Tuesday 12 October 2010

There's a surprise!

When you hire a plumber, there's one thing you know for sure. As soon as he's given your problem the once-over, he'll solemnly state that "the last bloke you had here made a right mess of this". And you know perfectly well that the next plumber to cross your threshold will say exactly the same about today's guy.

I see Sir Philip Green's report on waste in government spending in very much the same light. After a few weeks spent studying the workings of government, the retailing billionaire has concluded that there's scope for massive savings -- £700 million for telecommunications services alone.

I've no doubt Sir Philip is right about a lot of this stuff, but does anyone doubt that the next outside consultant called on by some future government to look at the same issue will conclude that Sir Philip didn't fix anything, and that waste remains at intolerable/shocking/unconscionable/your adjective here levels? Public servants don't go out of their way to waste money, but they lack strong incentives not to waste it inadvertently. Moreover, "good" procurement in government is rarely just a matter of getting the cheapest deal: there are often political issues to be weighed up: national preference, regional development, that sort of thing.

One of Sir Philip's particular recommendations points up very clearly the difference between the public and private sector ethos. Sir Philip thinks the government should start to demand 45-day financing terms from its suppliers, as his own businesses do. The government, bless its little heart, strives to pay all its suppliers within five days. This started out as a Gordon Brown initiative to help out small businesses when the economy slowed down, but now it's a general practice. Given the continuing scarcity of bank credit, how many companies supplying the government would struggle if Sir Philip's suggestion was put into practice?

Back in mid-August, when Sir Philip was appointed to look at government waste, I wrote that as a tax exile/avoider, he perhaps wasn't the best choice for the job. After all, the estimated scale of tax avoided in the UK greatly exceeds welfare fraud, yet which one is the government turning its guns on? Sir Philip told Robert Peston (see his blog on the BBC website) that if his companies were run like the government, they'd go broke. Well, if everyone ran their businesses and their tax affairs the way Sir Philip does, the government would go broke, however much it tried to curb spending. A point not lost on one of the commentators on Pesto's blog:

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.

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