Is the UK Government ready to find ‘efficiencies ‘ and real procurement savings?

The UK Parliament's Public Accounts Committee expressed concern last week about government Departments' ability to make efficiency savings, based on the experience of the last efficiency programme which started in 2007.

That was slated to save £35 billion; but only £15 billion was claimed, and the National Audit Office reckon only 38% of that was genuine.  So that's about £6 billion rather than £35 billion.

The Committee is worried that this suggests a lack of experience and / or capability in the public sector, which might in turn mean that the savings needed over the next few years are more likely to come from simple cutting of jobs and services rather than real efficiencies.

They are right to be concerned.  We've written about this before, including in our White Paper published back before the election.  We also pointed out there that, in a sense, it doesn't matter too much whether savings are 'genuine' while budgets are rising.  But when times get tight..this is what we said back in April.

While the National Audit Office and others have commented on the reality or otherwise of the savings, it has not mattered too much how ‘real’ they were for most organisations, who continued to have enough resource, and growing budgets, to at least preserve services even if savings were not made.  The world will be very different once budgets are being cut in real terms.  If real efficiency savings are not made, activities, services and staff will have to go.

Now budgets are being cut, there is much more incentive for managers to find real efficiencies.  The problem is though, as the PAC identify, do they have the capability to make real efficiencies - or will they just resort to the simple chopping heads solution?  The omens don't look universally good at the moment - here's our analysis that suggests for instance that the target savings from the 'centralising procurement in Whitehall' initiative fall far short of what is needed just to keep up with the overall cuts.   That would suggest even more staff having to go and more services cut.

I do actually believe there is a lot of capability in procurement around the public sector, but it needs to be focused and it must be involved in the wider efficiency discussions.  Again, I'm not sure this is happening. One Government head of function I spoke to recently confirmed that he was not involved at all in the discussions about how his organisation was going to make their challenging cost reduction target.  He, like every other senior manager, had just been given a cost and headcount reduction requirement.

Maybe he is an exception; it would be good to think that other functional heads around the public sector are plugged into the top level efficiency drive and are fully engaged looking at supply side cost reduction initiatives, demand management, specification review, value based contract management... and indeed, one procurement leader I spoke to this week in a large quasi-public sector organisation was engaged with his senior colleagues in exactly that manner. So we live in hope!

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