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Green: 'I'd be bust if I ran my business the way government does'

Robert Peston | 13:00 UK time, Monday, 11 October 2010

Sir Philip Green told me that if he ran his businesses the way the government does, the lights would go out.

Sir Philip Green

 

What he says he's uncovered is a culture where there are grotesquely inadequate controls of spending on everything from mobile phones, to travel, to property and paper.

The budgets he looked at are worth £191bn in total - and he believes billions could be sliced off that, if the government did simple things like centralising purchasing and monitoring expenditure properly.

For example, he argues that the public sector is spending around £700m a year too much on telecoms alone.

It’s the many smaller examples of waste that some will see as shocking, such as that on a single IT contract, 400 private sector employees are being hired at a daily rate of more than £1,000 per day, for tasks that Sir Philip was unable to identify.

He also highlights:

1) the existence of 71,000 central government buyers, who can spend up to £1,000 a month using “procurement cards” without any checks or oversight;

2) in general, the government permits spending of up to £1,000 “without monitoring or authorisation”;

3) £104m a year is spent on printing, with some departments paying 11p per leaflet while others pay £1.31;

4) there is £551m of annual travel spending by central government, with very little co-ordination of the purchases;

5) even more is spent on travel by the rest of the public sector, but the precise amount was impossible for Sir Philip to obtain;

6) some £38m a year is spent on 400,000 overnight hotels in London alone, with prices per room varying from £77 to £117;

7) some £84m goes on office supplies, with prices paid for ink cartridges varying from £86 to £398 and on paper from £8 per box to £73;

8) £61m is spent on laptop and desktop computers, from 13 different IT services providers, with no standard specification across departments and prices paid per laptop varying from £353 to £2,000.

9) one provider takes 98% of the £21m a year spent on mobile phones, which has nonetheless negotiated 68 different contracts with government departments - implying that the government is not benefitting from any economies of scale;

10) £25bn a year is spent on property, but only 6% of the entire estate is overseen by a central team;

11) the government is poor at taking advantage of break clauses in property leases, to rationalise use of office space.

That is just a selection of the myriad examples where Sir Philip believes the government can make very substantial savings, perhaps as much as 50%, on £191bn of procurement and property costs.

He is keen to point out that the savings he is suggesting would not involve a single public-sector redundancy: all of the squeeze would be on private sector suppliers (who probably won’t thank him).

Perhaps his most controversial recommendation - which he made in his interview with me but is not explicit about in the report - is that government departments pay their suppliers far too quickly.

He says that the norm in most departments is to pay suppliers in five days, compared with the standard 30 days payment period for most private-sector transactions, and 45 days demanded by some bigger companies (like his own).

If the government demanded a minimum of 30 days of credit from suppliers, it would save hundreds of millions of pounds in financing costs.

This would of course be painful for those suppliers, especially smaller companies.

The previous government made it a matter of explicit policy to pay suppliers as quickly as possible, to help them through the recession.

Sir Philip Green is saying that priorities should now change - and that the government should take advantage of its sheer size and credit-worthiness to extract the best possible terms from all those who sell to it (and never mind if they don’t like it).

Update 1430: I’ve had a brief chat with Peter Gershon, who advised the previous government from 2000 to 2004 on how to make savings in procurement.

He says that he is supportive of Sir Philip Green’s central argument, that there should be more centralisation of purchasing by the public sector (or what Gershon calls more "aggregation of demand").

He says that in his work for the then Chancellor of the Exchequer, Gordon Brown, he put in place systems to facilitate the centralisation of purchasing.

But Brown did not order departments to centralise purchases.

And nor was there any serious move to standardise specifications for goods and services bought by different departments.

Different parts of government retained considerable discretion to choose different kinds of computers, and stationery, and mobiles phones, among others.

Which of course meant that their individual orders were smaller, and therefore there was less scope to yield savings from placing huge orders.

The corollary is that taxpayers arguably ended up paying more than was necessary to equip the public sector.

Comments

Page 1 of 2

  • Comment number 1.

    Well it makes perfect sense to copy the successful. Much is made about his tax status but you have to make a profit for it to be an issue and that he has done consistently.

    Perhaps a peerage is round the corner?

  • Comment number 2.

    Paid to shaft small business.
    Not much money to be made from asset stripping small firms so it's the big ones he wants to encourage so he can work his magic on them.
    Some good points though. There's not enough incentive for the public sector to concern itself with saving money.
    Centralised buying makes sense but it's costly to set up so the savings aren't as great as it appears.

  • Comment number 3.

    I think the most appropriate phrase is 'it ain't rocket science'.

    When you've got a lot of money to spend, not a lot of time to spend it(remember that govt budgets that aren't spent are usually lost for the following year), then it tends to get wasted.

    As identified by Sir Phil

  • Comment number 4.

    You forgot recommendation 12: transfer half the Government's assets into Samantha Cameron's name and get her to move to Monaco. I'm sure Sir Phillip could provide lots of advice on how to do that.

  • Comment number 5.

    Goodness me is this how the government has been doing business for the last 12 years!

    If any other business would run in this way it wouldn't even last a year and go bankrupt, hence our position.
    Although I am not a fan of Sir Green I think it was a good idea for a business man to review the situation, and very clever of the coalition team not to be accountable of exposing what has been happening, because they were also a part of the attitude of bad practices.
    Politians are not business minded even those who proclaim to be economists, why hadn’t they reviewed and reported previously?
    It appears the last government had an approach of free for all stemming from a non cohesive working attitude between departments.
    This attitude is too common within public sector organisations which are inherently hierarchal and bureaucratic, its ridiculous and needs to be stop to move forward progressively.
    No wonder why public sector workers can't survive in the private sector.

  • Comment number 6.

    I am not astonished. Will Sir Philip of Monaco tell us how to realise the potential savings. Some of the inefficiencies seem to result from involving the private sector or being too nice to them. That is not to say the savings should be fudged. Unfortunately instead of a plan to capture the efficiency savings which require much diligence and some smart reorganisations we will get further arbitrary cuts and unachievable targets - quick fixes!
    Why stop at central government? Local government has 350 separate organisations (not including counties and unitaries)all supplying basically the same services but with 350 sets of overheads.

  • Comment number 7.

    Well he would say that wouldn't he, as he's a free-market libertarian anti-statist (aka a Trotskyist) who wants to help his greedy little friends get their hands on what's left of the states assets.

    His only motive for this report is the privatisation of the state for PROFIT!

    How many times in the past has a state asset been privatised only for turmoil to ensue?

    Telecoms (no infrastructure), british gas (spiraling prices anyone?), the railways (lack of investment and uncoordinated service?), waterboards (lack of investment), social housing (sold off to sporn the btl spivs) and so on and so on and son...blah blah blah!

    David Cameron's secret plan to cut UK's £149bn debt by selling off property
    http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/8054350/David-Camerons-secret-plan-to-cut-UKs-149bn-debt-by-selling-off-property.html
    'The Government is working on a secret plan to tackle Britain's £149bn deficit by hiving off state-owned property assets worth tens of billions of pounds and selling them to the private sector.'

  • Comment number 8.

    At last an attempt is being made to try to run the country as a business.

    Taxpayers money has been spent on an easy come easy go basis for far too long and if the government had had to work hard like businesses do for their turnover they would have put people in charge who understood how to run the country as a successful business instead of ruining it.

    The amount thrown away is ludicrous and at a time when billions of pounds are being paid to lenders in interest unnecessarily the sooner the debt is wiped out the sooner the country can be put to right.

    Anyone who cannot see how badly and quickly this restructuring has to be done frankly needs their heads examined.



  • Comment number 9.

    If government ran like businesses, how would it have the equivalent of cheating on the taxes?
    Government is not business and the idea that it should run like one is what has caused all the problems. The influence of banks and financial services caused the meltdown. The government had been persuaded that business could self-regulate.
    There is certainly waste in government, as there is in business. But government ends up cleaning up the messes left by businesses, something that businesses take no responsibility for themselves. Part of the problems are associated with the influence that big business has with government so when one starts looking at wasteful budgets it would be good to remember that these associations are usually because some business has been able to put some pressure on the political process to secure the contract.
    Now, if Sir Philip Green will address the influence of business in government he may find the real reasons why such waste exist.

  • Comment number 10.

