The election procurement debate, April 2015 (part 1)

We’re now just past half-way in this UK Government’s term of office, assuming the coalition does survive until May 2015. So rather than looking backwards at what’s happened in terms of procurement related achievements, I thought we’d look forwards, to a surprising announcement in April 2015...“Given that the Government spends one third of its total income with suppliers of goods and services, it has been decided that the first of this election’s leaders’ debates will focus on that topic – how will the parties address public sector procurement”?

So let’s look into our crystal ball and see how it goes....

Jeremy Paxman -  Good evening and welcome to our election leaders’ debate – on public procurement and all things related.  Let’s start with savings. What savings do you think are achievable from that £200 billion a year spend in the next government?

David Cameron (Conservative) -  Well, of course we’ve had a great success in reducing government spend already, unlike the last Labour government which allowed spend to spiral out of control. Francis Maude has driven savings of over £5 billion a year through better management of the money government spends with suppliers.  Good housekeeping, I like to call it. We now have a single government contract for paper for instance, that has saved millions. We will continue and re-double those efforts - we’ve set an even more ambitious target of £10 billion a year now for the next five years.

Ed Miliband (Labour) - It’s easy to claim savings of course.  But what worries me is that these weren’t all savings from lower prices, they were cuts. This government promised to preserve front-line services. That just hasn’t happened. A high proportion of the so-called efficiency savings came through firing staff, not a cheaper copier paper deal. Staff who were doing vital work in collecting taxes, in manning our borders, or finding people jobs.

And it’s interesting, you talk about savings, and you still go on about the last Labour government. But let’s be clear - this Government has borrowed £600 billion during the last five years. £600 billion! That’s more than the last Labour government borrowed over 13 years!  So it’s hard to see that your savings really amounted to much.  But looking forward, we have a detailed savings plan in place, backed by Sir Peter Gershon, who by the way has come around again to our way of thinking, which suggests that £15 billion a year is achievable through better procurement.

Vince Cable (Lib Dem)- Well, of course we played our part in finding those savings - we insisted for instance that spend on expensive consultants was slashed, and we protected some of the areas that the Conservatives wanted to cut. But our manifesto sees opportunities for more creative approach to savings, and more use of social enterprises for instance, who often offer much better deals than the big multinationals that the Conservatives seem to favour. We want to save money – but we want to use that £200 billion more effectively to drive growth and British business.


Paxman - What about those big suppliers – aren’t they still ripping off Government? How will you address this?

Miliband - Yes is the simple answer to the rip-off question! We’ve seen no evidence of the coalition getting to grips with this –they claim to have negotiated savings from the big companies but it’s is smoke and mirrors. There isn’t a single firm that has issued a profit warning after meeting with this government or told its shareholders it isn’t making as much money out of government. And can the government explain why (insert name of fat cat with recent pay award here), the Chief Executive of XXXX who make most of their money from government, has just awarded himself a 20% pay increase to £2.8 million a year? It doesn’t look like they’re suffering too much! It needs a Labour government that isn't beholden to big business to really squeeze these firms.

Cable - Well, we’d like to see more transparency on this. We’d like to publish full details of all government contracts, that’s one of our manifesto promises. And suppliers to government would have to publish details of their contracts with their suppliers on government work. If we do that incidentally, I think you would see what good work has been done in this area. We’re also committed to giving shareholders a stronger voice on executive pay.

Cameron - We’re proud of the way we’ve re-negotiated contracts with the biggest suppliers to Government. That’s saved hundreds of millions of pounds, making sure that the big suppliers give us their very best deals. Those savings have been audited by independent experts – I can assure you they are real. We introduced that initiative as one of our very first actions – these were suppliers who the previous Labour government had frankly let walk all over them! They'd certainly never had a Minister holding then to account as we have. We've set a target of getting another £5 billion out of these large suppliers.

Paxman – Then we have the smaller suppliers – what will you do to help them over the next five years?

Cable- Well, I think you’ll find that many of the ideas around supporting social enterprises and mutuals that we’ve seen in the last years came out of the Liberal Democrat movement. We’re proud of how we’ve supported these enterprises – look at (insert a good example of a successful spin-off here, motivational story about employee commitment, happy workers etc). And our manifesto lays out plans to set up a fund to support mutuals and social enterprises more pro-actively.

Cameron - We’ve supported smaller firms through a number of initiatives – we introduced a target for the first time for SME spend, and we’ve made it easier for them to do business with government. They can find opportunities easily now with the Contracts Finder, we’ve done away with PQQs for smaller contracts, saving them considerable time and effort, and the amount of government  spend going to smaller firms is up  30% over the last 5 years. And we’ve promoted social enterprises in many sectors – there are now over 100 mutuals and social enterprises that have been spun out of the public sector. We'll build on this work in the next 5 years and aim to have 1000 mutuals up and running by 2020.

Miliband - Most government Departments are spending a lower proportion of their money with small firms than they were five years ago!  And the data is so bad, we’ve found that some departments count private equity funds as small firms!  Now of course the whole idea of mutuals came out of the Labour movement so we support them. But the Government has been very half hearted about the whole idea  – and we still see these enterprises losing out when they bid for work against the big multinationals with their overpaid chief executives. So we’ll make sure these organisations – where staff really want to set them up , and aren’t just being pushed into doing so – get real support. And we will break up some of the huge national contracts that the government has been promoting – contracts that only the very biggest firms can win – so that small businesses have a chance to compete.

(Part 2 to follow)

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Voices (4)

  1. Dan:

    here comes the new boss, same as the old boss

    1. John Diffenthal:

      As the anarchists used to say: “if voting changed anything … they would make it illegal!

  2. RJ:

    Depressing indeed. Very realistic rhetoric as the politicians simply have digs at one another and talk in general banalities without making any real difference. I like the way you’ve promoted Vince Cable to party leader by 2015, though!

    I await David Orr’s comments with interest (or perhaps outsourcing is being saved up for part 2!).

  3. Paul Wright:

    Gosh that is depressing. Very realistic, and therefore depressing.
    Don’t get me going again on the folly of doing away with pqqs

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