Simple Shopper To Go Green?

I could do you 200 dozen, trade

Regular BOM readers will be all too familiar with the Simple Shopper and his staggering ability to burn our cash (see previous blogs gathered here). But Cam's procurement guru Sir Philip Green has clearly been rocked by what he's seen of the Shopper's operations:

"The process is shocking. There's no reporting, there's no accountability... You could not be in business if you operated like this. It would be impossible."

His report is refreshingly brief and punchy - very unlike the usual telephone directory reports we get from officialdom (see PS below). Among the real shockers he highlights:

• £2bn pa spent on landline telephony, where the Shopper is overpaying by an astonishing £600 - £700m every single year
• 400,000 hotel rooms booked every year in central London alone - Green estimates £50m pa could be saved by teleconferencing
• £800 laptops bought for £2000 each
• £20m lost on failure to break expensive central London lease - government property costs £25bn pa, but has not been managed on a commercial basis (especially taking opportunities to break expensive leases)
• Failure to exploit HMG's AAA credit rating - a commercial operation with such a rating would insist its suppliers extend lengthy credit facilities (aka paying invoices later).

Green declines to give a figure for the total possible savings, but with the total procurement spend getting on for £200bn pa, we're clearly talking tens of billions annually. Savings that would go a very long way to closing George's fiscal gap.

So WTF hasn't it been done already?

After all, governments overpaying on procurement has been a problem for at least four centuries (see this blog for what Charles II's Clerk to the Navy Board - a certain Mr Pepys - had to say about it). And the Great Helmsman used to bang on all the time about how much his brilliant procurement reforms had saved us.

Sir Philip suggests it's because government buying is too fragmented - scores of different departments and quangos buying their own paperclips and not capitalising on their combined buying power. What we need is centralised buying in the hands of hard-nosed professionals such as... well, such as Sir Philip.

Yes, nice idea. So logical.

Except... hang on a minute... isn't centralised buying precisely what was supposed to have happened under the G Helmsman? Didn't he set up the Office for Government Commerce under the direction of hard-nosed (and expensive) professionals, specifically to wring better prices out of suppliers by exploiting scale?

Well, yes he did.

And yes, it flopped.

You see, what Sir Philip has failed to understand is that once you set foot in Whitehall, you aren't in Kansas any more. You no longer have people around you who are driven by the cost imperative. Instead, you have people who are driven by the need to defend territory, and to keep the politicos off their back.

Just what that means in practice was neatly highlighted by one of those politicians, responding to Sir Philip's report today. Margaret Hodge is the new chairman of the Public Accounts Committee - the grand-daddy of Parliamentary watchdogs and the very body set up by William Ewart G to ensure taxpayers get good value from public spending. And her response to Phil's report was to say he doesn't know what he's talking about - government is much more complex than running Topshop. Even for the Public Accounts Committee, it's clear that cutting costs is not the over-riding priority.

The fundamental problem here is that government does not do cost efficiency - never has and almost certainly never will. And the reason is very simple - unlike Topshop, the "customers" of government have no choice. Yes, of course they can replace the non-execs every so often, but there is no other shop just along the High Street they can simply take their business to.

So government isn't under the same pressure as Topshop to deliver value for money. Not the same pressure to screw their suppliers down to the last penny. So even where you have centralised buying - as for example in defence equipment - because the pressure isn't there, you never get the cost saving the private sector takes as a matter of course.

No, the only real cure for all the billions government wastes in its procurement programmes is not to coordinate purchasing programmes, but to stop government procuring stuff at all.

In other words to break it up. To downsize government drastically, and return many of its current functions (like education and healthcare) back to the private sector.


PS Today's Fairness report from the Equality and Human Rights Commission is in sharp contrast to Green's snappy offering. It weighs in at a totally unreadable 750 pages, with further vast research appendices on top of that. As always, Tyler has only looked at the pictures, and we may blog one or two of them in due course. But for now, let's just note Commission head Trevor Philips' latest suggestion for government action - to redress the unfair distribution of "moral and social capital". No, we don't know how government could do that either. Outside of North Korea, that is.

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www.gudanggrosiran.com Categories: simple shopper

Can Big Be Beautiful?

Big - but also competing for customers

As you may possibly have gathered, Tyler isn't terribly keen on Big Government. Yet, in some ways, Big Government ought to have some Big Advantages.

Take procurement spending - something we've blogged many times on BOM. A Big Buyer, buying in Big Size, ought to be able to buy stuff much more cheaply than a load of small buyers.

