Sir Philip Green’s report reviewing efficiency in central government is a triumph. And I mean this most sincerely, even though it rankles that he pays less tax than the likes of you and me.
First of all, it is concisely and clearly written. The burd has spent far too many years reading the jargon of white papers, green papers, consultation documents and policy frameworks, trying to decipher the real meaning and find the important bits. So hurrah for a government report that cuts to the chase, speaks plainly and is produced in a clear, accessible font.
More importantly, he has honed in on the key areas with laser precision, and done it in only eight weeks. Normally, such reviews take months, if not years, to report. He has uncovered a quite remarkable level of inefficiency, duplication and lack of monitoring of expenditure on “central costs”. Read the report and weep:
- the UK government spends £38 million per year on 400,000 hotel nights in London
- office supplies cost £84 million per year through five principal suppliers and 83 individual contracts
- £61 million is spent annually on laptop and desktop computers
- nearly all the annual £21 million spent on mobile phones is with the same provider, yet this provider has 68 different contracts with government departments and NDPBs
- expenditure under £1000 is largely done by payment card – 140,000 of them in circulation – requiring no monitoring or authorisation ie no signs off these expenses
- spending on government property – leases and the like – is £25 billion per year
- a government department with 149 regional offices is downsizing to 30 offices and now has 119 obsolete offices, with ongoing unknown costs to service
Most interesting of all, is the laying bare of attitude summarised as “no motivation to save money or to treat cash “as your own”. Quite simply, because their jobs do not depend on it, and because it is public money and not their own, civil servants in charge of such procurement decisions have a profligate approach to managing expenditure.
Moreover, the report points up some of the key weaknesses at the heart of the public sector budgeting approach. Few take a bottom up or zero cost approach to budgeting ie working out how much is required to be spent on any area, preferring instead the extremely inefficient and lazy historic cost method. This involves taking the spend (or worse, the budget) from the previous year and simply adding on a suitable sum to cover inflation. It is rife throughout the public sector.
The review also uncovered a data deficit: people do not know what their spend buys, and few bother to find out if there are cheaper, more effective ways of doing things. Again, this lack of an evidence based approach to activity is endemic throughout the public sector.
Finally, it is clear that the report’s author despairs of a lack of business principles being applied to these most basic of government functions. The behaviour of government was neatly summed up in the disdainful tone adopted by Margaret Hodge, Chair of the Public Accounts Committee: “I am sure he has some interesting ideas…I, however, think running Topshop is very different to running government”. Yep, that’s why he’s still making money, and UK plc is practically bankrupt.
There are some lessons here for Scotland, though many of these issues have already been identified. What is commonly acknowledged is that the pace of change has been too slow. Everyone is still talking about sharing back room services and of improving procurement methods, but only a few are getting around to doing it. It’s time to up the ante. The sort of failings and attitudes identified by Sir Philip, and by the McLelland review in Scotland, have no place in a public sector facing an unprecedented level of cuts. Continuing to waste taxpayers’ money simply will not do.