Can Public Sector Procurement Efficiencies Deliver £35 billion Savings?

We can safely add a third factor to Benjamin Franklin’s quote, “In this world nothing can be said to be certain, except death and taxes.”  That element is “procurement pressure” – the need to squeeze ever more out of public sector budgets that are guaranteed to be slashed year on year for the life of the current government.

Austerity doesn’t impact just those in receipts of frontline services but also at the public servants who are charged with delivering the means and the framework in which to provide them. Procurement officers.

Colin Cram (public sector consultant specialising in procurement) writing in the Guardian on 2nd July 2015 reckons that the public sector could save billions without cutting frontline services. He outlines several possible approaches and summarises by saying “The potential for public sector efficiencies would appear to be at least £35bn a year, over one third being from unprotected budgets.”

That is a lot of money and his guess is as good as anybody else’s.

However, looking at it from another angle, if we accept that the total public sector spend, including government, NHS and defence, is somewhere north of £250 billion annually, then £35 billion is 14% give or take.

That is still a challenging reduction to achieve and perhaps he means that we could build up to that level over a number of years. I guess that must be the case because it is difficult to see it being achieved in 12 months.

Large though it may be, the analogy of “how to eat an elephant” comes to mind. One bite at a time in terms of procurement efficiencies means many, many varied initiatives. They range from the significant logistical challenges of merging frontend or back end services, right through the scale of difficulty to the simple actions of day to day, informal collaboration.

In each instance, the objective is to achieve more for each £1 spent, to obtain a greater quantity of whatever is being procured than was obtained previously. To that end, the relatively untapped seam of nationwide cross-sector procurement seems like low hanging fruit.

This involves looking around at who else in the public sector is procuring a similar product or service and joining forces to aggregate the order level. Leverage the power of higher volume to depress the price being offered. It’s what supermarkets have been doing for decades.