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New research: UK deficit can be slashed without cuts to public services

Posted by Tim Williams on October 4, 2011

A third of the UK’s structural deficit (£38bn) could be eliminated by reforming how the public sector buys its goods and

Henley Business School

Henley Business School

services, according to a major new report by Henley Business School at the University of Reading and specialist consulting group Future Purchasing. A complimentary copy of the report is downloadable from www.deficit-reduction.com.

Making performance improvements to procurement practice and processes would not only ease the pressure to make cuts, it would improve public service delivery and boost the UK’s economic growth for the long term, argue joint authors Jon Hughes of Future Purchasing and Professor Marc Day, of Henley Business School. Moreover, the Private Finance

Initiative (PFI) industry, which they describe as “public procurement’s Greece or Enron,” must not be exempt from reform.

Why Public Procurement is Central to the UK’s Economic Performance…and How to Transform It is based on a comprehensive analysis of all major reports relating to public sector procurement over the last 10 years as well as some 110 sets of government accounts and over 100 case studies of good – and bad – procurement practice in both the public and private sector. Included in the analysis were Sir Peter Gershon’s 2004 review of public sector efficiency, Sir Philip Green’s 2010 efficiency review and numerous reports by the National Audit Office, the Audit Commission, HM Treasury and other bodies.

The report examines the distribution of procurement spend across the UK public sector in detail, identifying those most in need of reform as defence, local government, NHS trusts, PFI and central government. It makes recommendations with regard to best practice and innovation that policymakers and procurement practitioners can implement.

Among the main findings and recommendations contained in the report:

  • Through reform, procurement-led savings across the whole public sector could deliver £37bn in the current term of Parliament, rising to £75bn by the end of the next term.
  • Total public sector procurement transformation should become a Coalition Government policy goal, with Cabinet level ownership
  • Reform PFI projects by extracting concessions from industry, renegotiating contracts and imposing clawbacks
  • Require each key part of the public sector to produce its own procurement reform and business plan on a rolling annual basis
  • Commit to meaningful expenditure data analysis and publication of the UK-wide public sector spend map
  • Accelerate process and procedural simplification of EU procurement regulations and increase SME access to public procurement

Commenting on the findings, Jon Hughes said: “Well-intentioned, piecemeal reform is most unlikely to succeed, even at a time of considerable fiscal consolidation and austerity. The breadth and depth of reform required will simply not happen without a small number of very substantial changes.”

Professor Day added: “We believe there is no other aspect of government that could release so much money, so readily, and with so little political disagreement or social detriment. Public procurement, with few notable exceptions, is massively misunderstood, under-valued and under-led. The transformation of procurement as a discipline is long overdue, with the capacity to play a central role in reducing the UK’s deficit and rebalancing its economy.”

One Response to “New research: UK deficit can be slashed without cuts to public services”

  1. The danger of premature action to reduce budget deficits while we are still recovering from the recession has been well aired internationally in the G20 group. The UK government, however, still seems more worried about maintaining confidence in financial markets than reducing unemployment – despite the fact that no one would seriously expect the UK to default on its public debt.

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