A New Era of Value – the quickest route to better public services?

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Last week I met up with Sheila, an old friend who had recently returned back to the private sector after some years in the NHS. During the pandemic she had started volunteering at her local hospital. By the end of the pandemic she had been offered an administrative job supporting a clinical team. At first she enjoyed it. Two years on, she had had enough. Her reasons? NHS micro-management and waste.

Sheila understood delegation and teamwork. She readily agreed to work overtime, and, where mutually convenient, to work flexibly and sometimes remotely. Yet step by step the NHS micro-management got to her. Managers imposed rigid boundaries obstructing her flexibility. They dictated when she could work remotely and from what location.  She no longer felt trusted. In the end she resigned and returned to the private sector. What a waste.

As the UK’s General Election gets closer there is a hunger for public investment. Prisons are overcrowded. The court, justice and probation service are sinking under backlogs. School maintenance is in crisis. Arts and youth funding has been decimated. Mental health services cannot cope. Waiting lists are at record levels. GP services are under strain. And – the biggest crisis of all – 30m tonnes of the Greenland ice sheet are being lost every hour, 20% more than previously thought. We all want to believe that a new government can invest more. Rightly Keir Starmer and Rachel Reeves are trying to limit our expectations. They tell us that we must wait for improved economic growth before the restraints can be lifted.

Is there any other way to square the circle?

This week the National Audit Office published a report on waste. Gareth Davies, the Auditor General, suggested that the government can make savings in five major areas. Four of them are well known –  big infrastructure and its governance; timely maintenance of public assets; IT systems, and fraud and error.

The fifth – better management of procurement – gets less attention. Of the £100bn of contracts awarded by big departments in 2021-22, a third were not subject to competition. According to the NAO ‘performance remains patchy, with an over-reliance on expensive temporary contracts and misaligned commercial incentives.’

Davies suggests that separate conduct of procurement by different ministries weakens their bargaining power. He’s right: a greater concentration of expertise in a professionalised central procurement function is needed. This could also help to discourage  the  ‘revolving door ‘ phenomenon where senior civil servants in a specialist department – say Ministry of Defence – leave to join a leading supplier to that department.

In a recent edition Private Eye observed that ‘The MOD has limited UK companies to draw on for building or supporting nuclear subs’.  Andy Stocks, an experienced civil servant wrote in to suggested that

‘this limitation applies across all government contracts from roads building to train operation to training to name only a few. Appalling performance in delivery,  health and safety and value for money is being ignored because, to quote ministers and dysfunctional procurement directors “the necessary capability and experience is in short supply”. This state of affairs is a direct consequence of a corruption of values.’[i]

The UK government spends over £250bn a year on the private sector. To get best value for taxpayers the government needs to create a National Procurement Service and secure the services of the most highly sophisticated and experienced executives. After exercising due diligence on the character, values, governance and quality processes  of Fujitsu as a bidder such a body would have been unlikely to allow The Post Office to enter into a business-defining contract with it. Any self-respecting private sector purchaser would expect to have detected these flaws.

This is depressing but also hopeful. There is clearly  potential for more spending headroom if a new government makes effective public procurement a priority and puts it on a long term footing.

Here is my 10 point plan for transforming procurement and freeing up more resources for public expenditure:

  1. Beef up the central government procurement function under the Cabinet Office; pay sufficient salaries (but not behaviour-distorting bonuses) to retain high level procurement executives
  2. Make public procurement a recognised and well-rewarded career pathway within the Civil Service. Work with appropriate professional  bodies to create fast track training for central procurement executives
  3. Prioritise a supplier investment and quality programme – intervening in training, R&D and business development to fill existing gaps in companies supplying the public sector.
  4. Strengthen Advisory Committee on Business Appointments (ACOBA). Impose a 3 year delay before anyone in government procurement can join relevant private sector employer. No revolving doors!
  5. Using BS 95009 (The Trust Test) to assess the character and governance of organisations seeking public sector work.
  6. Link this to applying the principles of the 2012 Social Value Act. Benefits could include new career pathways for the disadvantaged. (Outrageous suggestion: how about taking a risk on commercially savvy ex-prisoners who have served their time for fraud?)
  7. Involve the public in scrutiny of contracts so  that cosy deals are more likely to be exposed.
  8. Eliminate VIP Lanes and ban elected politicians from making introductions.
  9. Involve opposition parties and create all party consensus to give the programme continuity beyond elections.. Set up a procurement subcommittee of the Public Accounts Committee to oversee progress and underpin this emerging consensus.
  10.  Introduce enhanced quality and value for money modules in all civil service training.

Mark Goyder is the Founder of Tomorrow’s Company and Senior Advisor to the Board Intelligence Think Tank. He is the co-author, with Ong Boon Hwee, of Entrusted – Stewardship For Responsible Wealth Creation, published by World Scientific.

[i] Private Eye No 1614 p23

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