    So the idea is a central buying unit for things such as stationery and printing. It needn't be situated in London, as the costs would be high. Maybe a small city like Norwich would be ideal. It could be called Her Majesty's Stationery Office (HMSO for short). Oh wait a minute, a Conservative government already decided that that sort of thing was a bad idea, and got rid of it in 1996, making fat profits for those who won the bid (the secure press in Manchester was sold on for more than the bid price for HMSO). The ideas of Sir Phillip seem very sound, it just seems a shame that previous Tory governments decided that centralisation of buying was a bad idea. Maybe donators to the Tory party at the time wanted de-cenralisation knowing that the government would end up paying more to private companies in the long run.

  • Comment number 11.

    30 day payment terms is NOT shafting small firms. I am a partner in a small firm and one of my very large multi-national customers demands 60 days...and they want to put it up to 90.

    Only the naive and inexperienced would call this report anything other than a massively overdue dose of good sense.

  • Comment number 12.

    The summmary we are seeing from Green is no suprise to anybody like me who has worked with the public sector at any level.

    Senior civil servants are not encourged (or rewarded) for saving money. In fact as I saw numerious times, if you did not spend every penny of the budget allocated it was deducted from next years, thereby effectively punishing good business practice and prudent management. The exact opposite happens in the private sector.

    On a more personal level an employee of a local county council tried for two years to change the way broken curbs & paving stones were replaced. He could prove when you added in all the costs and disruption that it could be repaired (not replaced) for 20% of the cost. Plus the end result was stronger, less disruptive and more cosmetically appealing. Because of the red tape he encountered he eventually went out bought the repair compounds and did the job himself to show it worked. Afterall he had run his own company for 8 years in construction.

    End result - he was disciplined for breaking LCC proceedures even though they agreed with his arguments. Years later the proceedure has not changed, a good employee has just given up trying to save money and they are still wasting hundreds of thousands each year on outdated work practices.

    On another issue the pension scheme accounts I have seen are the same. Fortunes paid to auditors, actuaries, administration companies, consultants, etc to run the govt pension scheme. The truth is these contracts are expensive and could be anything up to 20% - 25% cheaper if tendered correctly.

    Green is just scratching at the surface of a real can of worms.

  • Comment number 13.

    At #4 afcone; I find comments like this tedious, HM Revenue and Customs estimate that the super-rich cost us approx. £1bn a year in tax avoidance. The cost of the black economy, and people dodging VAT is estimated at £15bn+ per year. When was the last time you paid someone in cash??

    By the work that Philip Green is doing, he will no doubt save more for this country than any tax he would have received if he was tax resident here.

    The pilloring of the "rich" (which in most cases equals anyone who earns more than us) as being all undeserving bankers or tax dodgers, is a great disservice to this country. You get richer by hard work, making sacrifices, being smart and putting your neck on the line when you have to; not by moaning and thinking other people need to get taxed more.

  • Comment number 14.

    As someone in the procurement business,who has interviewed ex-public sector buyers and has the views of private sector buyers who have gone over into the public sector - I can confirm that Mr Green has summed up the situation with Government spending processes accurately. Private businesses would be bankrupt if they purchased in the same manner. If suppliers to the private sector manage to make a profit while accepting competitive tendering, leverage of scale and 30days payment terms then so can public sector suppliers - whatever their size. I can't imagine they'd be happy about it, but that's a different issue. Good procurement practices deliver better suppliers, products and services at the best market price available. And that's all 'win' for tax payers - improved services and products, more of them at either a reduced or same level of taxation. I'm sorry but where is the downside?

  • Comment number 15.

    If the government demanded a minimum of 30 days of credit from suppliers, it would save hundreds of millions of pounds in financing costs.
    -----------------------------------------------------------------------
    Or the suppliers could increase their costs to cover the additinal delay in payment!

    Total Saving in financing costs-nil

  • Comment number 16.

    It would be easy to blame politicians and especially the Labour government, but I really blame the civil servants for the more obvious examples of waste. Most of this isn't even something that a minister should have to bother with. These aren't examples of stupid policies, but something that permanent civil servants should have dealt with.

    Ministers should be making decisions on education policies, health centres, roads, aircraft carriers - not checking that loo paper is being bought at the cheapest possible price. You have supplies officers who have the simple instruction, "Get us everything at the best price, and if you are paying even as much as last year I want to know why. In 3 years time, if you have got savings of 40% you will get a one off bonus."

    The Cabinet Secretary should have appointed senior staff (very small team) to check that this is happening. Phillip Green will have people checking that there is no waste in his organisation and if they fail they are collecting their P45s. Same should happen to these inefficient useless people in government.

  • Comment number 17.

    Pathetic.

    Consultants charge £1,000 per day to big business whether public or private.

    An ink cartridge with a gallon of ink in it costs more than one that lasts a few pages.

    Sir Philip Green is playing to the gallery. He's only involved in shopping and it shows.

  • Comment number 18.

    Is there an issue with his tax status? Isn't the tax status issue with his employer's only shareholder?

    He makes his money buying in bulk and selling at a profit. He may have something useful to offer government. Alternatively he may just list the things that are wrong and than go back to the drapery business. He's done the easy bit, what next?

  • Comment number 19.

    I get annoyed with the assumption that the public sector needs sorting by one rich businessman. Arcadia employs 40 thousand odd people and just sells clothes. The public sector employs 6m+ people and provides everything from health care to prisons. And you only have to read consumer complaint columns to know that private sector companies are not always a model of slick efficiency.

  • Comment number 20.

    Watriler is absolutely right - having worked in a couple of central gov departments and about 15 LA's this sort of waste doesn't surprise me at all.

    They need some private sector procurement types to go in and burn some of these suppliers, but also to leverage spend across departments. Easily done.

  • Comment number 21.

    How can anyone take this review seriously. Sir Phillip is hardly objective. Most of these conclusions would have been written the day he started the job. He is hardly likely to conclude that the public sector is wonderfully efficient and a model of good practice which the private sector should copy. As an earlier contributor wrote, the public sector has to operate within constraints which would horrify Private sector organisations. Having worked in both, and studied the way the Public Sector operates, it is clear that the chief cause of inefficiency and waste in the public sector is the imposition of free market practices such as competition and private sector management methods.

    This is just a political exercise aimed at creating spurious justification for the ideological attack on the caring society we have been building for centuries.

  • Comment number 22.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 23.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 24.

    Philip Green is a world-class retailer and financier and his advice could save the country billions on the expenditure side of the balance sheet.

    There is only one subject Green and his family know more about: tax avoidance. I look forward to Green's next report highlighting how we can raise tens of billions of pounds on the income side of the balance sheet. No accountant or businessman would look at only the expenditure side.

    Retailers wouldn't survive long if they let shoplifters just walk out with goods from stores without paying. Oh, wait a minute, Green doesn't talk about the income side of the balance sheet, does he...

    To recoup the £1.2 billion dividend exported tax-free to Monaco by Green's family (and unlikely to return to these shores):

    1. If the government reduces printing costs by 50%, it will take 23 years;
    2. If the government takes phones away from all phone users, including doctors, police, etc., it will take 57 years;
    3. If hotel stays are banned, it will take 31 years;

    And this is being kind and ignoring financing costs.

    The cowardly Revenue just reached a settlement with Vodafone, wroting off £6 billion in tax - puts the £21 million p.a. spent on mobiles into perspective, doesn't it? 285 years to get that back.

    Now, Green is even suggesting clobbering, putting it politely, small businesses on payment terms, while his familiy's businesses send hundreds of millions of pounds in dividends 'tax-free' to Monaco.

    Green has his CCTV and store detectives to ensure the income side of the balance sheet is strong, and shoplifters are caught. The Revenue, meanwhile, is cutting the number of tax inspectors, when shoplifting is running riot. You couldn't make it up.

  • Comment number 25.

    That is just a selection of the myriad examples where Sir Philip believes the government can make very substantial savings, perhaps as much as 50%, on £191bn of procurement and property costs.
    --------------------------------------------------------------------
    So £95.5 billion of savings, lets see the Libcons put this into action,

    I can see the headlines now- Tax cuts of £95.5 billion and no job cuts.as Green says:

    He is keen to point out that the savings he is suggesting would not involve a single public-sector redundancy: all of the squeeze would be on private sector suppliers (who probably won’t thank him).

    If Cameron had got Green to do this before the election then good old George Osboune could have saved his breath at the Tory conference. Poor old G.O. why didn't he think of it first!



  • Comment number 26.

    After being sceptical of Sir phillip green, i have to say he has delivered. I see wasteful use of money on purchases everyday, but when you speak to people in authority they are not interested as its not their money.People in charge of budgets who are incompitent are never made accountable for their errors! Its a great big gravy train which people at the front line know where to save the money but those in power have too much vested interests to rock the boat! Bring more people in from business to sort out the dead wood at the top and lets break this cycle.

