Any Chief Executive worth their salt will know the biggest deals on which their staff are working at any one time – and they would be in trouble with their shareholders if they didn’t.
You would expect government to be just as rigorous in keeping an eye on the projects on which senior civil servants spend taxpayers’ money.
So it is shocking that only a minority of departments were able or willing to provide the full details of their ten largest contracts in response to Parliamentary Questions, with only a handful setting out savings achieved through each of these major contracts, levels of overspend or underspend, and details of performance monitoring arrangements.
This alarming discovery has emerged during Labour’s Zero-Based Review, a root and branch examination of every pound of government spending.
As well as looking in detail at each government department, Labour commissioned five leading experts to carry out cross-cutting efficiency reviews. Today we publish summaries of their findings.
The weaknesses of central government at monitoring major contracts and the performance of big suppliers was revealed as part of the study of public sector procurement carried out by Prof Dermot Cahill, of Bangor University.
David Cameron’s decision to hand to G4S the security contract for the London Olympics 2012 is just one recent example of the government’s lax approach to the purchasing of vital goods and services.
Professor Cahill’s research found a worryingly relaxed level of grip on government contracts over the past two years. It is typical of a government which is led by David Cameron – who notoriously doesn’t like to bother with the detail.
This is why Labour is carrying out the Zero-Based Review. It will help the next Labour Government to ruthlessly prioritise public spending and deliver service reform and improvements, rather than just salami-slicing budgets and watching services deteriorate, as has been the practice under the Conservatives and Liberal Democrats.
The principles of the ZBR were laid out in our discussion document last year. Since then I have been combing through the books of every government department to explore detailed public service reform and redesign with each Shadow team.
Over the last few months we have published interim reports on the policing, communities and local government, and courts budgets, as well as a cross-departmental review of the vast pile of government assets and liabilities. In the coming months we will be producing further publications.
Our work so far has highlighted some examples of extraordinary mismanagement and false economies under David Cameron and George Osborne. These included:
-The £224m wasted from the policing budget following a contractual dispute with US defence company Raytheon.
-The £34m write-off from the Department for Work and Pension’s decision to scrap the planned Enquiry Service for benefit recipients.
-The £200m cost escalation following the Department for Transport’s decision in 2010 to cancel the “unaffordable” £1.3bn upgrade to the A14 and then to revive it in 2013 for £1.5bn.
But it is not simply enough to point out where the government is going wrong – even though Whitehall’s annual reports are littered with examples of expensive short-term thinking.
We have also used the ZBR to show how Labour will deal with the deficit and balance the books without crudely hacking away at department budgets in an ideological crusade to cut the size of the state.
There is no one, single saving that can resolve the deficit – but a series of detailed carefully considered changes which together can make the difference. For instance, we have already set out several examples where a better use of the revenue and resources of Whitehall could be achieved, including:
-almost £250m in the policing budget, including from scrapping elected police and crime commissioners and reforming police procurement through mandatory joint purchasing of equipment by police forces;
-more than £500m a year in the Communities and Local Government budget through shared services, back-office collaboration, and streamlining;
over £70 million of annual savings in the courts budget including from improving the collection of fines issues by the courts, co-locating county courts and magistrates courts and scrapping the use of the 15 High Court judges’ lodgings;
-commissioning a value-for-money review of some of the bars, restaurants and conference centres owned by Government departments, with four examples thought to be worth around £100m.
As Ed Miliband and Ed Balls have said, Labour’s agenda will be about big reform rather than big spending. The final phase of the ZBR will be completed in Labour’s first year in office but it is by doing this detailed work now, line-by-line and department-by-department, that we ensure Labour is serious and ready for government.
The squeeze on living standards over the last five years means George Osborne has failed to get the tax revenues in which are necessary to balance the books. In contrast, Labour will change our economy so we can deliver the rising living standards we need to get the revenues in to get the deficit down. Our plan will raise the minimum wage, get more homes built, cut business rates for small firms and raise the bank levy to expand free childcare for working parents.
Labour will be tough but fair as it balances the books and gets the deficit down. We are already making difficult but fairer policy choices on spending and taxation and we will continue to show where the money is coming from for all of our pledges.
Unlike the Tories, who want to take Britain back to spending levels as a share of national income last seen in the 1930s before the NHS existed, Labour will build a strong economic foundation and make fairer choices so that those with the broadest shoulders bear the greatest burden. That’s why we will reverse the £3 billion a year tax cut the Tories have given to the top one per cent of earners.
Yet difficult decisions on public spending will also be required, which makes it imperative we do the hard work now, scrutinise the small print of Whitehall spending reports and take a balanced and common sense approach to repairing the public finances, rather than pursuing the doctrinaire fanaticism of the Tory right.