Tesco Worship

It's no miracle - Tesco rescues Cumbria's Xmas

A couple of days ago we blogged the public sector's poor record at eliminating waste, and not for the first time, compared it unfavourably with Tesco. Judging from some of your comments not everyone buys the comparison. In fact, it seems some of you reckon Tyler has become a blind Tesco worshipper.

So we thought you'd be interested in the above vid. It shows how Tesco rode to the rescue of those poor Cumbrians who got hit by the floods last winter.

A collapsed bridge meant that thousands of people were cut off from their regular Tesco store in Workington and faced a detour of 40 miles to get their shopping. So Tesco simply built a new one - a new 13,000 square feet store built from scratch on a brownfield site and operating in just 13 days. Not rain, nor wind, nor local planners could stand in their way - they just got on and did it. Watch the vid and clock the happy customers.

Now - hand on heart - can anyone honestly say the public sector would ever be capable of such a feat? Yes, OK, in May 1940, with the hun at the door, maybe. But that aside, the public sector hardly ever brings its investment projects in on the original schedule, and history says that 90% of public projects blow their original budgets (eg see this blog).

Say what? Retailing is a much simpler business than running a school or a hospital?

Hmm. Maybe. But it's very interesting that Tesco and other large employers have to run remedial classes in the 3Rs for employees failed by our marvellous state education factories.

Anyway, Tesco is just our shorthand for the power of the market. Nobody is literally suggesting Tesco is going to take over our hospitals. But BUPA and the like could. And having personally sampled both NHS and private hospitals, Tyler is very sure which he prefers.

Off out now, but we'll return to this fascinating question when we have a bit more time.

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www.gudanggrosiran.com Categories: tesco government, waste

Dear Chris...

He'd love to hear from you

As the spending battle reaches its climax, public sector bosses from the cops to the profs to the jolly Jack Tars, are starting to fight dirty. Cam and George need to be resolute.

The leaker of Doc Fox's letter to Cam is reportedly being tracked down by the very latest and highly sophisticated MOD drones. But given that the leaker pretty well has to be someone at the top of the MOD itself, it will be a miracle if the drones find anyone.

Still, there's no reason why we should stand by idly while the battle rages. We can help the good guys by at least showing them we're on their side.

And in that vein, the TPA has written to Energy Secretary Chris Huhne to urge the abolition of the useless £118m pa Carbon Trust. The letter neatly summarises why the Trust should be added to the quango bonfire, and the TPA suggests we all add our voices by e-mailing chris@chrishuhne.org.uk or writing to him at

Chris Huhne

Department of Energy and Climate Change

3 Whitehall Place

London

SW1A 2AW.

Well, what are you waiting for?


PS Grown-ups, eh? Of course we can all understand why Milli snr has stomped off in a huff because baby bro was given the biggest slice of cake (which of us can honestly say, etc). But the point about these people is that they're not supposed to be like the rest of us. They're the ones who reckon they are so grown-up that they deserve to be put in charge and to tell the rest of us how to behave. And talking of infantile behaviour, did you clock Milli jnrs' speech yesterday? Either he really believes all that tired old boilerplate crap about "a new generation" is actually meaningful - in which case he needs to grow up - or he thinks we'll have fogotten about the thousands of other manipulative chancers who've used exactly the same pitch - in which case he needs to grow up. Here's the benchmark performance - nobody has ever delivered it better, and to make it stick properly you have to die before your high flown promises turn sour... and not fall out with your bro:

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www.gudanggrosiran.com Categories: eco wibble, politicos, TPA, waste

Paper Factories Still Booming

Another consignment ready for processing

Tyler was once told by an ex-Cabinet Secretary that Whitehall is "a bit of a paper factory". Tyler was shocked - he'd previously believed Whitehall's output comprised nothing but high quality governance services.

The funny thing is, despite all that stuff about e-government, Whitehall's observable output still largely comprises paper. And we'd like to know what it costs.

We don't know exactly how much paper the public sector gets through every year, but according to the government waste quango - who are surely the undisputed authority on paper usage - "office workers can get through 50 sheets of paper a day". No, wait... later in the same paragraph they go on to say "the average office worker uses up to 100 sheets of paper every day in a typical office". Well, whatever - it's a kakload of paper, and if those are averages across both public and private sectors, we can safely assume public employees are towards the top end.

