1 April 2010 | Lindsay Clark
Industry leaders today claim that sweeping away “arcane procurement rules” in the UK public sector could boost efficiency and avoid the need to increase National Insurance (NI).
In an open letter to The Daily Telegraph, chief executives and chairmen from UK companies including J Sainsbury, JCB and AXA, welcome the Conservative’s promise to stop the proposed NI increase, saying it would damage the economic recovery. Instead, they write: “Savings can be made by removing the blizzard of practices, arcane procurement rules and Whitehall interference.”
The private sector has improved productivity by 20 per cent over the past few years, the letter says, while public sector productivity has fallen by 3 per cent.
However, speaking on the BBC's Today programme this morning, Colin Talbot, professor of public policy and management at Manchester Business School, said creating efficiencies in the public sector was not so straightforward. “The public sector is labour intensive. It is much more difficult to achieve efficiency savings in labour-intensive industries than it is in capital- intensive ones.”
Professor Talbot also said efficiency savings should be “real” and not disguised as merely cuts to services.
Also speaking on the Today programme, Tory leader David Cameron said if elected the Conservatives would be able to find £6 billion savings during 2010 negating the need to increase NI. “In the first year you find these £6 billion net savings on wasteful government spending by looking at areas like IT, procurement and recruitment. These top business leaders, and Sir Peter Gershon and Dr Martin Read, the government’s own waste expert, have all said it’s doable and deliverable.”
Sir Peter Gershon led an earlier Labour government review of government efficiency which claimed to create £23 billion savings. In 2008, Treasury claimed £8 billion has come from procurement efficiencies. Additional billions in savings relate to other activities undertaken by procurement specialists, such as administrative reorganisation.