A way to save on the cost of government is to re-think our procurement strategies. This post is an enlargement a comment made on John Redwood’s posting “The Future of Trident”. I therefore start from the aspect of defence procurement.

 1)      Specialist specifications rather than adaptation of exisitng civilian (or foreign military) designs. (Communications technology is a case in point.)

2)      Inadequate specification at the outset, or changes to the specification part way through. (Numerous IT projects provide better examples).

3)      Changing the organisation to suit the equipment, rather than the equipment to suit the organisation. The best example (from personal experience) is of SAP software, where much of the benefits (in both improving the organization and cost savings) are through orientating the organisation to the software. Many of the failures of implementation are through

– Designing front-ends to make it more user-friendly.

– Writing bespoke reports when there are standard reports than can operate just as well (and are more reliable)

– Complex bespoke configuration.

– Have multiple configurations for a various entities or departments within the one organization.

4)      Poor stock control of spare parts leading to over-stocking, or getting rid of items that are required. I am sure that a major supplier of equipment (directly or indirectly) are traders in MOD surplus.

5)      Poor utilisation of existing equipment or assets. The MOD needs to keep huge stores in case of war – particularly of ordinance. But there are many areas where this can be improved. Again the NHS & Education may provide better (or at least more publicly accessible) examples.

The comments have some tie-ins with  the analogy between my shopping and improving expenditure posted on June 28^th.

The Tories straight-jacketed are becoming in the debate on public spending. For instance today Conservative Home reports Phillip Hammond saying that “protecting frontline services is the key reviewing government expenditure”. If the Tories do not change this debate then they will fail the nation when in government. Here are some examples from my shopping that might help them succeed:-

1)      VALUE FOR MONEY – It is not how much that is spent, but the output that matters. Consider an example from my shopping. Recently I bought aubergines for 49p each against 89p each at another supermarket. The quality was not as good. However, the cheaper ones were at least 3 times the size of the more expensive ones, and I use them for bulk in making ratatouille. If the Labour Government were regularly paying 89p for their aubergines, they would say it was a cutback if a switch was made the 49p variety, and lowering of quality, even though quantity was increased 3-fold.

2)      PLURALITY of SUPPLY. The standard argument is to have a single source and type of supply. In the Government sector, the NHS is the only source of supply for Healthcare and the National Curriculum is means that the syllabuses and the structure of lessons are determined centrally. In my shopping, I like to buy the branded tea and instant coffee. But in neither do I stick to one brand, or stick to one supermarket, and I tend to stock up when it is cheap. I therefore save around 30% on average. The government sector is more complex, but by having diversity it is possible to get better value.

3)      WASTE REDUCTION. I do most of the shopping in my family, as I have the knowledge of prices, where things are in supermarkets and the best idea of my family’s diverse tastes, and the quantities required. Knowing tastes and quantities means that mistakes are minimized. We occasionally waste food in the household, but it is far less than 20% that is claim nationally. The Labour Government may have looked at cheaper sources of supply, but not consistently. In particular, as tastes change it

4)      PRODUCTIVITY. Mine and my partner’s time is valuable. We neither want to spent large parts of out time on shopping or cooking. Therefore, we would not normally make bread, pizzas, sauces or sausages as these would waste time. In cooking, we may cook large joints of meat and freeze some, as this saves both time and cost. There is a lot of trail and error in this and learning by experience. The Government, consistently, has looked at extending existing services and creating new functions, with an eye solely on the public perception and no particular view on how much output is achieved for a given input. In so doing productivity has probably fallen. See Burning our Money here.

5)      FINANCIAL CONSTRAINTS. When shopping, I do not look for the absolute cheapest, nor do we do without luxuries. But too many luxuries, and too few bargains will lead to the overall household weekly shopping envelope constraining other expenditure, such as housing, cars and holidays. What is best is to have flexibility, so luxuries can be afforded, quality is generally good, diversity is high, new things tried yet cost is kept low. The Labour Government has for too long deceived itself about the financial constraints, first juggling over the course of the business cycle, then believing that boom and bust has vanished. Now there is the deepest recession since the constraints are massive, as government was already over-spending in the good times.

6)      MAINTAINING FOCUS ON PRIORITIES. When shopping for the best bargains, I do not lose sight of the fact of that I am aiming to satisfy the needs of my family. I do not slavishly pander to the whims of the children (though I do provide some treats and some junk food), nor do we do without all luxuries and treats. Rather, it is a balance of getting value, and concentrating on the basic goods that need to be purchased week in week out. For the Labour Government, too many items that should be classed luxuries, or “nice to have”, have become essentials and basic human rights. When it comes to stressing priorities they have little idea. Rather than make such a decision, they are waiting to be forced to make a decision, and then cuts are likely to be evenly made across the board.

7)      CONSIDER THE INTEREST OF THE RECIEVER AS NUMBER ONE. I look for the best offers in each supermarket. I take note and take advantage of pricing mistakes (such as making smaller packets cheaper per unit than larger ones); can see usually through phoney offers (usually); buy supermarket own-brands and trawl the discount cabinets for items at their sell-by date. In other words, I would like to think a supermarket’s profit margins on my shopping is somewhat below the average. My interest becomes before that of the supermarket. In Government, much of what is done is due to pandering to the government sector workers. Serving the general public is just another priority to be considered. Government should exist to serve the people. Everything should follow from that. This includes the interest of the public servants.

The analogy is only that. It does not encompass all the issues, and some areas (such as productivity and maintenance of priorities) are ranked as more important for government, whereas value for money in every item is the most important for my weekly shop. However, if it is the welfare of the nation that is our concern, it is a good way to move away from sterile and unproductive arguments.