  • Comment number 27.

    OK, so let’s look at some of the facts as presented here;
    "£104m a year is spent on printing, with some departments paying 11p per leaflet while others pay £1.31;"
    Now this in itself proves nothing, and the difference here could well be related to one department paying a high(ish) lease cost (most copier contracts are lease based contracts), which means per copies are charged low, where as the other department have negotiated a low lease cost, which correspondingly have a higher per copy cost. But the difference in those lease costs would not necessarily mean the £104m figure could drop by much anyway. Clearly the intended message is; "£104m is far too much for this reason", where in realty the difference described means nothing.
    Although Sir Philip is much more successful than me, so what do I know?

  • Comment number 28.

    I am not surprised at the comments being made about the spending process in the Public Sector. Having run businesses in the Private Sector for many years , I have to say that many companies have the same problem. It is about leadership , culture and the whole point of the organisation. The public sector still has a culture of political expediency to justify cost rather than a wholesale look at the principle of actually saving money for the sake of saving money.It is fair to say that the private sector could help government , but if they think that the money is actually theirs to spend how will things ever change

  • Comment number 29.

    Wow.

    I am simply stunned. I trust Philip Green to be telling the truth, at least in the essentials and rough order of magnitude. His reputation is on the line, he has little to gain from this, and he could easily have delivered a more 'moderate' report that didn't step on so many important toes.

    In any case, noone seems to be contradicting the bare facts of what he is saying, even if they don't like his suggestions to deal with them.

    Before today, I was a full believer in Vince Cable's old commentary on efficiency savings ('voodoo economics'). I have always believed them to be something everybody talks about in opposition, but magically vanish in government because they just aren't there.

    This forces me to radically re-think that point of view. I wonder whether Vince's apparent recent conversion into someone who belives in efficiency savings was driven by private conversations either with Philip Green, or with whoever Philip has presumably been reporting to (No. 10??)! If so, he has gone up in my estimation considerably. We could do with more politicians privately admitting when they were wrong, even if they don't do it publicly.

    Though speaking of public apologies, I wonder what labour/the civil service finance departments will have to say about all of this!

  • Comment number 30.

    "Only the naive and inexperienced would call this report anything other than a massively overdue dose of good sense."

    ie all those who post here who expect someone else to create jobs for them and moan like mad. The posts attacking the person rather than the method speak volumes. Nu Labour's spin really did get into the core of their being.

    If the guy saves money wasted and puts even 5 million more into Great Ormond St he will have done more to help young children than every single poster here will do in their entire lifetime.

    What a bunch of bitter moaners.

  • Comment number 31.

    Surely Mr Green isn't suggesting that private business has been ripping off the taxpayer?

    £104m a year is spent on printing, with some departments paying 11p per leaflet while others pay £1.31;

    If this is alike for like comparison- who took the profit?

    It’s the many smaller examples of waste that some will see as shocking, such as that on a single IT contract, 400 private sector employees are being hired at a daily rate of more than £1,000 per day, for tasks that Sir Philip was unable to identify.

    Does this mean a private company was happy to have it's people sat around doing nothing and CHARGING for it? I bet he wishes he'd got the contract for it.

  • Comment number 32.

    We cannot pretend that this is 'news just in'. There have been many other reviews by 'Sir's on the same subject matter in the last 10 years - Byatt, McClelland, Gershon, Varny etc.....
    And remarkably, they all concluded the same thing - public sector procurement is bad, and there is a 'no brainer' case for collaborative procurement and national benchmarks across the public sector.
    Now that the headlines are out of the way, I wait with baited breath for someone to deliver.

  • Comment number 33.

    13. At 2:10pm on 11 Oct 2010, Manav wrote:

    Well you certainly don't get rich by paying tax, that's for the little people.

    Well done in sucking up to your masters Manav.

    Extra crumbs for you today.

  • Comment number 34.

    Robert,

    To benefit from 'economies of scale' or 'centralised procurement' you need a single source.

    This has been tried and doesn't work.

    Traffic police is a good example - imagine they all drove Toyotas - and then there is a recall....


  • Comment number 35.

    Cameron wants to cut the public sector and expects the private sector to create jobs for hundreds of thousands of displaced (ie sacked) civil sevants.
    Greene has just explained how to save perhaps perhaps 95 billion by squeezing the private sector, greatly limiting its ability to create new jobs, and without displacing a single civil servant.
    That's 95 billion taken out of a fragile economy. Double dip anyone?

    btw - centralised purchasing in organistions as big as the NHS, let alone across the entire public sector, is what's responsible for such obscenties as £250 light bulbs and £30 screws.
    Green's empire is tiny compared to the size of the public sector and he's failed to realise this, and failed to realise that some things don't scale up effectively.

    Rob

  • Comment number 36.

    Just to add to Eddie Simmonds - I was working in the Civil Service in the Thatcher years when Tory dogma was to dismantle the central purchasing functions. I was involved in IT development for The Crown Suppliers (central contracts and purchasing of furnishings & equipment) in preparation for privatisation. (They shut it down when they couldn't find a buyer). That IT system introduced managed terms such as 30 day payments (or whatever the managers might choose). We had to prepare small businesses and give them time to adjust, but they knew they'd get their money...

  • Comment number 37.

    "Sir Philip Green told me that if he ran his businesses the way the government does, the lights would go out."
    Of course he would - because Governemnts are not in the business of exploitation (well not yet) and this is Sir Philip's business!

    "What he says he's uncovered is a culture where there are grotesquely inadequate controls of spending on everything from mobile phones, to travel, to property and paper."

    Sorry Sir Phil - you'll have to clarify this - do you mean in the public sector review - or in your own private sector company?

    I mean who is scrutinising these decisions in the private sector? - the shareholders (ha ha ha ha)

    http://www.just-style.com/news/arcadia-losses-lead-to-3500-job-cuts_id77550.aspx

    Never mind, make the workers pay and sack the lot of them - eh Philip? - I mean they're just 'stock' wich can be discarded - right?

    "It’s the many smaller examples of waste that some will see as shocking, such as that on a single IT contract, 400 private sector employees are being hired at a daily rate of more than £1,000 per day, for tasks that Sir Philip was unable to identify."

    Cripes - you want to meet the contractors in banking!!! - I mean £1000 a day is nothing - and they do nothing for it! I met a contractor in a bank who was there for a project - he was on £1500 a day and the project hadn't even been signed off yet!
    Nonetheless it did get signed off - 3 weeks after he started collecting that daily rate - but without a computer (provided by an outsourced IT function) - he couldn't do anything for another week.

    ...the difference was Sir Philip wasn't around to look into it - and the poor old customers footed the bill for that one (not that they have any visibility at all about costs in IT - I mean which corporations show what project costs are?)

    I love this one..

    "9) one provider takes 98% of the £21m a year spent on mobile phones, which has nonetheless negotiated 68 different contracts with government departments - implying that the government is not benefitting from any economies of scale;"

    ...but that's a problem with the private sector phone company ripping off the Governemnt - maybe it's because the public sector bodies are too honest and expect the same in return - not realising they're dealing with every shark and charlatan going!

    "He is keen to point out that the savings he is suggesting would not involve a single public-sector redundancy: all of the squeeze would be on private sector suppliers (who probably won’t thank him)."

    Yes Sir Phil - and this is the most important bit, please listen carefully - Who will protect the jobs of the private sector phone company (for example) who's business you just destroyed with your cost cutting?....remember the private sector - the thing that's supposedly going to pull us out of recession?

    When the value has gone- it's gone - cutting your services won't bring that value back.

    "Perhaps his most controversial recommendation - which he made in his interview with me but is not explicit about in the report - is that government departments pay their suppliers far too quickly."

    Oh it gets better - this was Gordon's promise to keep the private sector afloat - and now Sir Phil is saying they should take longer to pay?

    Many private sector companies will go bust if this was ever implemented.

    I know this looks like I'm saying that Sir Philips recommendations (which make sense) are not going to help the situation - implying that it's a no-win scenario....well that's because it is!!!!!

    Making these savings will damage the weakened private sector
    Not making these savings may increase borrowing costs and drive the country to bankruptcy.

    That's the sum of it folks - whichever way the clowns of Government decide to go - the party is well and truly over and the mother of all hangovers is about to hit us (once the BoE stop pumping us with liquid 'high' cheap money)

    What am I going to do? - I mean can I just sit idly by and watch the country deteriorate into a mess and witness the various factions tear the country apart while they argue about the position of the deckchairs and don't question the gaping iceberg sized hole in the ship?