The Institute of Directors has just published an interesting new report on this. Towards Tesco - improving public sector procurement reminds us that the UK public sector is one of the biggest buyers in the world, spending £220bn pa - 15% of our GDP. And yet, it has never fully exploited that size. It has never managed to emulate Tesco and the other big supermarkets in grinding their suppliers down to rock-bottom pricing for volume.

The IOD blames public sector procurement fragmentation, and the fact that it "still organises itself on the “corner shop” model, with the majority of purchasing organised in small scale silos – e.g. local authorities, NHS trusts, small central Government departments, each doing their own thing".

It argues we need more centralisation of the buying process:

• Centralised buying organisations that handle all key supplier relationships and all national and major contracts on behalf of the whole public sector;
• Where there are regional and local requirements, we need regional procurement hubs to provide expert contracting support to all bodies in the region;
• A single leadership point (e.g. the Office of Government Commerce) for the above structure.
• Mandatory use of the above structures by all public sector bodies.

If we did it right we could save "at least £15bn in the procurement process and £10bn in the outsourcing process" - a chunky £25bn pa, which would go a long way to filling our fiscal black hole.

Now, there's no doubt that public sector procurement is a shambles. For example, the report tells us that Greater Manchester's various local authorities "have over 100 specifications for tarmac, when seven are adequate – a potential saving of 10 per cent. Greater Manchester councils are unable to collaborate on dust cart procurement as they cannot agree on the specification and make – a potential saving on total cost of ownership of 10 per cent."

The question in Tyler's mind is whether more central control would actually deliver the mooted £25bn savings. After all, wasn't that the idea behind the Office for Government Commerce (OGC)?

Because as regular readers will know, the OGC has flopped. Indeed, as we blogged here, and here, the National Audit Office and the Public Accounts Committee discovered that it's actually managed to negotiate supplier prices that are higher than you or I could get (eg its cheapest price for a pack of 12 Post-It notes was £4.41, whereas they were freely available outside for £1.75).

The thing about Tesco - and its Big Difference from the public sector - is that it faces competition. Tesco may be Big, but it's been made beautiful by the constant day-to-day battle it faces to keep its customers. It's forced to wring every last penny of pricing concession out of its suppliers so it can deliver a better deal for its customers on the retail park.

The public sector simply doesn't have that spur. And unfortunately, experience from Stalin to the OGC shows that without the spur, Bigger all too often means Bigger Mistakes. And where the Simple Shopper is involved, much more costly ones.

As we've blogged to the point of miaow-miaow hallucination, the single most important step we have to take is to break up the public sector and find ways of injecting competition. And as far as possible, the ultimate buying power must rest in the hands of customers.

PS BOM correspondent PT has been monitoring the problems with the student grant/loan system. The delays in students receiving their loans have had much publicity over recent years, but PL points out that such delays were much fewer back when local authorities dealt with student funding. A key reason for that is that the new centralised system doesn't work properly. And whereas in the old days colleges and students could always find an individual at the funding authority who could sort things out, the only people you can speak to these days are call centre operatives with limited knowledge and limited discretion. And yet another dysfunctional mega-IT system.

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www.gudanggrosiran.com Categories: big government, simple shopper

Another Doomsday Overspend

There's always been a good living in doom

Now that Armageddon swine flu has proved to be yet another false commissariat scare story, precisely how much has the Simple Shopper blown on all those unwanted Swine Flu jabs?

As always, facts are scarce, but it seems to be up to £1bn. According to the World Health Organisation, the cost per dose is around $20 (see this blog), and it's believed the Shopper has ordered 90 million of the things. Since only 4 million of us (and I do mean us) have had the jab, that means 86 million are surplus to requirements. Which works out at just over £1bn.

So who's to blame?

Well, the Shopper obviously, for entering into yet another naive overpriced deal with Big Pharma (GlaxoSmithKline alone is reportedly on track for a £1bn swine flu windfall - and no, Tyler does not blame the drugs companies for the Shopper's inability to negotiate professionally).

Then, our Health Commissars for whipping up the scare - especially Chief Scaremaster Sir Liam Donaldson who hysterically announced that 65,000 Brits could die (actual deaths to date 203). As you will recall, the Scaremaster's previous triumphs include Bird Flu, which he predicted could kill up to 750,000 of us (actual deaths nil). And that followed the similarly wildly hyped scares over Sars and vCJD (predicted deaths 136,000; actual deaths 136).

Finally, there's the hopeless World Health Organisation, the chief promoter of global health scares.

The WHO is a wholly owned subsidiary of the expensive dysfunctional UN. It has an annual budget of $5bn, and is headed by a woman whose educational background is not medicine but home economics. And like most such organisations its funding and continued growth depend on whipping up demand for its services among bureaucrats and politicos in the rich countries. Which is why global pandemics and other health scares come in so handy.

