The whole thing needs a reorg from the top down and an attitude adjustment to match. I work in building services in an M&E capacity in a government department so the following are my own observations.
Cut down on the number of managers, thats where the majority of the wage bill comes from. The current organisation is far too top heavy and there isnt enough natural wastage so see people actually progress anywhere. So what you end up with is management grades being shifted sideways into positions with no staff for them to manage, while still drawing the same wage.
Prime example, there are 10 people in my section. The guy in charge is on £42-51K a year, under him are 2 guys on £32-39K a year, under them are 3 on £25-30k a year (all management grades) and under that are two admin staff, me and another engineer. The managers dont have any actual management duties to perform but still get the same pay as the same grade in say the roads service who may have 30 guys to look after.
Another huge saving can be made by bringing stuff we have the capability to do in house back in house. 90% of our design work and all our maintenance work is subbed out, so all we now do is minor works project management and FM.
We have just had an NEC contract come in, whereby a lot of the PPM and reactive maintenance responsibility was taken from us and given to the main contractor. So we are now in a position where we are paying subbies to do the reactive and maintenance works (as we were previously) but we have to jump through the extra hoop of the main contractor rather than deal directly with the subbies and their blokes on the ground. The main contractor gets a % mark up on the subbies bill for doing exactly what we were doing ourselves pre 1st April.
That however wont happen because as much as people bitch and moan about public sector waste they wont be keen for the public sector to make savings by taking money back out of the private sector.