So let me see... 100 sheets a day, say 220 working days pa, that's 22,000 sheets pa per public sector office worker. 6 million public sector workers employees, say half of them are safely tucked up in the office, so that's... blimey... that's 66 billion sheets pa. Or enough to go round the world half a million times.

WTF must it cost?

As it happens the National Audit Office has recently published a useful report giving us a pointer.

The NAO has returned to an old BOM favourite - the huge range of prices paid by different bits of the public sector for the self-same standard items, and the fact that some bits are paying far more than they should be (eg see this blog). Despite all the promises, and the expensive Office for Government Commerce, the problem has not gone away.

Here's what they found on the cost of paper. They surveyed 112 public sector organisations, collecting prices paid for a standard box of 2500 sheets of photocopy paper (ie a box of 5 reams):

As we can see, prices are all over the place, and contrary to what you'd expect to find out in the real world, there is no clear inverse relationship with volume.

Anyway, the average price seems to be about £10 for 2500 sheets. And applying that to our estimate of paper throughput, we get an annual cost figure of £264m pa.

So there we have it. Our public sector paper factories cost us around a quarter of a billion every year just for the raw materials. And that of course excludes the processing costs - which are immense - and the recycling costs.

In fact, here's a suggestion - instead of spending so much on waste recyling plants, why no simply close a few paper factories.

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www.gudanggrosiran.com Categories: waste

Taking Arms Against A Sea Of Waste

£150 to you

George's Treasury has apparently put together a waste dossier.

We say apparently because, although it has been sent to all the important journos, it has not been officially published so we humble taxpayers can take a look for ourselves - so much for the promised public spending transparency.

Anyway, the S Times reports its copy thus:

"A Treasury audit of Whitehall spending, which was carried out over the past week, has revealed how officials spend £125m a year on taxis, £320m on hotels and £70m on flights.

The audit also reveals that the government spends £580m a year on office furniture, £1 billion on advertising and £700m on other marketing and media.

[The] audit has revealed widespread waste where different British government agencies operate out of separate sites in the same city. For example, £20m could be saved by merging four offices in Abuja, the Nigerian capital, occupied by the high commission, the Border Agency, the Department for International Development and the British Council.

Even ministries whose overall budgets will be ringfenced are having to find cost savings, which will be reinvested in frontline services. The Department of Health, for example, is expected to end its £275,000 funding of dance classes and competitions."

Which all sounds like stuff that really must be chopped. So good.

And in truth, BOM readers don't really need to see George's report on waste - we've been tracking this stuff for years. We've also had access to regular input from actual real live public servants, some of whom - it may surprise you to hear - are just as appalled as we are about how taxpayers' money gets squandered.

As it happens, one emailed last night. We're witholding his ID, but he says:

"I work in a government department and cannot believe the amounts of money being spent. For example we recently had to convert a small office and a small store room in to a single conference room. It required the removal of a partition wall, a bit of paint and a bit of wiring. It costs £250,000.

This week we found out that the little metal "desk tidies" that we use to file forms, etc on our desks cost £200 apiece, and every desk has two of them! How can they cost so much?

A bolt was fitted to our finance office door - a basic bolt, nothing more than what you would put on a shed. The cost? £150!

Then we had to refit a floor of another office for new claims (because of the recession). The total floor space was probably (and I'm estimating) around 1100 sq ft. A bit of paint, about a dozen desk and dozen computers. Cost, £1 million. How? [For a clue see this blog]

My problem with any new government is they'll appoint people at the very top who know nothing about the workings of their departments. The frontline do know how money can be saved, but I am in a minority of those people who realise and accept that massive savings can be made."

Our correspondent has just put his finger on something very VERY important. The truth is that most of our government bosses don't have a clue what's going on below decks.

Consider.

George certainly wants to cut waste - of that there can be no doubt.

But so did Darling.

And so did Brown before him.

And Clarke before him.

And Lamont before him.

Etc etc.

The trouble is, they don't really have the knowledge to do it.

Even worse than that, big government is by its very nature wasteful (see this blog for how the Clerk of the Acts to the Navy Board found things in 1662).

Which is why we believe the only long long-term solution to government waste is to break up government itself. Choice and competition are key to managing waste.