Now, you might think there'd be a limit to the number of times these assorted conflicted commissars could cry wolf before we'd stop paying heed - and more importantly, stop paying their salaries. And maybe there is.

But the biggest such scam the world has ever seen still seems to be going strong. And unlike the global health industry, whose warnings of near-term pandemics can all too soon be proved wrong, the global warming industry has developed a 100 year pitch where we won't be able to tell if they're wrong until long after we're all dead. Genius.

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www.gudanggrosiran.com Categories: doom, simple shopper

Earning Your Pharmacist An Honest Crust

May I tick your boxes?

As we may have mentioned before, Tyler is a major league drug user. And not all of them are for recreational purposes: he routinely ingests an amusing cocktail of prescription drugs to keep a lid on his wayward immune system.

So the other day he's visiting his local chemist to pick up the latest crateful, when he's accosted by the pharmacist (see here for previous pharmaceutical encounters). Would Tyler care to enter her consultation room for a quick word?

Consultation room?

"Yes, yes, it's a bit more private in there."

Private? Why private? Is she going to break bad news? Has there been some horrible mix-up? Has Tyler inadvertantly been taking those drugs they use to chemically castrate elephants? No wonder he's been feeling a little lacklustre of late.

"Mr Tyler, we've noticed that you've never had a medicines use review." The keen young pharmacist brandishes the form she's holding. "If I just run though this with you, we can make sure you're getting the right medication."

"But I already have an annual review with my GP, and I'm also under a consultant."

"Ah yes, but they look at your body - we look at your medicines. We can advise you on them."

"Hmm... well, OK."

"Fantastic! Now, these first pills, how do you take them?"

"I... er... swallow them."

"Fantastic!" She ticks a box. "And how often do you take them?"

"Well, once a day, like it says on the instructions."

"Fantastic!" She ticks another box. "And do you have any side effects?"

"No... otherwise I'd have gone back to my consultant."

"Fantastic!" Another box ticked.

I could go on, but you get the idea. By the end of my 3 minutes, she must have ticked a dozen boxes. And what advice did she have for me?

"Well, you seem to be taking all your medicines correctly, and there's nothing I can suggest in terms of lifestyle to help your condition."

So no advice.

Fantastic.

But what was really going on?

The pharmacist was earning herself - or at least her company - £28 from the NHS. Which for 5 minutes work isn't bad (£336 per hour). That's what she gets paid for conducting a Medicines Use Review (MUR) under a scheme set up by the NHS to make sure patients comply - yes, that is the word they use - with the instructions they've been given.

You can sort of understand how the commissars dreamed up the scheme. After all, they spend well over £8bn pa on prescription drugs in England alone, and that bill has doubled in ten years. The last thing they want is for we punters not to be taking them properly.

But is 5 minutes with Sharon ticking boxes in her consultation cupboard really going to help?

Seems unlikely. In fact from what Tyler saw, it looked more like money for old rope.

And what does the whole exercise cost us?

According to the official stats, the number of MURs is soaring. Between 2006-07 and 2007-08 MURs roughly doubled to over a million. Which at 28 quid a pop comes in at around £30m - a considerable sum in these straightened times. Especially when you remember that pharmacies in England and Wales already earn getting on for £1bn pa from the NHS just for dispensing fees (ie not including the cost of the drugs):

Which is presumably why the commissars have imposed a limit on how many MURs an individual pharmacy can conduct - 400 pa.

But how does that work exactly? Who decides which punters are going to get MURRED? Sharon told Tyler she could tell immediately he didn't really need a MUR because he wasn't a batty old lady. But she went ahead and did it anyway.

And come to that, isn't the whole shebang open to massive fraud? How can the commissars possibly tell that the MUR has actually taken place? Tyler signed nothing, and Sharon retained the tickbox form.

Oh, guess what - the whole shebang is open to massive fraud. And it turns out there is a massive fraud investigation underway. The NHS's own Counter Fraud Service (oh yes, the NHS needs one of its very own) is on the case, and has already discovered that the payment system was set up by a particularly unworldly four year old:

"Pharmacists declare to NHS Prescription Services how many MURs they have performed during the month when they send their monthly FP10s for processing, and they are paid £28 for each one. They do not submit MUR forms or disclose patient names in support of their declarations, although they do send GPs lists of patients whom they declare have received MURs."

There is no procedure for checking that the claims marry up with what the GPs have been told. Still less is there a procedure for checking whether the MURs have actually taken place. Fraud is almost certainly rife.

Needless to say, the pharmacists are squawking. It seems they don't want to be investigated, and they reckon the case cannot proceed because of "patient confidentiality concerns". So the entire investigation is now on hold while m'learned friend is consulted - no doubt at further considerable taxpayer expense.

