WHAT a surprise. Sir Philip Green has found that the Government is “lamentably bad” at the procurement of goods and services and the management of its property portfolio. The budgets he looked at are worth £191bn in total, and he believes billions could be saved. He argues that the public sector is spending £700m a year too much on telecoms alone.
Clearly, these are shocking figures; but they should be no surprise. Whitehall is littered with such reports. In 2009, the National Audit Office found that better public sector procurement could save anything up to £11.5bn annually. Bernard Gray’s defence review found up to £2bn of savings could be made from better procurement processes.
Sir Peter Gershon, who advised government from 2000 to 2004 on how to make savings, recommended greater centralisation of purchasing by the public sector, precisely what Green is now calling for. Gershon was rebuffed by Gordon Brown, but Green will find the current government more receptive.
Indeed, Francis Maude, the minister for the Cabinet Office and Paymaster General, who helped commissioned Green, has recently said that all procurement contracts over a certain threshold need to be authorised by him. Setting a centralised procurement framework but leaving purchasing – actually buying goods and services – more local is a sensible plan. It sends out powerful signals. So is that it – job done? Sadly not.
The necessity to conduct a public finances rescue mission is a familiar and typically crisis-driven task. Eliminating waste and salami-slicing existing budgets tend to be the politicians’ stock answers, but neither of these approaches goes to the heart of the systemic and structural problem.
The real problem at the heart of the civil service is accountability. The lack of responsibility for saving money, the lack of process for setting and challenging detailed departmental budgets and the inconsistent commercial skills – these things will not be sorted out by centralised delivery. That will shield officials from taking personal responsibility.
No progress can be made on reducing the deficit and improving public services without introducing contracts that hold civil servants to account for the outcomes of their work. Offering performance-related pay, ending the notion of a civil service job for life and making it possible for ministers to sack their permanent secretaries are all vital. Only accountability will deliver real change.
Nick Seddon is deputy director of the independent think-tank Reform.