UK “Autumn Statement” – procurement implications

Having finally finished analysing Francis Maude’s speech on public procurement, we’ll take a quick look at the Autumn statement from the UK Chancellor of the Exchequer last week. While obviously it was not focused particularly on procurement, there are some interesting implications for the profession and future developments.

The first point is an expression of sympathy for everyone in public procurement. Two more years of austerity with pay rises limited to 1%; OK, the private sector hasn’t been booming but it must be dis-heartening to look at 4 years now with pretty much no pay increase in store.  It does make you wonder; who is going to be attracted into the public sector? I can understand risk averse folk already there hanging on to their jobs and pensions, but if you were a bright young private sector procurement person, would you join the public sector? And if you’re a young ambitious pro currently in the public sector, what’s your 5 year plan? Stick around? Or not?

John Collington, Government CPO, said a while ago he wanted the best people to see a stint in public procurement as a powerful addition to their cvs. Achieving that very worthwhile vision has just got even tougher.

Another announcement was around considering the removal of national wage bargaining in the public sector. That would also have an effect on procurement staff. It is a genuine issue though. I worked in a large public sector body as an interim a few years back – we had an office in central London and one in the North East of England. In London, recruiting at HEO level (senior buyer, around £25-30K) was very difficult. In the North-East, you could get excellent people at that rate – and they would have a much better standard of living in the North-East on £30K compared to London.  That’s not a bad thing of course, but I do understand the reasoning that says the private sector struggle to compete for good people with the public sector in some parts of the country.

Moving on in terms of the statement - the focus on capital expenditure, with more money for roads for instance, will presumably lead to additional procurement and contract management workload in those areas. But going back to our “Procurement Activism” theme – how can we encourage / force suppliers in those areas to take on British workers and train youngsters, rather than just calling for skilled workers from Poland or India? Can we build more of that into the procurement process?  (And that was one of the few black marks against the Olympics – their creative use of data to support their “local workers” claims).

The consultation on TUPE that was announced will have got a lot of outsourcing firms very excited. It’s a knotty issue, and we won’t go into it here in detail, but ironically I think it may have a negative effect on public sector outsourcing for a while – organisations may well put plans on hold while they wait for the outcome of the review. But clearly, if TUPE were relaxed, it would make it more attractive for both outsourcer and service provider - although not for the employees involved.

Then we get into political waters - but there is a procurement angle. Uprating benefits by 5.2% while cutting tax credits for those in work makes work less attractive - as the Minister, Ian Duncan-Smith, acknowledged in an interview at the weekend. That in turn will make it harder for the suppliers who run the Work Programme to get the unemployed into jobs, which earns them the return they need under their heavily performance linked contracts. We've praised that procurement and programme before, but I think there are a few black clouds gathering...

Finally, the elephant in the room – the new forecasts showing many years of austerity and economic under-performance ahead. That’s an issue that affects all of us of course in most of the Western world. What it all means for procurement is something we’ll come back to when we do our look forward to 2012 shortly.

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