Bosses need to be driven to investigate what's happening below decks by the sure and certain knowledge that if they don't, they will be swept aside by competitors whose bosses have.

Yup, I agree. We can't do that for defence, or law and order, or a few other things.

But we can do it for education.

We can do it for healthcare.

And we can do it for a bunch of other public services.

And we should.

PS When George announces his £6bn immediate waste savings tomorrow, we'll be checking them off against the TPA/IOD list of spending cuts published last September. You might want to do the same (see this blog).

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www.gudanggrosiran.com Categories: waste

15% Gets Wasted - Official

We've just had a very interesting new estimate of public spending waste (HTP Matt Sinclair).

According to a detailed study of spending in London, 15% of what taxpayers spend on public services gets wasted. In London alone that amounts to £11bn pa, and if extrapolated across the entire country suggests total waste is running at £75bn pa.

Now, here on BOM we've quoted a number of overall waste estimates over the years, and most of them come out even higher at around 20% (eg see this blog). But the interesting thing about this new estimate is that it comes from HMG.

Specifically, it comes from a operation called Total Place, which has been set up by the Treasury, and is jointly sponsored by the Department for Communities and Local Government (DCLG), and the Local Government Association. Here's how it describes itself:

Total Place is a new initiative that looks at how a ‘whole area’ approach to public services can lead to better services at less cost. It seeks to identify and avoid overlap and duplication between organisations – delivering a step change in both service improvement and efficiency at the local level, as well as across Whitehall.

What they are focusing on in particular is how Labour's complex web of quangos, agencies, and top-down initiatives collide at local level in a maelstrom of duplication and inefficiency - again, something we've blogged many times. And this 15% is the estimate of waste just on the public services delivered to us locally here in the UK (ie excluding things like defence, overseas aid, EU budget, as well as most of the entitlement spending on welfare benefits).

So that's £75bn pa.

Or £3,000 pa for every single household.

Or the entire annual tax take from VAT.

Just flushed away down the bog.

PS Do we have a solution? Yes we do - radical decentralisation of our public finances, with local authorities made responsible for both running and funding our local public services. We will be blogging about this at greater length within the next few weeks.

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www.gudanggrosiran.com Categories: waste

Big And Inefficient

We all know our public sector wastes squillions, but just how inefficient is it? How does it look against public sectors elsewhere in the world?

There are a number of studies that have attempted to answer such questions. One of the best known was published by the European Central Bank in 2003 - Public Sector Efficiency: An International Comparison, by Afonso, Schuknecht, and Tanzi.

The ECB study seeks to compare the outputs of government with their costs. The costs comprise the share of government expenditure in GDP, which is straightforward. The outputs are more difficult to measure, but include a wide range of indicators, from economic growth and stability, to health and educational outcomes (see paper for more detail).

These calculations are done for 23 industrialised OECD economies, and comparisons made.

Overall, the study finds that the most efficient government sectors are those in the US, Japan, and Switzerland.

The UK is by no means the worst, but lags way behind the leaders. Indeed, if our government could achieve the same level of efficiency as the three leaders, we could save roughly £140bn pa relative to the current level of UK government spending. Which would go a long way towards digging us out of Brown's hole.

And the study gives a very interesting insight into the relationship between efficiency and size. And guess what - it turns out the most efficient governments are also the smallest.

Here's a chart we've put together comparing each government's efficiency score with its cost as a share of GDP (note: the efficiency scores relate to 2000, and the GDP shares are averages for the previous decade):

As we can see, efficiency tends to decline quite markedly as government gets bigger. On average, for every 10 percentage point increase in government's share of GDP, efficiency declines by 15-20% (the estimated parameter says 16.6%, but let's not get too precise, especially since this is a simple linear regression).

The bottom line is that if you want to have big government, you have to accept a high degree of inefficiency (aka waste). In our chart, the very biggest government belonged to Sweden, and its efficiency levels were correspondingly abysmal (interestingly, over recent years Sweden has been slimming down its bloated public sector, partly through those school reforms we hear so much about).

To put this another way, the only countries that can afford Big Government are rich countries that can bear the costs of its inefficiency. The UK can certainly no longer afford that luxury.

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www.gudanggrosiran.com Categories: big government, waste