Cabinet Office makes procurement and spending controls “permanent”

The Cabinet Office controls on spending across UK central Government  have been extended “permanently” by Francis Maude, the UK Minster responsible for Whitehall procurement and efficiency.

“Permanent” is an interesting word of course when a new Government in three years time, or indeed a new Minster in three months’ time, could remove the controls at the stroke of the pen.  Even the change of Chief Procurement Officer might have an impact on the acceptance of and compliance to these controls. how well

These controls formalise the steps that were put in place in 2012, which have been successful in reducing central government spend in certain category areas. As Cabinet Office claims -

“The result was a staggering £3.75 billion of cash savings in 2010/11, and efficiency savings for 2011/12 – which are currently being audited – are expected to top £5 billion”.

We have no argument with the fact that these controls were necessary and generally have been a good thing given the appalling budget situation bequeathed by the last government. We don’t believe they are “efficiency savings” however. “Efficiency” relates to the ration of output to input.  These savings are in the main demand management savings - expenditure has simply been stopped. But as Cabinet Office has no way of measuring the effect on output of these measures, then technically the savings cannot be called “efficiency”.

(For instance, cutting the number of staff in passport control at Heathrow is a saving – few would argue it is an “efficiency saving”).

The controls themselves are pretty draconian in some areas.  Level 1 approval can be given within the department; Level 2 requires Cabinet Office led approval, and Level 3 approval requires Treasury led approval. So in terms of consultancy spend for instance, Cabinet Office approval is needed for-

All consultancy expenditure above £20,000 in cases where:

- New contracts are expected to exceed 9 months.

- Existing contracts are to be extended beyond 9 months.

- Expenditure on procurement related consultancy.

On reflection, that’s a really weird definition.  So I can spend £20 million on consulting without telling Cabinet Office as long as I spend it in less than 9 months. (Unless it is procurement consulting).  But employing a single consultant to do a day a month for two years (sitting on a Board perhaps) would take you into approvals territory?  Unless I’m missing something here, someone hasn’t thought that out very well.  Please let me know if I’ve misinterpreted that, readers in Cabinet Office.

How well do we think Departments are going to comply? What is missing of course are any effective sanctions. Maude is outranked by Cabinet Ministers, and when you look at the agendas that Ministers like Duncan-Smith, Lansley and Gove have to manage, I suspect they’re going to put the need for delivery ahead of bowing to Cabinet Office controls if they need to move urgently.  (And who in Cabinet Office is going to do the work to approve all the consulting, IT, marketing spend)?

But I don’t want to sound wholly negative here. This is effectively a set of “delegated authorities” as you might see in large private sector firms, who want to lay out the accountability and authority of subsidiary companies, divisions and senior managers. As such, you have to say it is good practice, even if we question some of the detail and the feasibility of managing compliance.

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