Hamish McRae: Do fewer things but do them better

Oh dear. On and on it goes. Everyone knows that the next government will have to sort out the country's finances. Yet every new comment on this, be it from the European Commission, the rating agencies, economists writing round-robin letters to newspapers, whatever, serves further to confuse. And we will have a Budget next week that will inevitably be so coloured by the forthcoming election that it will not, with the best will in the world, be taken seriously. A Budget announced in all probability three days before the Government calls an election cannot be the real deal.

But the most depressing thing about all this, the thing that makes me want to weep, is that all this heated political debate, all the slagging off of each other by the politicians, is utterly irrelevant. It is irrelevant for two reasons.

First, there is no significant difference between the plans of the three main parties, insofar as we know them, at least as far as the big numbers of deficit reduction are concerned. It will have to be done a bit faster than the Government's present plans, as the European Commission acknowledges, but not a lot can be done in the coming financial year because, by the time the summer Budget can take effect, we will already be a third of the way through it.

Second, the central decisions will not be taken by the politicians anyway. The decisions will be taken by global savers, exercising their judgement through the financial markets, who will determine at what speed the deficit has to be reduced. The country has to borrow the thick end of £200bn next year, and further billions the years after. Unlike Japan we don't save enough in this country to cover the deficit – we don't actually save enough to supply our mortgage market with funds – so half or more will have to come from foreign investors. They don't have to lend us the money; they can lend it to Germany, France or the US instead.

Given this reality, what we need is a different sort of politics: not ringing phrases or cute sound-bites, but rather competent, honest, detailed administration. It needs to be a government that does lots of small things really well and goes on doing them well year after year, rather than one that has grand visions about its role on the world stage. It may have to work with less revenue three or four years from now than the present government had before the recession struck. That is something that no post-war government has ever had to face. The only way to do more with less is to do everything better.

To say that is easy enough. Since most journalists know very little about administration, nothing they write about how to run things should be taken too seriously. But to illustrate the point, let me give four examples of areas where attention to detail ought to be able to make a material difference.

The most obvious is the National Health Service, the largest civilian employer in the Western world, with 7 per cent of the UK working population. When Labour came in, in 1997, it junked the various devices introduced by the Tories to try to create more internal competition and instead sought to improve performance by imposing detailed performance targets. After four years it became clear that this command-and-control method of management was not working and in England (though not in Scotland and Wales) an element of competition was gradually brought in alongside the target culture.

But targets have had their place, particularly with regard to cutting waiting times, and a danger now is that the new government will make the same mistake all over again and drop them, rather than focusing on a very few targets rather than the scores, even hundreds, that the poor old NHS managers found themselves juggling. Moral: don't junk things that have worked in the past in favour of new politicised ideas, but rather try to refine them so that they work even better.

The second area is defence procurement. No country does this well, not least because the time-lags are very long indeed. The military is ordering kit now that will be in service in 40 years' time. We have also seen, with the present government, the political consequences of starving the military of funds, so it is an area where politicians need to tread carefully. But the numbers are huge, so huge that they hold the possibility of serious savings, so there is no way the next government can duck the issue.

The trouble is that much of the debate is over big-ticket items, rather the detailed ways in which savings might be made. The Ministry of Defence is a difficult customer for a host of reasons. These include inter-service rivalry, the fact that the military is used to customising its purchases rather than buying off-the-shelf kit, and the "churn" of defence ministers, who are in and out of the revolving door more rapidly than in any other ministry. Some of this, not least the revolving door element, ought to be fixable. We should not pretend this will bring quick savings but the aim should be to have some within the next four or five years.

The third area is simplification of government programmes. I had a chilling insight into this the other day at meeting organised by the think-tank Reform. There were a number of civil servants there amidst the policy wonks and it was from one of them that I learnt the new expression "self-tasking". A group of them, we were told, would be brought together for some new government "initiative" – I hate the way that word has become devalued, by the way. Then the programme would come to an end but they were not disbanded. So being hard-working and honourable people they would figure out something else that was useful: they would set their own tasks.

You see the point. Something has gone wrong with the detail of government. Instead of paying attention to getting a few big things right, it is busy re-branding its departments, chopping them up and attaching them to each other but not giving proper direction to its staff.

Finally there is taxation. We have a hugely complex tax system by world standards, yet one that does not raise a particularly high proportion of national income in tax. There are some taxes where the cost to administer is one-third of the revenue they bring in. So there are some quick wins to be gained in simplification. Indeed that is the one area where it should be possible to change things quite quickly.

Do fewer things but do them better. Is that an unreasonable aim? I hope not.

h.mcrae@independent.co.uk