LONDON BRIEFING:In an economical 33 pages, Sir Philip Green gives plenty to justify his claim that, if he ran his company like the UK government, he would go bust
SIR PHILIP Green certainly managed to avoid waste in his report on government inefficiency – at just 33 pages, the retail tycoon's eagerly anticipated Efficiency Reviewspared more trees and print cartridges than might have been expected when he was first appointed to the task two months ago.
Although surprisingly thin on detail, the report nonetheless contains plenty of examples of Whitehall profligacy – from the prices paid for boxes of paper (anything between £8 and £73 a box) to printer cartridges, at between £86 and £396, and laptops, which vary in price from £353 to £2,000 (a member of Green’s team later found the £2,000 laptop available to buy on the internet for just £800).
Green provided the requisite soundbites in a series of interviews to launch the review, declaring the waste he had uncovered to be “bonkers”, “staggering” and “crazy”. He himself was “shocked” at the “upsetting” findings, saying that if he ran his own business this way, it would be bust.
The idea of the combative Topshop and Bhs billionaire being upset at what he and his team from Arcadia found when they went through the government books is stretching it a little, perhaps, but there was certainly plenty in the report to shock.
Take, for example, the revelation that 105,000 civil servants have mobile phones. Some 98 per cent of these are with the same provider but on 68 different, separately negotiated contracts, at a cost of £21 million a year.
Leaving aside whether so many Whitehall employees need to be provided with mobiles in the first place, central negotiation would undoubtedly cut the cost significantly.
Similarly, the £2 billion a year bill for fixed line telecoms could be cut by as much as 40 per cent if the government were to buy its own telecoms capacity, Green says.
He has asked for an urgent review of costs in this area.
Then there are the 140,000 procurement or payment cards in circulation, some 71,000 in central government. These are used for low-value items such as office supplies or travel but buyers are allowed to spend up to £1,000 without any monitoring or authorisation, the cost of which is put at £1 billion a year.
One of the biggest areas of overspend is in the government’s vast property empire, which cost £25 billion a year. The review details a number of examples of poorly negotiated leases and missed opportunities, including one missed chance to break an onerous lease in central London that would have saved £20 million.
In IT, the review highlights one contract for the provision of hardware and software development where work is charged at a rate of more than £1,000 per person per day, well above the market rate. The contract, which also includes services that are no longer required, has another six years to run.
Green also revealed the difficulties encountered in assembling the figures. Records were chaotic and the lack of central buying made it
impossible to track down some figures at all.
On travel, Green’s team was initially advised that the annual spend for central government was £2 billion; the second estimate was £500 million and the third estimate put the figure at £768 million.
That last figure has a ring of precision about it but a thorough review eventually revealed the actual spend to be £551 million.
The retail billionaire, friend of supermodel Kate Moss and celebrities such as Simon Cowell, was always a controversial choice to lead the government’s cost-cutting review, with his own tax arrangements leaving him wide open to criticism. Although, as he repeatedly points out, he is not a tax exile, his wife Tina is a Monaco resident – and she just happens to own most of the family business empire.
He declined to put a figure on the total savings government could make but one estimate doing the rounds in Westminster this week was £20 billion.
Older hands with more experience of efficiency reviews, of which there have been many over the years, are highly sceptical that anything like that figure can be achieved.
Green’s contention that much of the cost-cutting can be achieved without jobs being lost is also questionable.
For example, if payment terms to suppliers are extended back to 30 days (they were cut to just five days during the recession to help companies struggling with their cash flow), businesses large and small will suffer with knock-on effects on employment.
And if the government does move towards more centralised buying, as it undoubtedly should, many smaller firms will find themselves excluded from the tender process. In the end, someone always has to pay.
Fiona Walsh writes for the Guardiannewspaper in London