Savings targets, but where is the demand management?
Among all the budget hype (and pride) over how much the government intends to save over the next few years I feel one critical aspect has not been addressed.
Whenever the government talks about the annual procurement value it always quotes a mysterious £175 billion figure. This is an increase from £160 billion which was the standard figure quoted before a few months ago.
Where this £15 billion increase has come from is unclear – but coincidentally it accounts for the £15 billion efficiency savings outlined by the Chancellor.
Considering the woeful state of spend analysis among departments revealed by the OGC’s own procurement capability reviews I find it hard to believe that even the £175 billion figure is accurate.
Demand management is so often considered secondary to making cost savings – perhaps because it is seen as a more sophisticated aspect of purchasing.
But when you have a congregation of buying organisations as large as the public sector, I would argue managing demand – in the first case working out how what you are going to buy – should be a priority.
Making efficiency savings on unnecessary and poorly set-up contracts is, quite frankly, an attempt to close the stable door after the horse is galloping down the road.
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