Now, just imagine you're a pharmacist. You'd probably be knocking off as many of these £28 "consultations" as you could possibly manage, before the opportunity disappears. You'd also be ticking patient boxes like fury to get some kosher records on file ahead of Inspector Knacker's forthcoming visit.

Let's hope they still have time to make sure Tyler doesn't get any more of those elephant pills.

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www.gudanggrosiran.com Categories: fraud, nhs, simple shopper

Latest Shopper Triumph

Great data... shocking shopping

According to C4 News:

"An NHS trust has hired dozens and possibly hundreds of illegal immigrants through one of its biggest private cleaning contractors.

The company involved is ISS which employs over 40,000 people around the UK through contracts it holds with the NHS and blue chip companies.

The UK Border Agency has uncovered hundreds of fake documents submitted to Kingston Hospital, including security passes, national insurance numbers and passports.

A senior manager of ISS has been arrested on suspicion of skimming money from the illegal immigrants for cleaning and catering staff."

So who's to blame?

Well, according to C4, ISS is in the firing line:

"ISS is being questioned about the status, role and pay of hundreds of its cleaners and catering staff, facing allegations over the issuing of fake passports and national Insurance numbers and facing the possibility of a multi million pound fine."

If those allegations turn out to be true, then ISS must be fired from all its government contracts, and never ever hired again.

But beyond that, this has all the hallmarks of a problem only too familiar to BOM readers - the Simple Shopper.

Our guess is that the Shopper hired ISS to clean Kingston's Hospitals because they looked cheap. And our guess is that once hired, ISS got very little by way of practical day-to-day supervision from the Shopper. In all likelihood, the Trust didn't even want to consider the possibility that its non-English speaking cleaners might be illegal immigrants.

(A quick Google reveals that Kingston Trust has got previous. In 2008 they were suspected of massaging their MRSA data by cutting down on the number of blood tests conducted - don't ask, don't tell.)

The fact is - as we've blogged before - contracting out vital services like hospital cleaning is fraught with difficulty.

Unless the contractors are subject to close supervision - which generally they are not - all kinds of nasties develop. Illegal immigrants are the least of them (see this classic post by the Doc - Joseph Lister and the plastic dog turd).

As we've blogged many times before, when Tyler's Mum was a nurse in a pre-NHS flagship hospital, the ward sister was responsible for keeping the ward clean. Yes, there were cleaners who did the work, but Sister was responsible for the results, and had authority over them.

Which is why hospitals were infused with Dettol rather than MRSA.

And why they weren't cleaned by anonymous illegal immigrants.

PS As for the rest of C4 News this pm, I gathered that Europe's High Representative boonies have now been divvied up amongst a bunch of grey commissars nobody has ever heard of (cf the Soviet Union), our Deputy Prime Minister has been charged with serious motoring offences (including the offence of Gross Hypocrisy in respect of using a mobile whilst driving), and a bunch of sharks are moored in Lyme Bay (as cribbed from this morning's Mail). My friends, we are rapidly heading into the darkness.

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www.gudanggrosiran.com Categories: simple shopper

The Real Lessons Of Nimrod

More victims of government failure

"We are working hard to ensure we capture lessons from incidents and inquiries to improve our safety. As an organisation the MOD is changing its culture and approach to put safety first."

So says the lamentable Bob Ainsworth.

How many times have we heard that? How many times have we heard some government minister telling us that lessons have been learned and changes made? And how many times have we been let down?

And before we go any further, just take a moment to imagine it was your partner, your son, your brother, or your father who went down with the plane.

I haven't read the whole of the 587 page Haddon-Cave Review of the 2006 Nimrod crash, but what I have read tells a familiar story of bungling, complacency, and denial:

"If the Nimrod Safety Case had been drawn up with proper skill, care and attention, the catastrophic fire risks to the Nimrod fleet... would have been identified and dealt with, and the loss of XV230 in September 2006 would have been avoided...

Unfortunately, the Nimrod Safety Case was a lamentable job from start to finish. It was riddled with errors. It missed the key dangers. Its production is a story of incompetence, complacency, and cynicism."

It is a shameful tale, and nobody emerges with credit. Unusually for such an enquiry, the Review names names, in the MOD, the RAF, and the private contractors involved - BAE and Qinetiq. They should all hang their heads - as well as getting sacked.

But the real lessons go much deeper. The real lessons relate to those fundamental flaws in government we blog so often.

To start with, the only reason fourteen of our servicemen were flying in that ancient clapped out plane at all, was because our politicians decided to overrule the advice of their frontline professionals.

