The Green Efficiency Report: my take
There has been a lot of criticism on Twitter already of the Efficiency Review that Sir Philip Green issued today in response to the Prime Minister’s request. Below is my take.
It is not until page four of the 33 page report that the first piece of insight hits you. And it hits you like a locomotive:
Multiple contracts have been signed with some major suppliers by different departments at different prices.
You may need to sit down now and re-read to understand the enormity of this statement. Sir Philip appears to have encountered more than one contract that has been signed with more than one major supplier by more than one department. And to cap it all, there was more than one price tag across these contracts.
Just to bring you back down to earth, the same could be said for my household, if only you replace “departments” with people. Yes, my wife and I have both signed agreements, nay contracts, with major suppliers—Orange, British Gas, Virgin Media to name but a few—and paid different prices for the services received.
He goes on to tell us that “there hasn’t been a mandate for centralised procurement”. While technically true—there has been no mandate per se—I see this point as dismissive of the role that the OGC has taken in ensuring that due diligence is followed. Nor does it acknowledge the role of the COI in its buying of media, a function that has been drastically downsized under the coalition government.
And apparently “there are inconsistent commercial skills across departments”. Hark, if only the Nobel prizes had been awarded two weeks later.
To be fair, the chart on page six is useful. It gives an indication of where government might be best able to find the sizeable savings promised. This chart is probably instrumental in informing the relentless charge that seems to be underway on quashing benefits.
Page eight documents energy as a case in point of where centralised buying has allegedly driven down costs. He’s been clever with the numbers here, but assuming a linear reduction over the four years, the £500m cumulative saving peaks at £200m in year four which, with a baseline of £2.5bn (£2.8bn current spend plus the £500m saved, multiplied by the 75% affected) equates to an 8% saving. Good, but not astronomical. It would be interesting to understand how market economics would have driven this figure in the absence of a centralised initiative—is government energy consumption going down anyway? Issy?
Some printing examples are given on page ten, but without further information about the examples given, it’s hard to understand whether the comparisons are valid.
Page 11 is woeful. There is indeed a centralised mandate to provide accurate and timely data. Ask any government department right now how it’s spending its time, and it will tell you that it’s responding in detail and in a timely fashion to a plethora of requests for information (lowercase) emanating from HM Treasury and the Cabinet Office. In asking for travel data, Sir Philip fails to articulate the reason for the range of responses. My bet is that it was because the assumptions were not clearly understood (or articulated). The definition of “consultancy” has resulted in similar debate in areas in which I’ve worked.
I am heartened, yet ever so slightly skeptical, when told that the maximum one-night price paid for the 400,000 nights’ accommodation was £117. And I was similarly skeptical at a minimum of £77, particularly when the Civil Service Club offers Sunday night accommodation from £48 per night. Assuming a daily subsistence of £30, Sir Philip’s assumptions suggest a nightly travel allowance of around £123, which seems excessive to me given the standard class mandate and the fact that the vast majority of the travel will be train travel. A Monday–Thursday visit to the big smoke would allow £369 in travel, for example. Also, no analysis seems to have been done here of the suitability of video conferencing as a substitute for the travel.
I struggle to comprehend or believe *any* of the numbers on page 13. Are you sincerely telling me, Sir Philip, that no one in government paid less than £86 for a printer cartridge? Really? And that the £73 box of paper was of the same nature as the £8 box?
Page 14 made me cry. I won’t dwell. But again: are we comparing apples with apples here? £2,000 vs. £353? I very much doubt it.
The woeful comparisons continue until we reach a wholly unsubstantiated conclusion on page 17:
This means that there are 71,000 central Government buyers who in the main have a monthly spending limit of up to £1,000, which is not monitored.
No it doesn’t. It means that their spend does not go through a procurement system.. It does *not* mean that it’s not monitored. Page 18 continues with the inaccurate conclusion theme.
Towards the end, he makes some fair points about the major IT outsourcing contracts and estates management, but by this point, the audience has stopped listening given the idiocy and oversimplification of many of the prior points. And Sir Philip’s supposition that public sector thinking can be the same as private sector thinking is absolute bunkum. If that’s the case, then I’ll ignore OJEU tomorrow and go buy me some cheap stuff. And incur the associated penalty and wrath of the private sector at a later date.
In summary, woeful and ill-informed with little in the way of useful recommendations. The theme seems to be to centralise buying. It would have been nice if he’d used the COI as a model of how this has worked, although I don’t know (I genuinely don’t) whether this is a case study that would promote his argument. I would have liked to see more about how the market would have reacted to such centralised buying—don’t assume that if you can secure 100 widgets/hotel rooms at a very favourable rate, you can do that for 400,000. And I’d have liked an appreciation of the commercial and contractual landscape in which he’s working, which he doesn’t seem to have grasped.
Otherwise, top drawer.