If you ever wondered why the government body, Special Group on Public Service Numbers and Expenditure Programmes, is nicknamed 'An Bord Snip Nua', it's because 22 years ago – during the country's last economic crisis – there was a similar body established to cut back on government spending that quickly attracted the nickname 'An Bord Snip'.

The body was the brainchild of the then minister for finance Ray MacSharry and included private sector economist Colm McCarthy, who is also chair of the current body, and two senior civil servants, Seán Cromien and Bob Curran.

MacSharry has the "utmost confidence" in An Bord Snip Nua cutting "the fat that entered public expenditure during the boom years". But Seán Cromien, the most senior civil servant on the first Bord Snip, is concerned that people are "more reluctant to accept cuts now than they were in 1987".

As An Bord Snip Nua finalises its report for finance minister Brian Lenihan ahead of Tuesday's deadline, the Sunday Tribune spoke to MacSharry and Cromien, former secretary general in the Department of Finance, about the first An Bord Snip.

Cabinet ministers openly referred to the cuts suggested by Cromien in the first An Bord Snip as 'Cromienism' and his work is now viewed as a key factor in the later birth of the Celtic Tiger.

Back in 1987, as government borrowing soared and the public finances were out of control, newly elected taoiseach Charlie Haughey appointed MacSharry as his minister for finance when Fianna Fáil returned to power.

Ruthless

MacSharry immediately pledged to bring order to the public finances and his ruthless slashing of state expenditure earned him the 'Mac the Knife' nickname.

One of the most significant moves made by Haughey and MacSharry to cut state expenditure was his establishment of the Expenditure Review Committee, the cost-cutting board which was dubbed An Bord Snip.

The three-man committee is not unlike today's body as McCarthy was involved back then as well. "I knew Colm and thought his bluntness and outspokenness would be a very useful addition to the team," says Cromien.

With the political will of MacSharry and Haughey behind them, the body had a pivotal influence as it put pressure on various department officials to come up with their own range of suggestions for cuts while the body came up with its own ideas for cuts.

Cromien recalls being called in to the new taoiseach's office where Haughey outlined his radical plan.

"Each secretary of a government department was to be called in to the Department of Finance with his senior colleagues and re-examine each item in his vote.

"When Haughey was briefing me about this, he told me to tell each secretary that this exercise was different from all previous ones. They were expected to come up with their personal proposals for abolishing schemes and if their ministers had doubts, the proposals were still to be put to the cabinet."

Cromien says that Haughey was aware that every government department had proposals that had been given to previous government ministers but they had proved too politically unpalatable to be executed.

These previous proposals were known as the 'Asgard list' as the scrapping of the sail training vessel, the Asgard, was a recurring suggestion.

Bord Snip was different. Haughey even went so far as to warn secretary generals in a memo that they would have a black mark against their name if they did not deliver cuts and this would affect their future hopes of career advancement.

"The idea was that the departments would look down through their own lists and come up with ideas for cuts and state that from experience, rather than political considerations, that they could be sacrificed," says Cromien.

Department of Finance officials met with officials from each government department and trashed out where cuts could be made.

Cromien recalls: "I took great pains to ensure that the meetings were held in a congenial atmosphere by phoning each secretary beforehand.

"I was concerned to eliminate any unnecessary tension or hostility so we could just concentrate on the business of the meeting. I told each secretary we were going to handle the meetings in a low-key and non-confrontational manner.

He also inspected the large conference room before each meeting to make sure the seating arrangements did not lead to officials "bellowing at each other from the opposite ends of a large table".

"I also arranged for coffee and biscuits to be served early in proceedings. This caused much amusement at the generosity of the Department of Finance, which was unusual. I found that almost all my colleagues tried to respond positively," he says.

After the meetings, Department of Finance officials prepared a memo for the government, setting out the proposal that had been agreed between Cromien and the secretary of the given department, the amount of money that could be saved and any changes in the law that were needed. The memo also outlined proposals that Cromien sought but the secretary would not agree to.

"I had instructions from the taoiseach that the other departments' explanations were not to include the political implications for dropping or cutting a scheme. These were to be left for the minister to deal with at the cabinet meeting," says Cromien.