    This is my moral dilemna - watch the colapse or try to do something about it. It seems that too many people are undeserving of any rescue as their arrogance and lack of clear thinking has allowed them to think this whole collapsable system is sustainable.

    Maybe I'll just have to wait for the credit crunch 2 - then the people will lose all faith in politics and decide that Democratic elections were never actually democratic and they've been slaves all their lives...

  • Comment number 38.

    1. At 1:20pm on 11 Oct 2010, Lindsay_from_Hendon wrote:

    "Well it makes perfect sense to copy the successful. Much is made about his tax status but you have to make a profit for it to be an issue and that he has done consistently."

    So Lindsay - any comment on Sir Philip's recommendation of centralised purchasing being more efficient? - Seems Mr Green is advocating centralised economic Government - exactly what you oppose.

    "Perhaps a peerage is round the corner?"

    Sorry - but not for you this time - maybe you've not avoided anough tax - you need to move to Ghana where the tax take is far less than Switzerland.

  • Comment number 39.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 40.

    20. At 2:15pm on 11 Oct 2010, Hedley Lamarr wrote:

    "They need some private sector procurement types to go in and burn some of these suppliers, but also to leverage spend across departments. Easily done."

    They tried that with contracting out council services - the result is a fixed tender process...

    http://www.iii.co.uk/articles/articledisplay.jsp?article_id=10053714&section=Markets

    ..and increased costs for council services (because everything has to be packaged up so the private sector can compete for it)

    You see private sector is for simpletons - public sector procurement takes a lot more nous to get right - because you cannot simply lay your increased costs at the customers door.

    I mean one of the companies listed in the story still managed to go bust - even with it breaking the rules on tendering!

  • Comment number 41.

    #13

    'You get richer by hard work, making sacrifices, being smart and putting your neck on the line...'

    Another capitalist defender who doesn't understand contradictions.

    Can you explain how Tina Green earned her £1.2 Billion?

    Was it from 'hard work, making sacrifices, being smart and putting her neck on the line...'?

  • Comment number 42.

    Maybe if the big firms as said before paid on time the the price would come down?

    And try getting a cheque out of any council or government dept. The market says long payment , put the price up to cover the bank charges. Is this basic business as well as central purchasing?

    The sign of accountants and bankers who don't know how to run a business.

  • Comment number 43.

    @ 38. At 3:00pm on 11 Oct 2010, writingsonthewall wrote:

    > 1. At 1:20pm on 11 Oct 2010, Lindsay_from_Hendon wrote:

    > So Lindsay - ... you need to move to Ghana where the tax take
    > is far less than Switzerland.

    He's just confused - he's in Swaziland, not Switzerland!

  • Comment number 44.

    33. At 2:37pm on 11 Oct 2010, warwick wrote:

    "Well done in sucking up to your masters Manav.

    Extra crumbs for you today. "

    yes Manav - I suspect you wil be 'promoted' to senior slave soon for that little defence.
    What a shame you don't understand that if the movement of capital is free (and then fair) - why is the movement of labour resticted?

    I mean in a free market how do the new entrants obtain the wealth of Sir Phil. by improving the existing process - when he removes the capital from their reach - leaving them to scrap over the crumbs he leaves behind...

    Classic Capitalist cronyism - supporting something you can never hope to understand - but going along with the crowd because you think it's the right thing to do.

  • Comment number 45.

    There used to be something called Her Majesty's Stationery Office which bought stationery centrally. This was stifled by the Thatcher Government.

  • Comment number 46.

    Now, is there any way that we could refer the current government's monopoly on the provision of governmental services to the Monopolies Commission and hence introduce some competition for the tax payer?
    What I mean is that instead of having to pay my taxes to one government there would be two and I could choose from whom to 'buy' my services, i.e. pay my taxes. Whichever offered the best services for the least tax would be the one to get my money...
    Perhaps that would sharpen up government purchasing...
    Or how about an office of taxation - oftax - to ensure that the tax payer was getting value for money, with a claw-back clause if tax money had been frittered away in a foolish manner...?

  • Comment number 47.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 48.

    This is all very familiar stuff and happens every time there is an efficiency drive.

    The mandarins nod their heads, go tut-tut and then continue their discourse in Ancient Greek.

    Nothing changes.

  • Comment number 49.

    So. If Mr Green is correct what does this say about:-

    (1) the work of the National Audit Office. Has the NAO been certifying accounts without qualification?
    (2) the work of the Internal Auditors, have no critical reports been produced?
    (3) the role of the Departmental Accounting Officers. Have these Permanent Secrataries simply been signing off on accounts without understanding what they were doing?
    (4) the role of the Office of Government Commerce. Has no-one been listening?
    (5) the work of Gershon. Has all that been a waste of time?

    The Head of the Civil Service needs to respond to Green's claims. If he accepts them he should go.

  • Comment number 50.

    Just want to double-check the "logic" of the lefty brigade on this blog:

    1) Any money saved anywhere is "bad" as it means less money for the deserving "workers"
    2) We should continue spending exactly as much money as we're currently spending on every single item and service that the public sector purchases

    So presumably we should continue therefore to rack up more Government debt at the current rate of very approximately £100bn every year.

    What's the end game by the way? At what point does the national debt become "too big" for you - when we physically can't pay the interest out of current income? Or do we just default?

    Please enlighten us all. Us silly ordinary working people have this ludicrous notion that this debt will need to be paid by our children at some point and therefore it might be an idea TO SLOW DOWN THE RATE AT WHICH THE DEBT CLIMBS EVERY SINGLE DAY OF OUR LIVES by cutting out as much spending ill-discipline as we can. How foolish of us - I'd forgotton that those nice Norweigans working for Nokia need to put food on their table too. Thanks for explaining it all so carefully and considerately.

  • Comment number 51.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 52.

    #46
    What I mean is that instead of having to pay my taxes to one government there would be two and I could choose from whom to 'buy' my services, i.e. pay my taxes. Whichever offered the best services for the least tax would be the one to get my money...
    ----------------------------------------------------------------------
    Great idea, but why stop at 2 goverments to choose between, why not 3 or 4 or 5or.or...................................

    I could set up a price comparison website "Compare the Goverment.com"
    and make a fortune.

  • Comment number 53.

    Public Sector - Welcome to the real world and bye bye to final salary pensions too! Happy New Year.

  • Comment number 54.

    "..can make very substantial savings, perhaps as much as 50%, on £191bn of procurement and property costs."

    50%? Is that all? Phil's not trying hard enough.

    Try ...
    12) Replace ministerial cars with second hand 2CVs.
    13) Bring back shiny toilet paper.
    14) Standardize on ZX Spectrum.
    15) Create/use contract loopholes and avoid paying - ever.
    ... plenty more if required

    Knighthood please!

  • Comment number 55.

    I hope they did not have to pay Sir Philip since he states the obvious. Government is a by word for incompetent procurement from justice to schools and IT they cannot drive any value from any procurement at all due to the little princeling who incompetently manage their "fiefdoms".

    Examples include:

    + Over 40 uniform specifications for the police
    + Every vehicle manufacturers represented nationall from Skoda to Lexus. No standard ôlice patrol vehicle, no standard local patrol vehicle no standard "paddy wagon".
    + Complete failure to manage the police Property Estate with numerous unused and unmanned police stations up and down the country that need heating and lighting.
    + No consistent police radio system, a few years ago less than 50% of radios in London supplied to police worked.
    + No combined police purchasing organisations or mandatory purchases.
    + The combined Fire purchasing organisation is not supported as a mandatory requirement.

    + Much of the IT procurement is done on a Time and Material basis rather than contract.
    + Government accepts being billed for meeting attendees on IT irrespective of justification from the contractor.

    + County council roads department in some cases have not implemented competitive tendering for raod maintenance.
    + County and local authorities have failed to manage their property portfolios to move people into home working to sell or reduce the size of properties.

    + In Justice there is not requirement that policing is cost effective. As evidenced numerous times on "Police Cmera Action" or "Police Interceptors" police fail to get a conviction or recover the costs of their intervention and end up spending hours or their time off duty in the police station filling paperwork.

    + UKBA and police do not share their custody resources even when they are in the same town - eg: Dover.
    + UKBA and Police do not deliver a consistent DNA database management structure or processing model. It is always an over paid police offices rather than a civil specialist.
    + UKBA do not deliver consistent attendance at the ports - never there every day only when overtime is payable such as Sunday night. Again Dover.
    + UKBA and police both attend at UK boarder crossings such as Dover - why duality of resourcing that is wasted.

