny. He has three adult sons and is an avid fan of Gaelic football.

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