As BOM readers will recall, back in 1996 the RAF and MOD procurement team wanted to replace the ancient Nimrod MR2 fleet with the Lockheed Orion, the world's most successful maritime reconnaisance aircraft. But the politicians effectively overruled them, opting instead for an updated version of the Nimrod.

Why? Well, we'll never know exactly, but we may presume it was to shore up BAE which depends critically on MOD orders. In other words, it was a decision made on industrial policy grounds rather than military needs (the Defence Secretary at the time was BBC TV pundit Michael Portillo, who subsequently became - yes, you guessed it - a non-executive director of BAE).

Second, the reason the Nimrod MR2 is still flying, rather than its replacement MR4, is that BAE has still not finished the new version. The MR4 was originally supposed to go into service in 2003, but the latest official estimate is 2011 - eight years late. Eight years in which our servicemen have been expected to go on flying in dangerous planes that are older than they are themselves (indeed, when you consider the Nimrod is basically a converted Comet airliner, these planes are actually even older than Tyler).

And of course, the delay is on top of a truly wild cost escalation. The project was originally supposed to cost £2bn for 21 planes- £95m each. But we're now paying £3.6bn for 12 aircraft- £300m each. That's a price increase of 216%.

Should we blame BAE for the overruns? Well, yes, of course. But it fits into a much broader pattern of government being incapable of managing its contractors effectively. We've blogged this issue many times, and it includes the inability to spec the job properly, the inability to draw up workable contracts, the inability to price jobs realistically, and a chronic inability to stick to the original spec. The all too predicatable result is delay and cost overruns, just as we see with Nimrod.

Third, the reason the MR2's known safety issues were not tackled - or better still, the plane grounded - was that the 2001-2005 safety review (the "Safety Case") was little more than a gigantic box-ticking exercise. Haddon-Cave says:

"... the task of drawing up the Safety Case became essentially a paperwork and ‘tickbox’ exercise...

... The Nimrod IPT [the MOD's own project team] inappropriately delegated project management... to a relatively junior person without adequate oversight or supervision; failed to ensure adequate operator involvement in BAE's work; failed to project manage properly, or to act as an ‘intelligent customer’ at any stage; failed to read the BAE System Reports carefully or otherwise check BAE Systems’ work; failed to follow its own Safety Management Plan; failed properly to appoint an Independent Safety Advisor to audit the Nimrod Safety Case; and signed-off BAE Systems’ work in circumstances where it was manifestly inappropriate to do so. Subsequently, the Nimrod IPT sentenced the outstanding risks on a manifestly inadequate, flawed and unrealistic basis, and in doing so mis-categorised the catastrophic fire risk... as ‘Tolerable’ when it plainly was not. The Nimrod IPT was sloppy and complacent and outsourced its thinking."

We encounter this kind of sloppiness in government all the time. Senior managers who delegate critical functions to juniors without proper supervision. Non-existent project management. Failure to act as "an intelligent customer". Failure to check contractors' work. Failure to follow their own procedures. Failure to audit results.

Government is very good at compiling massive codes of practice and rules both for itself and other people. But when it comes to practical execution in the real world, it is terminally hopeless. It simply isn't up to the job.

Fourth, the Nimrod disaster reflects the unintended consequences of this government's much-hyped "efficiency" programmes. Haddon-Cave describes how the cuts demanded by the 1998 Defence Review sent the MOD into "organisational trauma":

"Financial pressures and cuts drove a cascade of multifarious organisational changes, which led to a dilution of the airworthiness regime and culture within the MOD, and distraction from safety and airworthiness issues as the top priority. There was a shift in culture and priorities in the MOD towards ‘business’ and financial targets, at the expense of functional values such as safety and airworthiness."

As we've blogged many times, these so-called efficiency programmes may sound good on paper, but they almost always degenerate into farce (Gershon) or tragedy, as here. Government just doesn't do efficiency. To get better value we have to dismantle it.

But defence is a rather special case. Government has to do defence. And that being so, our first and overriding priority must be to support our servicemen and women, especially in the line of fire. It is completely unacceptable to put their lives at risk in an attempt to shave 20% off the logistics budget, as apparently happened here.

Yes, we should switch to buying off-the-shelf kit (like the Orion). But beyond that we should recognise that we will always end up paying over the odds - that's just the way government is (eg see this blog).

So to summarise, the real lessons of the Nimrod killings are:

1. Politicians should not override the operational judgements of frontline staff
2. Government is hopeless at managing outside suppliers - and the end-customers become the victims
3. Government is hopeless at project management - and indeed, at management more generally
4. Government is hopeless at efficiency programmes - cuts are never the same as efficiency savings

But of course, we knew all that long ago. It really should not have taken 14 more service deaths to remind us.