    + Schools do not operate wsith a standard Web interface to support ordering of school uniforms and school dinners online.
    + Schools seldom communicate on line so back office staff are writing envelops long hand for local posting even when parents have email.
    + No consistent schools procurement policy for all items needed in the school.

    Despite the deficit Osborne has utterly failed to take the first and simplest steps to cut costs these are:

    + Immediate salary cut on all public sector employees earning £150k so that they are brought back to this level. If individuals dont like it they can leave.

    + He has frozen salaries but he needs to go further and cut wages for all staff earning over the point at which the higher rate tax kicks in on a sliding rate.

    + All procurement by government should experience the implementation of a 90 day payment period before settlement.

    + All invoices levied to be arbitarily cut by an initial 5% increasing to 10% on past rates for theh 2011/12 tax year.

    + If suppliers do not like the chalenge then move to some other organisation or delay purchase by 6 months

    + In defence end all cost plus contracts to defence contractors implement an immediate 10% reduction on all invoices and a requirement that all future invoilces need to be reduced by 10%.

    + In medicines procurement reduce the prices paid to drug companies by an imediate 10% and open the market to grey/parallel imports subject to quality controls.

    + Cancel all nursing agency contracts and renegotiate such that they pay NHS scale plus 10% and no more.

    +Where procurement staff have been found not to have made similar recommendations for costs reduction - sack them with imediate effect for grosss professional miss conduct.

    Osbourne should split departments into cost centres and profit centres. Profit centres such as HMRC, Justice and Home Office have to raise income from their services on a fixed level where their costs are a declining percentage of the overall revenue take. In HMRC this would require them to close all tax loopholes and improve computerisation to focus on household income so the tax system was able to be more flexible.

    In the case of Justice they would be required to cap payments to barristers and lawyers to a maximum of £150k/year per person. At the same time they would be expected through the CPS to raise more money through fines. Fines and imprisonment would move from and standard one size fits all to a bespoke settlement where:

    + Fines would be levied in proportion to income for the employed.
    + Custodial sentences would have to be paid for at a rate of £500/nite. Where found guilty the family unit wuld then have to find the money.
    + If a criminal did not have any assets and was living on benefit theh full value of benefit to the family would automatically be reduced by 25% for a first offence on a 3rd offence the benefit would stop completely and they would have to rely on the charity sector.

    + All statutory motoring fines to double from £30 to £60.

    + The Organisaed crime agency would have as a target the recovery of 100 times its costs, any failure to meet this target would see management sacked. All senior management would be on a 3 yr contract with a maximum salary of £75k and the opportunity to make £100k/yr when targets were met.

    The answer is that Government central and local is a hopeless and incompetent gravy train that has no interest in reform on the level that is needed. I welcome Philip Greens observations but as the debackle over child benefit shows Cameron and Osbourne are not really interested in fixing things in a fair and fast manner.

    This is definately a singlem term Coalition.


  • Comment number 56.

    This doesn't surprise me in the slightest. I work in private sector procurement and EU procurement law is bonkers. Bizarrely most of the processes are designed to increase accountability and transparency. In practice they demotivate the procurement staff, who have to spend most of their time filling in forms to satisfy an audit trail rather than getting the best deal for the taxpayers.

    The temptation will be to put more rules in place to make sure this doesn't happen again by giving the buyers less wiggle room. Since this idea has failed every time it was implemented can we please tear up the rule book and just let the buyers get on with their jobs? I guarantee that someone will abuse a system like that and give a contract to their cousin. I also guarantee the level of waste this creates will be a drop in the ocean compared to what's been wasted now.


  • Comment number 57.

    Sir Philip Green is absolutely right in raising concerns on government's profligate spending and enormous wastage. If he would have looked into the MoD's nuclear spending, he would have gone crazy with rage. Tens of millions of pounds are wasted every year by defence contractors such as the Rolls Royce and its sub-contractors, BAE Systems and its sub-contractors, not on telephones, not on buying computers or cartridges but on simply doing nothing; or pretending on doing something. As most of the MoD's nuclear contracts are cost plus contracts, the more money these contractors can show to the MoD to have been spent, the more money they make as their cuts. And the MoD with lack of expertise in this field has no legs to scrutinise or verify the incoming bills. The whole thing is simply beggars belief. Thess mind-boggling incredible practices had been going on for tens of years in the name of nuclear safety and national security!

  • Comment number 58.

    Edge540 - I agree. But how about having the option to contract out of Government services and buy from a private competitor eg. Opt out of state education system, send your kids to a private school and get a tax rebate for the equivalent cost of sending each child to state school. It may still be more expensive but the superior education would be worth it. I'd be happy to have my bins emptied by a private refuse firm too if I could get my council tax reduced. It goes on.............

  • Comment number 59.

    8. At 1:59pm on 11 Oct 2010, virtualsilverlady wrote:
    Anyone who cannot see how badly and quickly this restructuring has to be done frankly needs their heads examined.

    9. At 2:06pm on 11 Oct 2010, ghostofsichuan wrote:
    Government is not business and the idea that it should run like one is what has caused all the problems

    The Ghost is correct.
    The Virtuous lady is a victim of the sideshow that this whole exercise represents.

    The real story is how, in times of 'austerity', wealth or GDP or National income is redistibuted from the workers who create it to profits.

    If you need this simplified. There is no reduction in GDP at them moment but the increasing number of unemployed, poorly paid workers and anyone else struggling to pay the mortgage will be consuming less of it. The real question is who is consuming more?

  • Comment number 60.

    I remember centralised IT procurement in government departments, from the late 1980's. It went more or less like this:

    1/ Establish that a particular task could be quickly and cost-effectively carried out if a PC (of such and such specification) was procured.
    2/ Raise a requisition though IT procurement.
    3/ Wait 6-8 months - this time could usefully be filled in carrying out the original task slowly and inefficiently, as the PC wasn't available.
    4/ Take delivery of the now-redundant equipment (or more likely, equipment which didn't quite meet spec, because some necessary aspect wasn't covered in the block procurement contract, so wasn't supplied).
    5/ Note that the price charged for the equipment was 20-30% higher than purchasing single units from direct suppliers now, though not wildly out of line with prices 6-8 months ago when the equipment was needed.

    Most apparent "savings" on centralised small item procurement (and that can be anything up to £5000) look a lot less impressive when the person waiting for the equipment costs £90/hour, and can't complete the task without it.

  • Comment number 61.

    I should point out that there is a Prompt Payment Code put in place by the CBI that deals with how quickly an invoice gets paid. This was changed around the same time fiscal stimulus came in to require invoices are apaid as quickly as possible in order to benefit the companies being paid. Before this, the civil service typically waited to the very end of payment terms (typically 28 days) before making payment.

    If Sir Phillip was not aware of this, I'd suggest that he hadn't done his research very well.

    In saying that, there are clearly many instances where the civil service does not get best value - I'm thinking of things such as laptops, pens, meeting room bookings, train tickets. Here the problem is the rules that don't allow benefits to be had. I've always presumed this was so the civil service could not bully suppliers by threatening to withdraw huge contracts.

  • Comment number 62.

    Although we all knew it, it is good that this has come from a highly recognised business man - what I think will be interesting is if we see any of these suggestions taken into account, as mentioned there is a lot money that can be saved and it would sit well with people if the government looked proactive with its own spending.

    Can Sir Phillip Green look at banks and where they are wasting our money next - having just read your other article http://www.bbc.co.uk/news/uk-scotland-11512414 - how is it that Bank's senior employees are now earning more than they were 2 years ago.

  • Comment number 63.

    Lets try analysing what Green said:

    1. Paying suppliers after 45 days rather than more quickly is, from memory, deliberate govt policy. They brought in the right for small businesses to charge interest on late payments so it does seem reasonable that govt sets an example.

    2. Saving on telephone bills (£700m). There are some very valid questions that Green is asking - why should desk bound junior employees get mobile phones? Is there centralised procurement in central govt for phone bills

    3. Vacant office space is clearly poorly managed and cash is being spent unnecessarily.

    4. Does Green's report relate solely to central govt? Local govt is different and should be managed differently.

    5. Assuming central govt only being dealt with in report then the failure to have standard specifications for certain goods is just plain daft. This is waste that we the tax payer have to pay for.


    By way of example (admittedly a little old) of the rubbish we have to put up with. As many know army houses have been privitised but what many people may not know is that the MOD is responsible for specifying the maintenance required on army houses (and paying for it). I know that a few years back the owner of the houses started replacing defective windows with double glazed units (more energy efficient, easier to maintain - good for tenants) only to be told by the MOD to remove them from squaddies houses (after they had gone in) as only officers would be allowed double glazing. That is the civil service/MOD mentality we have to deal with

  • Comment number 64.

