Archive for Budget Review

Is Cost Effective Government Possible?

Posted in Britain, England, Europe, Germany, Insanity, Mobile Phone, Modern World, MP's, Parliament, Police, President, UK, USA with tags , , , , , , , , , , , , , , , on 12/10/2010 by floroy1942

The old adage: “If you want to make money – get a Government contract” is as true today as it ever was. The bigger the country, and thereby the government, the easier it is to charge extortionate fees for the provision of services.

Sir Philip Green

The sheer depth of government miss-spending has been revealed in Britain today by a report issued on an ‘in-house’ investigation by a well known High Street name, specifically Sir Philip Green, owner of the ‘Top Shop’ chain of stores. He was commissioned by David Cameron, the UK Prime Minster, to look into government spending with a view to cutting expenditure. What he uncovered defies description!

He stated quite frankly, that if he operated his business in the same way, he would be bankrupt within in days.

Government Waste?

In Sir Philips view, literally billions of the huge £191 billion budget could be saved by government departments with better co-ordination in the procurement of services. As an example, he estimates that a massive £600 to £700 million could be saved on the annual British Telecom budget of £2 billion. Renegotiating contracts with companies providing mobile phone services, and even office supplies and coffee could save up to 40% of the annual budget.

Damn! There Goes Another £1.45

The differences between departments in the costs being forked out for mundane things such as a box of copy paper (from £8 to £73), printer cartridges (from £86 to £396) and a cup of coffee (90p to £1.45) are to say the least, quite staggering. Who in their right minds would pay £396 for a printer cartridge? Talk about being ripped off!

Never Heard of Video Conferencing?

Sir Philip also criticised the 400,000 nights a year spent by M.P’s in hotels in London in order to attend meetings at a cost of £30 million. In the modern age he found it incomprehensible that so much money could be spent on people who must attend meetings personally. Quite rightly he puts the question: “Have these people never heard of video conferencing?”

M.P’s transport costs such as taxis and hire cars is a huge £551 millions a year. Someone from an anonymous car hire firm wrote in to say her company were being paid by the government £156.28 a week for a small car, which a normal customer would get for £99!

At the Heart of it All

It’s amazing to think that no-one in the financial side of government, i.e., The Treasury, has checked up on this kind of thing for so many years. It’s the same old story of there being no accountability within government circles! Government laptops, so often in the news for being left behind on buses, in taxis and on tube trains by government officials in sensitive jobs, cost up to £2000, while a little research on the internet revealed identical models for just £800.

Sir Philip also questioned the advisability of moving a government agency to new offices in the Midlands with a rent of £1.2 million a year on a 20 year contract, fixed for 15 years, when shortly after the department was abolished leaving a commitment of £18 million. Mismanagement of real estate by government departments costs the taxpayer £25 billion a year but could be drastically reduced.

The final report due out on Monday should make very interesting reading for Governments world-wide, especially in the rest of Europe and the United States. With luck, it will begin a wave of in-house cleaning by many governments, but I doubt it.

The Eurofighter - Costly, But Worth It

When government contracts are awarded for new military hardware, buildings or transport links etc., we all know that the project is going to cost e.g., £25 billion, but when the final accounting is done the end figure can be five times that or more. Good examples are the Eurofighter from BA Systems and the Channel Tunnel, both of which went way over budget.

Boring the Eurotunnel

Such major contracts are first put out for tender and presumably the lowest bidder wins. In my opinion, over the last three or four decades many companies have intentionally put in ridiculously low bids, one for which they know they cannot complete the task, just to get the contract. Once the contract is signed, they are fully aware the price can be jacked up once they have started work.

This is no way to run a business, and running the government services for any country is just that, a business on a larger scale.

The Secret - Make it Stick!

Governments must realise that if a supplier quotes a certain price for work to be carried out, the company must be held responsible for ensuring the end product for the quoted price. Companies dealing with government departments, be it the Ministry of Defence, Transport or whatever, must be made to put in realistic bids for services to be provided. There is nothing wrong in allowing perhaps a 3-5% cost over-run in today’s turbulent markets, but it should be no more than that.

The problems highlighted by Sir Philip Green only go to emphasis that much tighter control is necessary on government spending, for in the long run, it always comes from the pockets of the general public in the form of taxes.

This is 'In-house'

The present coalition government is currently looking for ways to reduce the annual budget by many billions of pounds with cuts to defence and the police force high on the gender. It would seem wise for them to first look in-house before taking such drastic measures, and the assistance of men like Sir Philip would be invaluable in such an exercise. By this I mean top flight business men with a known track record like Sir Philip who pulled BHS back from the brink into a good solid company, not some fly-by-night stock exchange wannabe.

Obama, Zarkosy and Merkel - the Big Three

Britain is by no means the only country afflicted with such woes. I am sure the economies of all the major nations could see a dramatic upswing if the leaders, like Angela Merkel, Presidents Barack Obama and Nicholas Sarkozy were to employ businessmen in strategic monetary positions within the government as fiscal advisors.

Another Good Place to Start?

Without a doubt, we will not see an end to the worlds economic woes when duly elected governments and leaders allow such wastage at the top, while telling the public it is time to ‘tighten belts’.

I firmly believe in the old saying, which should apply especially to governments: ‘If you must lead, lead by example!’

Roy.


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