News focus: Centralised but not mandated

9 November 2010
New body to send 'shockwaves' through departmental spending
John Collington to head up central government procurement
Whitehall department chiefs gear up for cuts challenge
Alastair Merrill describes challenges of collaborative purchasing
Joint public buying is not getting results, say audit bodies

9 November 2010 | Angeline Albert

Scotland has proved there is no need for a mandate to enforce centralised buying. Angeline Albert asks what the rest of the UK can learn from its gains

When John Collington, head of procurement at the Cabinet Office’s Efficiency and Reform Group, visited his native Scotland last month, he may have taken the opportunity to learn about centralised government buying, which has been going on in the country for four years.

Part of his role, established for the first time in August, is to bring together category spend across central government departments and strike better deals using spending data. Speaking to SM last month, Collington said his mission would not happen through collaboration in the hope that people participate. Instead it would be done “through mandatory policies”.

But for the last four years, Scotland has achieved centralised buying without such a mandate. And from April 2006 to April 2010, procurement saved more than £800 million.

Scotland’s achievements stemmed from a pivotal review of public procurement by John McClelland in 2006, a former global chief industrial officer at Philips Consumer Electronics. McClelland’s report highlighted weaknesses in buying relating to resources, skills, structure and practices and said public sector organisations should boost procurement’s importance. Adoption of McClelland’s recommendations led to major public sector purchasing reform.

Procurement was helped by the report’s recommendation for public sector collaboration to bring together professionals and optimise scarce skills. It also recommended the use of qualified, professional staff with seniority and influence.

A vital component of Scotland’s buying reform was the report’s recommendation that centres of procurement expertise be introduced.These cover: health; local authorities; higher and further education; Scottish Government departments, agencies and non-departmental public bodies; and Procurement Scotland (responsible for procurement strategies for national commodities for Scottish public bodies).

The report also recommended the creation of a Public Procurement Reform Board. 

Scotland’s public procurement reform programme is owned by this board, which is chaired by Scotland’s finance minister John Swinney. The board brings together senior representatives including chief executives from public bodies to ensure top level buy-in for Scotland’s purchasing reforms. 

Alastair Merrill, director of the Scottish Procurement Directorate, tells SM: “It’s not a case of enforcing solutions. It’s not government doing it to the country. It’s the public sector organisations working together.

“The UK and Scotland are at very different places in the procurement journey. We have been advised that public services in Scotland have met or exceeded the targets that they were given for efficiency savings.”

The Scottish Government’s efficiency outturn report for 2009-10, reported £312 million of efficiency savings through better procurement – almost double that reported in 2008-09.

Merrill says the rest of the UK could learn from Scotland’s shared procurement, which includes the Public Contracts Scotland portal to allow firms to register for free to receive electronic notification about contracts. Whitehall could also learn from Scotland’s investment in a management information hub, which helped it categorise and analyse spend data in the public sector.

McClelland, now chair of Scottish, Further and Higher Education Funding Council, tells SM not all the challenges highlighted in his 2006 report have been met. He says the public reform board should expand procurement to areas such as construction, ICT and social care.

The scale of Collington’s challenge in Westminster is far greater than his counterparts north of the border. He has already said getting useful management information across government will be a key objective of the ERG in the UK government. This will have to accommodate 18 times the spending of Scotland. In 2009-10 the UK government procurement spending was £166 billion, according to Sir Philip Green’s efficiency review, while Scotland spent approximately £9 billion.

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