UK Government savings – procurement contributes £3.8B in 2012/13

The UK government held a briefing this morning on the Efficiency and Reform cost saving programme and its 2012/13 results.  8 o’clock on a lovely Monday morning in Westminster – who says our MPs and civil servants don’t work hard?

I’ve never been to one of these formal briefings before. Should I dig out an old hiking jacket and pose as a batlle-hardened foreign correspondent, taking a break perhaps from reporting on the Syrian front-line?  No. I went with the suit and tie look, which turned out to be appropriate, and joined around 50 journalists and financial analysts in the Treasury Horseguards building. There’s a desire to make these events resemble a Corporate plc’s financial analyst briefing, so there were folk there from Goldman Sachs and the like as well as Computer Weekly and Civil Service World.

We had Francis Maude, the Minister in charge of the programme, Chloe Smith (Treasury Minister), who was presumably just there to show the Treasury are vaguely interested in this work, as she contributed nothing,  Bill Crothers, Government CPO, Stephen Kelly (his boss and Cabinet Office COO) and Mike Bracken (Government digital supremo). Katherine Davidson introduced it, sounding every inch the politician  – I can’t help smiling when I read the debate about whether Ministers need more political appointees in senior civil service roles, because Maude has shown how easy it is to achieve that within the current system!

Anyway, what was interesting? Maude and Kelly did the formal speaking, and both came over well, presenting the headline saving for 2012/13 as £10 Billion, £2B ahead of the plan. That is a very nice round number... but it breaks down into:

£3.8B     Procurement (see below)

£3.4B     Workforce (headcount reduction ad pension reform)

£1.7B     Projects (major projects and construction)

£1.1B     Transformation (IT reform e.g. digital, and property)

Within the procurement heading, £1.6B is demand reduction on consultants and contractors, £0.8B on the supplier relationships work (beating major suppliers around the head until they bleed money), £0.6B is centralising procurement in central government, £0.4 B centralising procurement in wider public sector, and £0.3B reduction in marketing and advertising.

The “wider public sector” element is interesting – this hasn’t appeared before, and is presumably where local authorities and simialr use the GPS framework contracts.  It’s difficult to know how that is measured, as it must make some assumptions about how much a council was previously paying for energy, fleet, whatever. We may dig into that a bit more, as the element that immediately got my "dodgy savings detector" going.

However, under the guidance of their measurement supremo and chief data geek , Carl, Cabinet Office are tracking savings better than any previous attempts. So we’ll give them the benefit of the doubt for now and congratulate them on an impressive result, badly needed given the state of the UK’s finances (we should remember that even with this work, the deficit is pretty much flatlining, not declining, at around £120B a year).

Much of the savings come from demand management rather than clever commercial stuff, but one thing did strike me this morning. In a sense, Cabinet Office will never be perfect at cost management work. But they don’t have to be. Their political goal is to persuade us that they are – and will be – better than the opposition parties. And whilst we might enjoy pointing out shortfalls, there has been a focus on costs that I’m not convinced we would have see under Labour – and Labour have shown little in opposition to show that public sector efficiency, procurement, or better project management, is really on their radar.

Anyway, enough of the politics. The least convincing moment of the session was in response to the  question, “can you give us an example of supplier innovation”? (Kelly had mentioned that alongside the cost cutting). The example provided was the JV for the PRINCE2 and ITAL project management portfolio, which is not supplier innovation at all. It is an (arguably) good idea from the Cabinet Office, to privatise these activities,  and Capita happen to have won the resulting contract.  I don’t actually see much evidence of supplier innovation these days, and it’s a shame “Innovation Launch-Pad” type work, which promised much, seems to have been forgotten.

One other interesting point. Whilst we had the usual homily to SMEs, and how great / important / innovative they are, there was no sign of the latest spend data, which must exist at least for the 1st three quarters of 2012/13. I take that to mean bad news in terms of the 25% “aspiration”.  I suppose I should submit an FOI request although no doubt we would get the “this will be published eventually” justification for non-release.

Finally, it was also good to find that all the Cabinet Office communications team appear to read Spend Matters – thank you for that, and for the invite!

Voices (4)

  1. Paul Wright:

    Should we assume the £0.5m not spent on consultants reviewing the north west trains franchise was part of the savings?

    I’m glad it is a big number because it might increase awareness of the importance, but can they really claim a saving for a reduction in demand? What are they going to do if a future government decides to commission more projects?

  2. chris farthing:

    Was this the same meeting that announced that the cloudstore was being removed from GPS and handed to GDS to be run Peter? Any thoughts on that?

    1. Peter Smith:

      Chris
      I didn’t pick that up – there was a question about the G-Cloud programme getting a amber/red review in the recent MPA report, and Bracken said something in response about a team moving from Home Office to his command (if I heard to right) but I didn’t think that was the G-Store side of things. But Bracken did mumble a bit so I may have misheard or misunderstood!

  3. LincolnMusicFan:

    The “Dodgy savings detector” should be on red-alert for the wider public sector ‘savings’ (I use the word very loosely) claim. Recently took a look at the new GPS/Pro 5 Insurance framework agreement and buried away in the FAQs is a statement on the savings calculation.

    It works on the basis of receive ‘x’ number of mini-competition responses and work out the average price. Deduct the price you will pay (presumably the MEAT offer) from the average and, hey presto, there’s your magic saving. Obviously, ignore the price you’ve paid last year as that would be over-complicating things.

    Everyone’s happy….or so I thought. Just asked my Finance Director for a pay rise as I’m clearly doing such a good job at this ‘saving’ malarkey – the P45’s in the post!

    I hope this is a one-off, but uses Cabinet Office guidelines it says and further details of the method available on request.

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