    5. At 1:41pm on 11 Oct 2010, blackdoll24 wrote:
    Goodness me is this how the government has been doing business for the last 12 years!

    ##################################################

    Stop the government propaganda please!

    Not everything is the fault of the previous government.

    This is how governments have been doing business for the last 50 years.

    When tatcher put busnessmen into government departments to control spending they faced obstruction, obviscation and back-peddling. The first lot gave up after a short time.

    We have heard tales before about government and local authorities pay £25 for a £2 hammer etc. The first management book I read, published in 1967 in the USA commented that every government department was incapable of paying less for a pencil than could be bought over the counter in woolworths.

    I work in the private sector but do have some experience working for local government. There the red-tape had to be seen to be believed. The reason it cost more for everything was that to get approval took days, sometimes weeks, endless letters and meetings.

    The core issue, as identified, is that no-one is responsible, no-one cares how money is spent. Until you create a culture where employees see the money they spent as 'theirs', then nothing will change.

    But there again we are talking about our (un)civil service, which is a national disgrace. No one is prepared to make a decision because a) if it is the right decision their superior will want to take the credit, b) if it is the wrong decision they alone will take the blame. Under those circumstances there is no incentive to change anything.



  • Comment number 65.

    Running government like a business is just a right wing euphemism for handing over control of public services to the private sector to make a profit,irrespective of whether it costs the public more or less in the long run. Look at the council house right to buy policy. Would a private land lord sell their best properties at a knockdown price, losing their most reliable tenants at the same time?

  • Comment number 66.

    I've worked in local govt IT for many years, and the 6 figure sums we regularly spend on software products is no less than vulgar. Often these products are binned a year or two later when someone new takes over and has their own ideas (or is willing to take back-handers from a software vendor to implement their product). The public would be shocked and disgusted.

  • Comment number 67.

    Mr Green’s report yields no surprises. Every large company has wastage and could save millions. The Government runs a large company, hence wastage cannot be totally eliminated.But that is not to say that wastage cannot be minimised.

    The first step to minimise wastage is to dispense with fancy reports which state the obvious and get on with the matter in hand. If we make purchasing departments responsible for cutting costs and put an end to local council gravy trains where Councils pay over the market rates for goods and services.

    Taking simple measures will save the taxpayer billions. Effectively and without a loss of jobs. Taking these measure would reduce the need for austerity.

    Of course there will be an impact on private companies supplying goods at inflated prices. Most have enjoyed a stream of income beyond the imagination of private companies who have not been fortunate enough to land government contracts.

  • Comment number 68.

    DibbySpot - your doctor just called. It's time to take your medication.

  • Comment number 69.

    a_sensible_comment wrote
    "So presumably we should continue therefore to rack up more Government debt at the current rate of very approximately £100bn every year."

    It looks like you're confusing the subject of public service procurement & expenditure with the national deficit. Whilst certainly there are clear connections, they are separate issues.
    The national deficit was not caused by the public service spending too much on pens and paper.
    Indeed, the national deficit will not be made worse by continuing to spend too much on pens and paper. But it is a bit stupid to continue to do so if the currect situation allows the existing rules to be changed.
    However, what will reduce the national deficit is people making more money. That increased earning will bring in more tax that will reduce the debt far more than any procurement rule changes are likely too.
    But for business to earn more money, particularly in hard times where other businesses are not spending so much, a core source of funding is government contracts and the national infrastructure (such as the road network) that businesses rely on.
    So improving efficiency is sensible and should largely be welcomed. But some of those 'inefficiencies' were in place to ensure that money still flowed.
    You don't switch off the water until you know where the leak is.

  • Comment number 70.

    Another delight which centralised financial authority brought (very frequently) was watching £100,000 or £200,000 worth of capital equipment sit idle for six weeks while a requisition for £200 spare parts cleared the system (the supplier could deliver in 2 days, usually). Alternatively, you could spend £30,000 guessing which bits were needed, and filling drawers with stuff that never got used. Or call in a service engineer, and pay £2000 for him to fit the £200 spare.
    Hint: "procurement cards", properly used, entirely solve this problem

  • Comment number 71.

    I'm reminded of a Dilbert cartoon where a speaker comes to deliver a pep talk to Dilberts office the speaker is seen telling the assembled throng they need to "decentralise to be more reactive to change" a few years later the same speaker is back in Dilberts office sspeaking to the same crowd and saying "your whole system is disjointed, you need to centralise and get more control". I think the strip was called "The Wisdom of Business Consultants" or some such, pretty much sums this up.

    Mark it down, in five years or so some government department will blame a project failing on their inability to source new IT infrastructure, the government will hand over some money to some genius like Green or Gershon and the main plank of their report will be that no private organisation would try and manage such a large single contract for IT as the Governments national IT contract and then the whole sorry cycle will begin again.

    There are certainly problems with public service procurement, but Green hasn't found the answer here.

  • Comment number 72.

    Spot on, Sir Philip. Proves that public sector efficiency savings don't (necessarily) mean job cuts.

    I work in the NHS and see this kind of nonsensical wastage on a daily basis

    Latest example I noticed was when two middle managers went on a business trip on the train to London from Nottingham. This was booked through a travel agent 3 weeks ahead. The cost? £340

    Looking at the National Rail website today, I could book this journey for £250 on the day, or £130 if I booked, as they did, 3 weeks ahead. Only takes a few minutes to do.

    Truly astounding.

  • Comment number 73.

    Issues like whether something is overhead or project cost and how much budget is left at the end of the year were the key concerns in my day - 20 years a go I was asked whether I could make a case to spend 40,000 on any single item of electronic kit within 2 weeks - needless to say I did.

  • Comment number 74.

    Sir Philip Green, Cameron’s "spending TSAR".
    David Cameron has not endeared himself to my heart, but the decision to make Sir Philip Green an expert on Government spending seriously smacks of justification, propaganda (if you will) to support massive cuts.
    I come from a (Canadian) Government background – 25 years service. Sir Philip has truly raised my hackles.
    Danny Alexander, the Chief Secretary to the Treasury said: “The Spending Review is about promoting growth, rebalancing the economy and completely re-evaluating the Government's role in providing public services.
    Sir Philip Green's efficiency review will play an IMPORTANT ROLE as we totally re-think how the Government spends taxpayers' money. Tough decisions need to be made. By being prepared to do things differently, we can ensure that this process will enable us to get more for less, and support our front line services.”
    I concede that there is likely need for auditing Governmental controls. Billions being sliced from Government budgets IF the government did simple things like centralizing purchasing and monitoring expenditure properly.
    Not likely!
    Because most Governmental Departments have unique requirements; some of these requirements address legal protocol. I think you might have chaos, certainly delays, and this chaos would eat up any savings.
    As for Sir Philip’s other findings: Where are my facts and figures?
    He can’t go around spouting these criticisms without supplying facts and figures, can he? E.g. 400 private sector employees are being hired at a daily rate of more than £1,000 per day for tasks that Sir Philip was unable to identify. Where are the names, and if Sir Green could not identify the tasks why is he feeding Cameron incomplete data, perhaps misleading data?
    As for Sir Philip’s other findings, I could address them one but, but I won’t, except to say that though procurements should be spot-checked periodically, anything under $1,000 should move quickly with minimal onsite review...alternatively, we could have Government Departments waiting to make entries without pens.
    This study was a big fat mistake done by someone who may be excellent in private industry, but who evidently does not understand that Governments are a bigger and operate in accordance and laws, regulations and other mandates, including TB Guidelines.
    As for payments too quick, I have yet to see a Government department pay too quickly; in fact, payments are usually behind. What Sir Green likely saw was the raising of the payment requisition, which then goes to the operation financial administrator for approval, and then to the site Manager for approval, and finally to Head Office administration for actual payment. Time? Anywhere from three weeks to three months.
    This Green study only goes to prove that if you want to audit Government Departments, you need to submit the requirement to the Auditor General and allow the Auditor General (who understands Government) to assign designated and professional auditors (who also understand Government).

  • Comment number 75.

    50. At 3:34pm on 11 Oct 2010, a_sensible_comment wrote:
    ‘Please enlighten us all. Us silly ordinary working people have this ludicrous notion that this debt will need to be paid by our children at some point and therefore it might be an idea TO SLOW DOWN THE RATE AT WHICH THE DEBT CLIMBS EVERY SINGLE DAY OF OUR LIVES by cutting out as much spending ill-discipline as we can’


    I’m a self employed working Joe, and I think that:
    If we could get Government debt to accelerate exponentially we’d likely be better off in the long run.

