The Centre for Economic & Business Research published a report on Monday, stating that "public sector procurement [accounts] for at least fifteen per cent of total demand [for business services]", which seems about right to me.
The best bit is this:
Whilst there is almost certainly a proportion of government expenditure on external advisors that could be cut without any noticeable impact on public services, ministers should think carefully before wielding this particular axe (1). Not only can external expertise play a crucial role in helping government become more efficient and effective (2), many important projects could not be achieved without the support of the business services sector (3). Cutting these budgets is an easy option compared with cutting public sector jobs, but unfortunately whoever forms the next government will quickly discover that significant cost savings can only be made by cutting the public payroll (4).
1) OK, I've thought carefully and decided to get rid of it.
2) The government ought to concentrate on "core functions" (things which free markets would not provide and which 'add value'). In economic terms, these are always "efficient" as the value exceeds the cost. If the cost exceeds the value, they shouldn't be doing it (e.g. ID cards, subsidies to favoured industries, green energy tomfoolery, the War On Drugs, endless regulations of everything, smoking ban etc etc), however "effective" they may claim to be in these endeavours.
3) According to their figures, over half a million people in the supposedly private business services sector depend on the government for their jobs. Remember that not only are the employees are paid decent salaries, but that their employers usually charge the end-customer about four or five times their salary, so the end-cost to the taxpayer is equivalent to at least two million extra public sector employees.
4) I've been saying that for years as well. The way forward is zero-based budgeting - tell the two million people paid by the taxpayer who are doing useful stuff (teachers, nurses, doctors*, coppers, prison officers etc) that their jobs are safe and then work on the assumption that the other six million are entirely superfluous.
* As a separate issue, state provision of education or health ought to be scrapped and the money dished out as vouchers to be spent with the provider of your choosing, there's nothing like having to keep paying customers happy to ensure value for money.
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7 comments:
What's the matter? Don't you know the NHS is the envy of the world? ;)
Zero-based budgetting is definitely the way forward (and is normal in the private sector of course). The question is how you get the civil service to do it when their main aim is protecting their jobs and not protecting services.
The tories answer seems to be what they're doing in Essex where they'll contract more services out.
Unfortunately, these often don't deliver much savings, and can actually cost more. The council gets locked into quite a long contract which specifies exactly what must be done. When the council change their mind (because of law changes), that's a new cost, and as you've already got IBM in, it's easier to stay with them than to go elsewhere cheaper.
AC, the NHS is all right, really, if you strip out the one-third of their budget they waste on admin, stop smoking campaigns and crap. But vouchers might be better.
OC, government procurement is one disaster after another, that's for sure.
Mark,
It's also the case that large consultancies have a pretty terrible record in the private sector, too. It's so bad that I've literally never met someone who has a good word about them (in private).
Medium sized consultancies are generally good. They're run by people who aren't just sharp salesmen. They understand stuff, hire experienced guys to run things and get the job done.
Heads up to all Bloggers!
Make this your Christmas number one:
http://www.youtube.com/watch?v=KT6KSJcloj0
I'm a senior architectural technican. In the entire three years at my current firm, and two at the last, I haven't worked on a single private project. The only work going has been PFI's for hospitals and schools. My old firm is currently doing public libraries and fire stations, so again, no private projects. The only exception was a collegue in 2008 designing an office and training facility for a major energy firm, however, they pulled the plug before construction could begin.
I have may have previously mentioned that Mrs Lola is a teacher. In the past I could easily decend any dinner party into an unholy row by advocating the privatising education and proving I was right. Now though, teachers are very open to the idea and ask questions as to how this can be made to work and dxebate how much better they could teach if liberarted from leftiness. Ditto clinical staff in the NHS. I am encouraged by this. In other words - as usual - the people are way ahead of the Government.
I agree that the large 'consultancies',the one that runs the London Congestion charge for example, have just twigged how to get shed loads back from the taxpayer and have become very good at milking the system. And they exchange people with government to cement this relationship, Mark Hoban for example.
We need to move the Government from 'how much should we spend on x this year' to ,should we be doing x at all'.
Some bloody hopes.
And a Merry Christmas to you and yours Mr Wadsworth.
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