PS BAE comes out of this even worse than the MOD. The Review says: "BAE Systems bears substantial responsibility for the failure of the Nimrod Safety Case. Phases 1and 2 were poorly planned, poorly managed and poorly executed, work was rushed and corners were cut. The end product was seriously defective... The work was riddled with errors of fact, analysis and risk categorisation... These matters raised question marks about the prevailing ethical culture at BAE Systems." BAE may claim that the cause of the crash “will never finally be determined”, but if I were a relative I'd be suing.

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www.gudanggrosiran.com Categories: defence, mod, simple shopper

Pol Makes A Good Point

So bad, it's fallen off the official chart

Today's horrific public borrowing figures underline the need for drastic action. So far in 2009-10, Brown's government has borrowed £77bn, which puts us well on course for busting through £200bn over the year as a whole (the budget forecast was £175bn).

Even setting aside Brown's much hyped capital spending programme, the current deficit year-to-date is £61.5bn - so big, it can no longer be accommodated on the official ONS chart (see above). And our net debt now stands at £825bn - which means the latest estimate of our real national debt we blogged yesterday already needs increasing by £20bn.

The dials are spinning, my friends, and unless someone grabs the controls soon, I'm very much afraid we're going down.

As luck would have it, the CBI has just published its "blueprint" for getting a grip. Like us, it wants spending cuts rather than tax increases, and says:

"...an extra £120bn will need to be taken out of current spending to achieve budget balance by 2015-16. Such savings cannot be achieved by tinkering at the edges, but will require radical public sector reform.

We have identified how the required savings might be achieved by re-engineering the ways in which public services are delivered. By introducing new technology and competition, eliminating waste and inefficiency, and tackling unaffordable pensions and pay head on, we can avoid crude cuts to frontline staff and the vital services on which we all depend."

Their £120bn spending reduction is a cumulative total spread over three years, and it breaks down like this:

• £63bn from "radically re-designing the way public services are delivered, including making use of new and proven technologies, as well as increasing competition"


• £27bn from "improving workforce management" - specifically, a two year pay freeze, tackling the sickie problem, and gripping public sector pensions


• £30bn from more outsourcing to private sector suppliers


• £16bn (mimimum) from "cutting waste from within government"

63+27+30+16... umm... that's 136 isn't it? Oh well, what's the odd £16bn in a crisis?

Anyway, Pol doesn't like it one little bit. Warning us to "beware the zealots selling miracle cures", she accuses the CBI of fiddling the figures and "licking its lips as it eyes up public services cuts". Anyone would think she was talking about the TaxPayers' Alliance again.

But wait... what's this? Polly actually goes on to make a very good point. Homing in on the CBI's enthusiasm for more outsourcing, she says:

"The CBI claims private contractors can process arrested people through custody suites more cheaply by freeing up police from paperwork, and that private civilian companies can provide basic logistics for the forces more efficiently than using trained soldiers, which sounds convincing.

Or at least it sounds convincing until you consider the forces' abysmal record for striking good contracts with commerce. That's just the problem. Weak public managers are often even worse at drawing up private finance initiative, public-private partnership or even bog-standard procurement deals with the private sector. The danger is that canny companies will run rings round civil servants with neither the knowledge not the greedy motivation to squeeze out every penny's worth."

Spot on Pol. As we've highlighted over and over again on BOM, whether because he's naive, or stupid, or lacks your greedy motivation, the Simple Shopper is absolutely pants at driving deals with the private sector. He cannot be trusted to do it. Which is a serious flaw in the CBI "blueprint".

So if outsourcing is out, what should we do instead?

Pol's solution is pretty well to keep everything in-house, and hope that the public sector can somehow get more efficient by rolling out best practice. Kind of idea.

Our solution is to go way beyond what the CBI suggests. We don't want yet more cack-handed outsourcing arrangements - everything from hospital cleaning to IT shows that the public sector cannot manage them. What we need instead is for government to divest itself of its intermediating role between customer and supplier.

We need... yes, you've heard it all before... choice and competition. We need the spending power put directly into the hands of customers, and we need competing suppliers. So school vouchers, competing social health insurers, directly elected sheriffs, fiscal decentralisation, etc etc. Except for the core functions of the state (law and war, and in this day and age, some minimum welfare safety net), we need to take our bungling Big Government out of the equation.

Such radical reform would not only solve the problem of Simple Shopper outsourcing, it is actually the only way of driving the efficiency savings that comprise the bulk of the CBI's £120bn. Disembodied managerialist efficiency drives just don't deliver such savings: we've had no end of failed attempts over the years, most recently the Gershon farce.

And just be clear about this - the money has run out. Spending cuts are unavoidable.

