The All-Purpose Bedtime Story

August 27th, 2009

In which we generalise commentary on ‘that report on government spending’ and find that it sticks; courtesy of The Guardian.

There is not enough money for what has already been promised. We need a serious review – we’re not going to get it

The row refuses to lie down, however hard the government tries. Growing public unease is now compounded by the leaks from the report into procurement. In sum the author has pointed out that successive governments have been ordering programmes and operations they couldn’t or wouldn’t fund adequately.
This has been going on for years, as experienced insiders and senior staff have been telling me. And in fairness, they too have been telling me this for years. Here is just a sample; three salient lines that have been leaked so far from the report.

How can it be that it takes 20 years to procure a contract?
Why does it always seem to cost at least twice what was thought?
At the end of the wait, why does it never do what it supposed to do?

We have nowhere near the money in the allocated budget to pay for the equipment ordered; there are only funds today to pay for a fraction of what has been ordered for the next 20 years. This gap is so big according to some calculations that a 10-15% increase in tax revenues would not even cover it.
The seriousness of the situation has been underlined by two sobering pieces of comment this week. The first makes the point that it is the combination of lack of political will to replace defective or exhausted equipment, lack of realistic funding and internecine rivalry in the departments that has brought the present crisis, which is now probably the worst since 1945. The second observes that too much money has been spent on useless and very expensive kit in high profile projects and little elsewhere.
Because there is not enough money to pay for what has been ordered, the government, and the Treasury in particular, have indulged in a peculiar Through The Looking Glass mechanism of delay. This is hugely expensive, with extra fees for keeping the projects alive and managing them with large numbers of civil servants. Two multi-billion pound programmes have been put back five years – which means they could cost twice the original tender price. The delay mechanism means billions are being wasted each year.
One of the most spectacular delays was in the order over a decade ago at the market value. Additional software would have cost an extra 20%. The department decided instead to make its own software, which has never worked. The additional cost now of putting this order right is as much as the original cost. Investigating this story over the years, I have never been able to establish who took the decisions over the procurement. The civil servants blame front-line staff, and the politicians blame vague and unnamed committees.


So what should give here in the UK? The civil service, roughly three times the number doing the same job in the second world war, needs to be cut.
A new agency should be set up on commercial lines to take charge of all contracts. They should look at all of the programmes and devolve as much as possible.
There should also be a reduction of scope and state funding every year. The last UK review was years ago, and the programme it laid down was never properly accounted for by the Treasury. Instead we have been promised a review after the next general election, and that it will be “policy and security driven” which sounds awfully like a cop-out from the painful decisions the author has made plain for all to see.
The civil servants, managers and politicians will have to face up to serious cuts in personnel and programmes – to say nothing of British policy claims and ambitions. To do otherwise is to court disaster, and real political defeat. But will it happen? I doubt it. For too many of those involved it would be like turkeys voting for Christmas.

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