    The system is designed to keep the Government in debt, always in debt, always paying interest.

    You along with sixty million like you have been conned into believing that the country has a debt problem. This country has no debt problem.
    There is however ‘a keeping the financial sector funded problem’.
    That’s where the problem is.

    As regards wasteful public spending, it is just that, wasteful and pointless.
    As regards the government having a debt problem, it’s a fallacy, it always has been.

    So Sensible Comment, whilst I agree that our children living out there lives as debt slaves is an awful prospect. Oddly enough the best way to stop it, may well be letting Government debt spiral out of control to default. Sadly they won’t let it happen, they’ll just print more money, just enough to keep the Government from defaulting, but not enough to do any real good.

    Do you not find it odd, that the Government, which has an absolute right to create and issue its own money, borrows it from banks, that in turn have created it from nothing, and then pays them interest on it?

    The government could fund itself with consummate ease, and give the next generation a future, but they won’t. They won’t even entertain discussing it. Not this government, nor the last one. I wonder why that is?

    In fact they won’t even discuss one maverick MP’s attempt to change things:
    http://www.positivemoney.org.uk/

  • Comment number 76.

    If you think that this is bad, just wait until he gets his next appointment to look at the contractual details of the PFI agreements! It is always the same old story, clever private businesses putting together contracts that can't be understood by the run of the mill civil servant. Twas always so, forget about gold plated pensions and all that nonsense, the fact of the matter is that if you pay peanuts you get monkeys and when it comes to public sector procurement, you will find a whole troup of them. Not their fault of course, just a bunch of undertrained, underpaid, unappreciated individuals looking forward to their retirement. Solution; a well paid, well resourced, well trained, centrally based procurement function that actually knows what it is doing. Drawback; usual story, upfront investment followed by long term return. Tricky one to sell at the moment unfortunately.

  • Comment number 77.

    64. At 4:03pm on 11 Oct 2010, JohnH wrote:

    "Stop the government propaganda please!

    Not everything is the fault of the previous government.

    This is how governments have been doing business for the last 50 years."

    Thank you, thank you, thank you - I can only assume that most people on here are children who don't pay attention in history class - or they are simply parrots who wil repeat anything they hear that suits their disposition - without ever questioning it.

    If the last Labour Government was able to do this much damage in 12 years then they would receive many accolades for such a feat - but what you say is absolutley true - this is not a 10, 15 or 20 year problem - it's been going on for decades.

    We didn't need a wheeler dealer of cheap womens clothes to tell us that.

    The biggest difference between public and private expenditure is you cannot hide the public spending excesses - how many FOI requests has Sir Philip completed regarding his expenses? How many demands have been made to see inside the books of Arcadia?

    You see of course the public sector is bloated - it has a great deal more scrutiny than the private one.

    I don't think half the people who claim to work in the private sector actually have (or maybe it's just the industry I'm in) - because if the public sector wasted like the private sector I see does - then it would be headline news every day for months on end.

    The difference is that scrutiny on taxpayers spending is far greater than the scrutiny employed by consumers when choosing the 'best value'. What that means is that people will notice a 2% increase in tax to pay for an excess - but how many people would notice a 2% increase in clothing from Top Shop??

    I mean they haven't noticed the rampant food prices (yet) - and we could easily hit 7% by the end of the year.

    http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/7996060/Food-inflation-to-hit-7-by-years-end.html

  • Comment number 78.

    62. At 3:57pm on 11 Oct 2010, charliewrote wrote:

    "Although we all knew it, it is good that this has come from a highly recognised business man"

    With that 'off red' colour and that smile which is modelled on Walt Disney's Goofy - I am not surprised Sir Philip is highly recognised.

  • Comment number 79.

    Having worked as a contractor for a government department I can easily support Phillip Green's statements. There appeared to be no accountability and the arrogance of the civil servants I worked with was breathtaking. They were willing to pay lots of money for contracts which were rarely if ever audited. They also had no top level accountability and no idea of the constraints of industry to try and provide an efficient service on time and to cost. A particular example: They were willing to pay three pounds each for hardback binders, if buying in bulk they could have paid 2 pounds twenty five each from their supplier. (I could have sourced them for one pound twenty and still made a profit!!). It doesn't need Phillip Green to discover these anomolies. I wonder just how much they are paying him for this very obvious information.

  • Comment number 80.

    17. At 2:13pm on 11 Oct 2010, PacketRat wrote:

    "Consultants charge £1,000 per day to big business whether public or private."


    ...and in fact it's because of the private sector (the market) why the Government has to pay such ridiculous rates.

    As you say - it's pathetic - this whole exercise by this clown of retail was a waste of time - I seriously hope he didn't get paid for this - please tell me he didn't get paid for this...

  • Comment number 81.

    18. At 2:14pm on 11 Oct 2010, SeanBroseley wrote:

    "He makes his money buying in bulk and selling at a profit"


    ...and Sean - how did he get into such a position where he can buy in bulk and undercut his rivals?
    Did the capital he uses to do that simply fall from the sky?

    Give me Philip's capital and I will make the same as he does - give it to yourself and the same result.
    The capital sir Philip plays with is actually owned by us all (as long as you agree we share the earth and that no one man is portioned a greater amount of resources than another) - therefore the profit he makes is not his.

    One day you might think hard and work this out for yourself.

  • Comment number 82.

    So we have a Government who incorrectly thinks of the deficit like a household credit card and a retail 'giant' who analyses the public spending procurement like it's a shop.

    ...can anyone else see why this is such a bad idea?

    This is Economics for simpletons - and the answers are as worthless as the paper they are written on from a bunch of clowns who have already surpassed expectations by demonstrating they can write!

  • Comment number 83.

    All of the problms stem from the Civil Service, and their problms stem from the very top. And the same ones who were running government for the last government are still running it for this one.

    Nobody is responsible for anything. (Least of all computerised administration systems acquisition!)

    The remedy: Fire Permanent Secretaries - regularly!

    All governments have the stupid idea that because administration uses computers it is easy to change - it isn't - it is far more difficult - but the supine senior civil servants don't bother to say so!

    Don't we have the right to expect a skilled Civil Service?

  • Comment number 84.

    the Public sector has been hamtrung for over 20 years by Government Rules on pusrchasing. They have been forced to negotiate their own deals when power wasd eveloved by the last Conservative Government and then prevented from buying bulk items like IT equipment from the same provider in case they went bust. when you consider that we are talking about forms linke Sun microsystems, Oracle, IBM etc the arguement was a joke.

    Mr green needs to look back at why wthey public sector is where it is not just why they are doing what the are doing. the Public sector used to have centralsied purchasing departments that were broken up by the Conservatives when trhe agencies were created - why? to make things more efficient and tod evelove the pwoer down to local levels. except when you do this you lose the economies of scale that he is talking about.

    You cannot have it both ways. either centralise and get economies of scale or develove and get inefficiences when bad rules are applied enforcing unworkable restrictions.

  • Comment number 85.

    Well; I don't think you needed Sir Green to arrive to these findings. Ask anyone who works in government IT projects and you will hear horror stories of waste, mismanagement and bad practices.
    There is an urgent need to change the way public sector IT is funded. There is a strong case, with the technological advances, for more consolidation, resource sharing between government departments.
    Departmental budget allocation (sometimes within a single government body) causes inefficiencies in form of duplication, increases the lack of overall management and makes strategic planning harder as there is no control over the funds.
    Another aspect that needs to be addressed is the end of year spending phenomenon. Departments go on a wild shopping spree in order to exhaust the budget to avoid funds capping on subsequent years.
    IT procurement requires a more rigorous scrutiny. The amount of money charged for IT services sometimes borders on the obscene.
    Lastly and most importantly, the civil service needs people in management who can make decision, stand up and be counted. There is certainly little accountability sometimes due to the shear sizes of departments. The is a culture of not challenging decision, "no one wants to rock the boat” in fear of being sidelined, or to score points with senior management. Saying this, there are some excellent civil servants who want to do a good decent job, who care about the tax payers money but encounter all sorts of obstacles and hardly have backing nor a reporting channels senior management .
    I don’t think this is an easy problem to overcome, but there is a huge amount of savings to be made by streamlining public sector IT services.

  • Comment number 86.

    #64. At 4:03pm on 11 Oct 2010, JohnH wrote:

    "I work in the private sector but do have some experience working for local government"..............

    - And -

    "But there again we are talking about our (un)civil service, which is a national disgrace........."

    No bias at all then.

