The Coalition Government asked Sir Philip Green to examine and report back his findings and recommendations on how its central (Whitehall) departments spend money. His Efficiency Review has concluded in summary that the Government is failing to leverage both its credit rating and its purchasing and property (largest tenant/owner in the Country) scale to full advantage. This reflects inefficiency and waste, mainly due to very poor data (e.g. great difficulty in establishing actual transport costs) and process (e.g. lack of a centralised approach to purchasing, leading to significant price variations for common items across departments and multiple contracts with some major suppliers).
Implicitly acknowledging the political connotations of his report, Sir Philip has subsequently emphasised to the media that he was not looking for job cuts, just how the existing personnel in central government could work better with less. In addition, no total value has been placed on the actual amount of waste identified and/or the possible total saving, although practical examples sprinkle the report such as the 400,000 hotel nights spent in London for central government with a suggested 50% saving from video conferencing and other such solutions. He also questioned whether it made commercial sense to pay suppliers in 5 days (a relic from the last Labour government to help its suppliers through the recession), when the norm is 30 days or more in the private sector. Labour has already countered that government is complex and that more centralisation e.g. of government purchasing, will lead to more bureaucracy and expense and this also runs counter to the Big Society government idea of more decentralisation to local level to reduce cost.
Total central government spend in 2009/10 is put at £670 billion consisting of:
? Benefit & Grants???????????…………..270 (40.3%)
? Procurement (e.g. IT, Travel, Consulting)??166 (24.8%)
? Pay?????????????????……………..164 (24.5%)
? Property (including running costs)?????…..25 (3.7%)
? Other?????????????????…………….45 (6.7%)
Procurement at almost 25% of total spend in Whitehall is then identified as an area where the whole public sector would benefit from a centralised procurement process.
However, in asking the colourful Sir Philip to carry out this efficiency review the government has taken the risk that the media impact of his report will far outweigh the negative aspects of his personal tax affairs. That said, if it was his own business, Sir Philip would also have ensured that any such report by his own staff would not only have quantified the total waste and potential saving but also the required action plan and resources required to achieve an actual target amount.