If we make the choice and competition leap, there's just a chance we can get through by driving out waste rather than hobbling our frontline services.

If we don't, we'll get cuts in frontline services. It's started already: the Crown Prosecution Service is going to save money by letting offenders off.

Your call.

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www.gudanggrosiran.com Categories: cuts, debt, simple shopper

Well Dodgy

Crooks or idiots - either way we lose

Dodgy building contractors have always enjoyed a fruitful relationship with our local councils. Sometimes it's been out-and-out T Dan Smith (pic) corruption*, but more generally the problem has been our old friend the Simple Shopper.

Today, the Office of Fair Trading (OFT) announced the outcome of its long-running enquiry into bid rigging among contractors supplying councils and other public sector customers. It has fined "a total of 103 firms £129.5m for colluding with competitors on building contracts", mainly via a practice known as "cover pricing".

The fined companies include some very well known plc names, with big public sector contracts elsewhere - Balfour Beatty, Carillion, Kier, and a host of others (full list here). But despite the guilty verdicts, the fines are quite small, and none of the contractors has been blacklisted for future contracts.

We've blogged this enquiry before. As the OFT explained it then, cover pricing is:

"...where one or more bidders collude with a competitor during a tender process to obtain a price or prices which are intended to be too high to win the contract. The tendering authority, for example a local council or other customer, is not made aware of the contacts between bidders, leaving it with a false impression of the level of competition and this may result in it paying inflated prices."

It has long been a widespread practice, known to all in the industry. Indeed, when the Chartered Institute of Building asked over 1,000 insiders for their views on industry corruption, it got the following response on cover pricing:

In other words, the practice is so widespread that nearly four in ten insiders reckon it's perfectly OK.

Now, if you're Tescos wanting to build a new store, you know all about this. So you employ guys who've been round the loops a few times, and who know pretty well what the work ought to cost. And when you send out your tender invitations you only send them to contractors that you trust to give you kosher bids. And just to make sure, you might phone them up and say "on no account should you quote if you do not want the work, and if you take the piss you will never get a crack at another contract with us ever again; plus, we will dock you 50,000 points from your Tesco Clubcard, and we will break your legs".

But in publicsectorland it doesn't work like that. In publicsectorland the emphasis is on ticking boxes, not getting good value. And the Simple Shopper in charge of tenders knows he can tick the required boxes simply by publishing an RFP in the European Journal, ensuring he receives and files at least three tenders, and stopping himself accepting too many douceurs. Job done.

So although these contractors have been very naughty - and they certainly deserve more than their pretty derisory punishments - once again, the real culprit is the Shopper. As we've blogged so often, the Shopper is simply not up to being trusted with our money.

And how much have we taxpayers lost?

As per, we don't know. All we do know is that the OFT enquiry was looking at £3bn's worth of contracts. So you'd have to guess our losses run into hundreds of millions.

*Footnote Not everyone thinks T Dan Smith was A Very Bad Man, a man who not only brought disgrace to his native Newcastle, but also inflicted a concrete brutalist hell on its citizens. Oh, no. Even today, the BBC clearly admires the cut of Big Dan's Big Government jib and tells us: "Smith's legacy still lives on in the streets of Newcastle. Today T. Dan is as much admired for his vision as for his concrete achievements. Smith remains an old-style 'city father' whose visions are now being reclaimed by a younger generation." Hmm, yes... and while we're back on the BBC, you should check out Newsnight's Classic Interviews. They reckon they've got six classics, four with media celebs, and two with politicos. And the two with politicos? Yup, you guessed it - the Paxo repeated question "interviews" with Michael Howard (1997) and William Hague (2007?). Not that Pax has never subjected Labour or LibDem politicos to such treatment. Oh no, no, no... there was that time when he... er... ummm... well, there was definitely that other time when... ahhh... well, last night he did humiliate poor old Vince over his half-baked "mansion tax". But then again, now that the entire world has started to scrutinise Vince's pronouncements properly and found them wanting, the poor chap has suddenly aged 20 years. Last night he looked like a confused old man at a bus stop being terrorised by a yob.

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www.gudanggrosiran.com Categories: simple shopper

Nice Work If You Can Get It

The wages of unemployment

Given that romantic strolls along sunset beach were out (on account of there being a howling gale and no sunset), one staycation evening Mrs T and I found ourselves watching a new C4 reality TV show.

It's about a woman who lives in a huge eff off mansion (Thornbridge Hall above), having made an even huger pile of cash.

She seemed jolly pleased with herself, as well she might. As the number one player in a growth industry, her business is booming. Even better, her biz is devoted to helping those far less fortunate than herself, so she and her staff get to feel real good about themselves.