"The whole success of the expenditure review depended on what happened at the first cabinet meeting to deal with those memoranda. Haughey's tactical skill and his dominance over his cabinet colleagues illustrated how a strong-minded politician can have dramatic results.

"I wasn't at it but the proceedings in the first meeting were so remarkable that they became part of civil-service and political folklore.

"As it happened, the secretary of one department involved had agreed substantial cuts with me under seven or eight headings. But the following day he phoned me apologetically to say that his minister had overruled him and he was to show only two small items as having been agreed between us.

"I gather that what happened at the cabinet meeting was that Haughey savaged the minister concerned for intervening with the process and threatened to take his seal of office from him. He also got the government to approve almost all the cuts finance had proposed, which delighted us."

Haughey's heavy-handed approach with this minister, whose identity is not known due to cabinet confidentiality, set a precedent for all other ministers and laid the path for An Bord Snip's success.

Essential

"Shortly after this, I met the late Brian Lenihan and he began bantering with me that there was a new word at the cabinet meetings called 'Cromienism' to describe what I was doing to public expenditure," says Cromien.

MacSharry agrees that the originalal An Bord Snip was an essential building block for the boom years.

"It was essential for two reasons. Firstly, it was an opportunity to go through every single item of state expenditure. Each sub-head of expenditure was looked at and cuts were identified. So a sub-head that was costing the state as low as £1,000 was looked at to see if even £100 could be saved on that expenditure.

"Secondly, it identified so many little and large areas where savings could be made that could put the public finances on a firmer foundation for the future."

MacSharry is confident that An Bord Snip Nua can have similar success to its predecessor, with Maurice O'Connell and Colm McCarthy, who were at the coalface 22 years ago, still involved.

"There is no doubt that a lot of fat entered into many areas of public expenditure during the boom years and that can now be eliminated without too much of an impact on the public services in general as I am sure there are areas where savings can easily be made," says MacSharry.

"We had Seán Cromien helping us on my three budgets between 1987 and 1989. I delivered two budgets and prepared the final one before I became EC commissioner. In preparing those three budgets, Seán Cromien, Maurice O'Connell, myself and others went through every single sub-head of expenditure to make savings where we could.

"It is important now, as it was back then, to make sure people realise that savings can be made in public expenditure and this is not a limitless cheque. We had to ensure we got value for money and the public could be satisfied with the services provided.

"Seán Cromien did trojan work as secretary of the Department of Finance back in the 1980s and there is no doubt that Maurice
O'Connell did the same. As chair of the new body, Colm McCarthy was involved on the original body back in 1987, and Maurice O'Connell is also involved in the new body so I have the upmost confidence in the body delivering."

Improvement

Cromien recalls that the Cromienism process executed by Bord Snip amounted to cuts of £500m in 1987 and continued into 1988. Between 1986 and 1989, public expenditure as a percentage of Ireland's GNP fell by 11 percentage points from 48% to 37%.

Some 10,000 public servants took advantage of a voluntary redundancy scheme at a cost to the state of £130m.

"The improvement in the public finances got that problem off the political agenda and future ministers of finance did not have to deal with it. That prepared for the emergence of the Celtic Tiger, which could not have happened if the exchequer problems had persisted," Cromien says.

"Haughey's government was a minority government and he couldn't have got approval in the Dáil for his unpopular measures if he had not got the support of the Fine Gael leader Alan Dukes in the 'Tallaght Strategy'. Dukes got his people to abstain from the vote and Haughey got his measures through.

"The three people that were responsible for sorting out the public finances were Haughey, MacSharry and Alan Dukes. I have great time for Dukes as Fine Gael did not benefit electorally from his move but he acted in the national interest."

The creator of Crom­ienism in the first Bord Snip does have reservations about An Bord Snip Nua. "The difficulties are worse now internationally than they were in 1987 and I think people are much more reluctant to accept cuts now than they were then."

Some 22 years after the first An Bord Snip was born, its successor is about to report to the government. We should know in the coming weeks if Cromienism is about to return.