The business model of UK Inc is an interesting one to consider. Unlike most organisations, it is almost completely unable to influence the top line, as much of its revenue, the tax take, is dependent on the performance of businesses and individuals over which it has little control. Of course, it can, through pricing i.e. rates of tax, have an influence, but there are political and economic ramifications of raising tax rates.
The cost side of the UK business model is obviously far easier to influence. In such a huge organisation, the existence of “fat” is taken for granted. Every large organisation, from time to time, carries out a serious cost review and is able to identify many potential savings whether it be on head count or purchased goods and services.
It’s against this backcloth that I read with interest the recent report issued by Sir Philip Green which can be found at http://www.cabinetoffice.gov.uk/ .
Green shoots from the hip and takes no passengers. What he has unearthed, which lets face it, any good manager could similarly have discovered, is an environment of waste, profligacy, extravagance, lack of ownership and to be frank, mismanagement. It really seems to be a case of the Wild West meets government’s expenditure. Some of the examples he unearths such as boxes of paper bought for £73, printer cartridges for £398 and laptops bought for £2,000, smack of the lunatics running the asylum.
To be perfectly honest, I am surprised that there hasn’t been more of a reaction to this report. One article I read in the paper seemed more concerned in exposing Green’s own tax avoidance than focusing on the matter in hand.
In many ways, this report is more scandalous than the MP expenses furore.
The numbers in the report are staggering. As an example, there are 140,000 procurement cards (payments cards) in circulation and the total government spend on these cards is approximately £1bn per annum. 71,000 of these are in central government each with a monthly spending limit of up to £1,000 which isn’t monitored. How can it be that 71,000 people can each spend up to £1,000 per month on government business? What exactly are they spending money on?
Other areas of the report are similarly damning. Long term IT contracts of more than £100m per annum are in existence with work being charged at a rate of more than £1,000 per person per day, well in excess of market rates. Mobile contracts with multiple different suppliers and no advantage being taken of the discounts available.
Central government travel spend alone is £551m per annum and government uses 400,000 room nights in London each year at a cost of £38m. Apart from the cost savings that would be possible if this was centrally controlled, or greater use was made of video conferencing, what on earth are all these room nights being used for. I shudder to think!
The whole report is very damning and really needs to be properly exposed. At a time when government is about to announce its spending review which is definitely going to lead to massive job losses, the conclusion from this report is absolutely crystal clear. Easily achievable cost savings across the board, and better management and control on an ongoing basis could probably save us all billions of pounds per annum.
Green’s report is actually a breath of fresh air, but like so many documents, the key is in implementation. Let’s have him do the report again in a year’s time and see whether anything has happened. No let’s go one stage further, let’s see him do a similar report on the NHS, an area where I am absolutely sure there are enormous savings to be made.