But what really got our attention was that all her cash comes not from those she's helping, but from us - the battered and bemused British taxpayer. Our Simple Shopper Alarm began screaming.

The show is called Benefit Busters, and the lady in the mansion is one Emma Harrison, founder and chairman of a company called A4e (Action 4 employment).

A4e is a job broking company who describe their principal mission as being "moving people into jobs and promoting sustainable employment". Which right now is a very saleable proposition - especially to politicos who need something to clutch at as the economy sinks into the jobless joyless abyss. And Emma's trading results show just how saleable she's made it:

Now don't get me wrong - Emma is clearly a star, and a glance at her upbeat website (including her own personal lower case blog) shows just how well she's packaged and marketed her services. She makes tackling long-term unemployment sound like a branch of the entertainment industry rather than a canker that destroys lives. No wonder our clueless politicos and commissars have been such ready customers (Bonkers Blunkers is a £30k pa consultant).

So good luck to her for spotting and exploiting a great business opportunity (and here's her entry in the Sunday Times Rich List).

But as always, the big question is whether we taxpayers get value for money?

On last week's show, ten unemployed single mums living on benefits were put through one of A4e's six week re-employment programmes. They were under the wing of Hayley, a brassy Northern lady straight out of Corrie, who tutored and bullied them through the course. Mrs T and I rather took to her, although Vicki Woods was less impressed:

"A similar-sized woman to Jade Goody, but with Sharon Osbourne’s hair and make-up, Hayley... was comedically forthright. She told the women they were “dreary” and badly dressed, explained that work was a blessing, made them cry, kissed them better and eventually got five of them a job at Poundland. The viewer (me) was left loathing the loudmouth Hayley, empathising like mad with the poor dreary women."

(In case you missed it, you can taste Hayley here).

As Woods explains, only four of the ten women actually ended up with a job. And that was no more than a two week try-out at Poundland.

A4e's overall success rate?

According to Jim Knight, DWP minister of state for employment and welfare reform:

“The Department currently has 47 contracts with A4e for the delivery of a range of welfare to work provision. On those contracts where we count job outcomes, during the period 2008-09, 20 per cent of people starting provision delivered by A4e have started work. Some customers, however, will still be on provision.”

20% - hardly the greatest record.

Especially when you consider that some of those jobs will be displacing others who might have got them anyway (Poundland would have had to employ somebody). And especially when you consider the ever present risk of cream-skimming - ie only taking onto the programme the easiest to place candidates. And especially when you consider that some of the "successful" candidates will drop out again after a relatively short time.

We've blogged the pitfalls of job brokers before. They are everyone's Great Idea for tackling long-term unemployment. Yet there is virtually no evidence that they work in the aggregate. When the Public Accounts Committee looked at DWP's use of private job brokers under the New Deal for Disable People, they found:

"There are more than 500 providers contracting with Jobcentre Plus to deliver one or more of the disability programmes. The quality and value for money of provision varies widely and acceptable standards are not always achieved. Between 2002 and 2005, for example, over 50% of the learning offered in Workstep provider placements was judged unsatisfactory by the Adult Learning Inspectorate.

...Providers of the New Deal for Disabled People may be deliberately picking people who are easier to help, at the expense of the more difficult to help. The contract for New Deal for Disabled People specifies that providers must accept all self-referred people who are eligible. However, such a stipulation does not preclude subtle encouragement to the easiest to place and discouragement of those who would require more effort."

So good luck to Emma, and we hope she enjoys her mansion.

But don't expect us to believe she's giving us value for money.

The wholesale use of job brokers is turning into yet another triumph of the Simple Shopper's art. Dave and George will need to grip it soonest.

PS A4e has attracted a rapidly growing army of critics. In June it was revealed that it was being probed by the DWP for possible fraud: "The DWP started its investigation into A4e's Hull office in May 2008, after discrepancies emerged in "confirmation of employment" forms submitted by the company. Two recruiters filled in forms meant for employers who agreed to take on workers. In some cases, employers' signatures were falsified. One of the recruiters had also entered into a fraudulent deal with a local temp agency." And here's a dedicated blog on the New Deal Scandal, including many posts on A4e.

PPS During the TV prog, one of the unemployed women on the A4e course put her finger on the real reason we have so many long-term unemployed. It turned out her benefit level was substantially higher than what she could earn at Poundland. She was getting £460 per week on benefits, which was £40 higher than she could earn, even with the government's employment subsidy. So quite sensibly she jacked in the job and reverted to benefits. Now, I wonder if anyone can see the lesson for George...

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www.gudanggrosiran.com Categories: dwp, simple shopper, Unemployment, welfare