    As for decision making, I'm a civil servant and I decided quite quickly you are an ill informed generalist. For the record, we buy our pencils for £2.34 per box of 50, cheaper at the (now defunct) Woollies were they? Can't speak for hammers but our maintenance guy is so tight if he dropped a penny it would hit him on the back of the head he'd be so quick getting down to pick it up, £25 nah seriously doubt it. Meetings - yes there are lots but no more than when I worked for a bank.

    Regarding other blogs mentioning the 30 day deferral for paying invoices, that was the standard until the cabinet office told all departments to pay on receipt at the onset of the recession, wouldn't be good if government forced companies into administration by not paying would it.

  • Comment number 87.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 88.

    I don't think Sir Philip Green's model of bullying smaller suppliers should be how the Government runs things. It's fine for Green to use the size of his organisations to demand 45 day payment terms and squeeze margins of other businesses (for their fear of losing large orders). However for the Government, such tactics towards Industry in this country are not an option.

  • Comment number 89.

    I think my memory serves me right ,there was a government dept.
    called the stationary office where the buying was carried out
    which became crown suppliers.
    Purchasing was made in bulk at good value for money. This was passed
    to each dept to make their own puchasing not a good idea one might
    think.What comes round comes round.!!!!
    Also government property was maintained by the PSA a central dept.now
    each dept does its own at increased expence I expect nothing new here.

  • Comment number 90.

    # 72. At 4:23pm on 11 Oct 2010, Rodders86 wrote:
    "Spot on, Sir Philip. Proves that public sector efficiency savings don't (necessarily) mean job cuts.

    I work in the NHS and see this kind of nonsensical wastage on a daily basis

    Latest example I noticed was when two middle managers went on a business trip on the train to London from Nottingham. This was booked through a travel agent 3 weeks ahead. The cost? £340

    Looking at the National Rail website today, I could book this journey for £250 on the day, or £130 if I booked, as they did, 3 weeks ahead. Only takes a few minutes to do.

    Truly astounding."


    Proves a standard is required, our managers/directors have to use a certain booking agency, must travel 2nd class and provide a rationale for travel. Seems civil service departments are much tighter than the public services, your example truly is astounding, they wouldn't get away with that where I work in a major department.


  • Comment number 91.

    72. At 4:23pm on 11 Oct 2010, Rodders86 wrote:

    Seriously - that's an example of public sector procurement gone wrong???

    It seems you're doing that classic 'attack the symptoms and not the problem' - which is clearly the privatisation of rail travel has failed the consumer as the deliberately over-complicated system of ticket purchasing is designed to ensure that anyone who doesn't have the time to search through a million different ticket sources - will get ripped off. Even employing a travel agent to do this work for you doesn't bear any fruit.

    Is that private sector efficiency? - How long before the sharks eat all the prey and there is nothing left?

    Why do you think we get contractions in the Economy - all coincidence - or maybe Labour's fault?

  • Comment number 92.

    Well it's a delight to see these figures. GB should have tears in his eyes. It takes a professional to show up the ridiculous, scandalous waste the previous Govt., but all Govts. in general make off the back of the tax payer. No responsibility, no accountability and gold plated pensions and a clear conscience (through ignorance) to boot.

    This should be a huge benefit to the deficit redunction plan. The growth no doubt will suffer because it was public sector wasteful spending led, BUT like any business, turning it around IS the right thing to do. It takes a measure of courage, determination and good advice and focus (which was lost over the last Parliament or two with so much spin and new policy directions). The private sector companies which fleeced the taxpayer through the last Govt. deserve to go to the wall as they were leeches on society at the tax payers expense, yes entrepreneurial perhaps, but in the long term just wreckers out for short-term gain (and no not every capitalist believes in destroying the golden goose, it has to be sustainable).

    More to come I'm sure, but this is an excellent start GO. GO George Go!

  • Comment number 93.

    This is a surprise?
    I worked in a privatised part of the civil service. We shed three quarters of the jobs, increased production, and saved pots of money on just about evewrything. In my opinion that was only half of what could have been achieved if the will had been there.
    Of course the question remains how do you then re employ all those people etc.

  • Comment number 94.

    I agree with Sir Philip, It's not 'new' news even the tv series 'yes minister/prime minister made fun of the systems in place.

    With reference to contributers having a go at taxing the rich again, consider the following (apologies for those who have already seen it);

    Suppose that every evening, 10 men go out for beer and the bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this :-

    The first four men (the poorest) would pay nothing.
    The fifth would pay £1.
    The sixth would pay £3.
    The seventh would pay £7.
    The eighth would pay £12.
    The ninth would pay £18.
    The tenth man (the richest) would pay £59.

    So, that's what they decided to do....... The 10 men drank in the bar every evening and were quite happy with the arrangement, until one day, the owner said, "Since you are all such good customers, I'm going to reduce the cost of your daily beer by £20".

    Drinks for the 10 men would now cost just £80.

    The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realised that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

    So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

    Therefore, the fifth man, like the first four, now paid nothing.
    The sixth now paid £2 instead of £3 (33% saving).
    The seventh now paid £5 instead of £7 (28% saving).
    The eighth now paid £9 instead of £12 (25% saving).
    The ninth now paid £14 instead of £18 (22% saving).
    The tenth now paid £49 instead of £59 (16% saving).

    Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

    "I only got a pound out of the £20 saving," declared the sixth man. He pointed to the tenth man,"but he got £10!"
    "Yeah, that's right," exclaimed the fifth man. "I only saved a pound too. It's unfair - he got 10 times more benefit than me!"
    "That's true!" shouted the seventh man. "Why should he get £10 back, when I got only £2? The wealthy always win!"
    "Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"
    The nine men surrounded the tenth and beat him up.

    The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

    So, take note and leave Sir Philip alone; as his companies pay millions in tax every year and let him get on with his job!

  • Comment number 95.

    "I'd be bust if I ran my business the way government does"

    The government is bust

  • Comment number 96.

    So when Sir Phil has finished his 'investigation' - perhaps he can use his masterful skills to resolve some of the various disputes in the services we're experiencing in London at the moment.

    We're already losing the tube, now the fire service is on strike and soon they will be joined by the civil servants and if the clowns and the blond bufoon get their way we'll be seeing wildcat strikes across many key industries soon.

    Alas Sir Philip - your normal response of 'sack the lot' won't work on account there isn't anyone who can do their jobs at short notice (unlike your unqualified school leavers who fill your posts)

    ..but is we're all going to assume that public = private then we may as well get started.
    Can't wait until you look at the Olympics - what assessment of waste will you give that? I mean it's a lot of money to invest on something which won't produce anything near a break even return.

    If Greece's hosting followed by their financial collapse wasn't a big enough clue for you - then I'm afraid you're never going to see it.

  • Comment number 97.

    One aspect, though worries me. The recent edict that GPs will be responsible for the HUGE NHS budget individually stinks of the same mistake of getting Parliamentary ministers to manage their budgets. Neither have the experience. Philip Green has pointed out mainly savings on the purchasing side, quiet apart from the management of resources and general efficiencies. How can it be that GPs won't squander all the savings this Govt will save through Govt. savings. I can't believe the naivity to think it will be avoided. I'm guessing but the efficiency drive over the NHS will be over procedures, management, targets, but NOT procurement which if Sir Philip is right should be centralised, which it may already be. Let's not make the same mistake twice.

  • Comment number 98.

    Just one simple question " when did government turn into a business ? "

  • Comment number 99.

    I’ve worked the private sector for 35 years, we are used to the real world of cut backs, accounting for every penny we spend, making very difficult decisions on whom to make redundant. My company sells to the MOD, who pay 3 or 4 times over the odds for our products because they are purchasing through second source, yes we have pointed out this to MOD but they won’t change. We need to have someone from industry involved in every government department to oversee spending.

  • Comment number 100.

    Just an unrelated thought among the scientific communitiy's demonstrations against the proposed 25% cut in research budget. With the cry from industry/commerce for some more quantative easing, i.e. the introduction of more money into the system, why not give it to the research community. A recent Medical Research Council report indicated that every £1 invested produced 40p returns per annum forever. Let's see the banks match that kind of return.

    Yes there are vast savings to be made, especially in the MOD that has constantly esculating costs through the inability to prescribe exactly what it is they want. Yes, like a supermarket chain bulk means reduced costs, and centralised purchasing leads to efficient supply and costs. Does anybody remember the Greater London Council who opperated a similar scheme for all of London, and its education provider the Inner London Education Authority? Oh, yes Margaret Thatcher closed them both down using the arguement that they were a waste of taxpayers money.

    What goes around, comes around. As for the peerage, who would want "Lord" Green and Lord Sugar in the same room?

 

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