Margaret Thatcher’s procurement legacy

17 April 2013
Margaret Thatcher’s premiership arguably heralded the biggest changes in the public sector since the second world war. But with the benefit of a vantage point in the Cabinet Office and then the Treasury for eight of the 11 years of her government, my perception is that the initiatives and reforms were practical responses to issues that had to be tackled. What Baroness Thatcher did was create the environment for innovation and initiative – doing what had hitherto been unthinkable. This was leadership. Only towards the end of her premiership – and probably largely afterwards, did people rationalise these initiatives into a philosophy called ‘Thatcherism’. The problems she inherited were huge. Interest rates and inflation were at times close to 20 per cent. The public sector was unaffordable. One response was to bring in Sir Derek (now Lord) Rayner to oversee a programme of efficiency reviews in central government. The civil service responded by creating its own unit to ‘out-Rayner’ Rayner. It was the management and efficiency group, which eventually became part of the Cabinet Office. On joining in 1980, my task was to review government stores and stockholdings. This took me into all main government departments and many smaller ones. Central civil government had overstocked by hundreds of millions of pounds and the Ministry of Defence by several thousands of millions through a combination of poor procurement, poor stock management and poor policy. Very large opportunities for procurement savings were identified and delivered. Thus was born the first report on government procurement, co-authored by Stephen Penfold and myself. It addressed topics familiar today such as ‘lean procurement’, improving the performance of suppliers and supply chains and eliminating those factors and practices that add cost for the public sector and for suppliers. It addressed how best to organise procurement, training and skills, the key success factors, clear performance measurement and target setting – and even outsourcing. This led to the Prime Minister commissioning a new report on government procurement, which led in 1985 to the creation of the Central Unit on Purchasing in the Treasury, whose role was to reform government procurement and whose functions are now part of the Cabinet Office’s Efficiency and Reform Group. Procurement operated in a time of change. The EU Procurement Directives were introduced in 1983, the complexity of procurements and projects increased, outsourcing became a government policy and the Private Finance Initiative was introduced in the late 1980s. But the procurement community largely failed to adapt quickly enough and was sidelined for many major civil procurements. Arguably, it still has some catching up to do. ☛ Colin Cram is managing director of consultancy Marc1
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