Philip Green's Somewhat Bizarre Report

Download from here

Now, I sort of get what he's saying... If you're BHS or Tesco, you can use your size to gain more purchasing power and save heaps of money:-

There is no standard specification across departments.

•We found the following variations in price for laptops: Highest price: £2,000 Lowest price: £353 Differential: 82%.

•At this level of volume, the Government should buy direct from a multinational manufacturer.

So, what you then end up with is a centralised Department of Computer Purchasing which buys computers for everyone. The manager at a council puts in his 25 page, triplicate request into the department who then process the request and send out the laptop.

Is it going to save any money? Well, no.

The real problem that Green doesn't understand is that there's a huge difference in how retail sets its incentives and how government sets incentives. Something goes wrong in government and the press will be all over you, public enquiries and so forth. Make your department 3 times more efficient than the next guy? No-one cares.

So no-one in that purchasing department is really going to care because everyone above them and below them is spending other people's money. In fact, if they get tight on budget they can then plead poverty and ask for more next year.

That laptop isn't just expensive now. It's expensive + the expense of hiring some more bureaucrats to order it + the cost of the paper trail + the extra delay to people trying to do their job.

I've seen these things in large companies vs small ones, where the small company I worked for ordered PCs from Dell for less than the large company with its supposedly excellent buying power. Why? Because my boss owned the company and got me to spend 5 minutes shopping around for a PC. He cared about the price which some middle manager doesn't care that much about because he's spending his own money.

So, what's the solution to government spending? It's quite simple:-

1. Privatise everything that can be made competitive. Let the public buy things. They'll soon find value.
2. Reduce the laws and taxes to be as simple as possible. That way government has less to do.
3. Take out all unneccessary functions of government. You want arts, you pay for them.
4. Make government more accountable. If something is delivered locally, then people vote for it locally.

Other than that, accept that those last remaining parts of government will piss money away. I've read reports around the world, and no-one has cracked how to make government efficient, except by trimming it down, or giving the public quite direct powers to fire the useless.

Those Hard Spending Cuts

From the Perthshire Advertiser

PROVOST John Hulbert has been given the green-light to organise a council-funded trip to Canada costing £2950 – in the face of severe cuts.

The council figurehead’s sub committee members agreed on Wednesday that a trip to visit twin-town Perth, Ontario, in September or October next year would be viable.

Yup. Rather than spending £3K on fixing roads or educating kids, they're going to go on a jolly to Ontario.

But I'm sure there's a justification for it

Provost Hulbert, whose wife will travel at her own expense, explained that on a previous visit to the town he felt that there were business benefits which could be taken advantage of.

He said: “They capitalise on their craft industry, it is part of Lanark County which has a large number of craft industries.

“When I was there some years ago I thought that we should be doing something along those lines here.”

Doing something about crafts? And you have what experience of business, Mr Hulbert?

Of course there's another old chestnut...

Defending the costly jaunt, which will be funded from the twinning-budget, councillors pointed out that strengthening links between the towns was important.

Councillor Alexander Stewart said: “There is no doubt that the arrangements create business links.

“We would have to spend a little to get there but more comes back, so I am happy to support this.”

I'd love to see Perth provide some figures on this, because twinning rarely creates business links. Yes, it's going to happen, but at what cost?

Twinning was created for a very simple reason... it was to foster friendship links with Europe after WW2. It was to show that Johnny Foreigners were actually quite nice people. And it probably made some sense back then, but in an age when half of Britains holiday abroad and frequently work for international companies, it's pretty much redundant

I've decided to go on a hunt for lots of these stories. Councils pleading poverty in the face of cuts, yet still able to fund luxurious spending. Any more examples gratefully received.

Daily Mash Nails the UK Film Council

From the Mash

"Just imagine how good The Godfather could have been, if only it had been part-funded by the government."

I was going to write a post about the UK Film Council, but the Mash piece covers it so well that I'm going to redirect you there.

Silly Article From Peston About Business Cuts

From The BBC:-

Business leaders have been arguing passionately that the public sector needs to become more efficient. You'll recall that the equivalent of a plane-load of them publicly backed the Tories' general election campaign to make additional savings in public expenditure this year - in order to avoid that national-insurance rise they hate.

Well, it'll be interesting to see how they respond, now that their dreams have been made a reality.

Because a good proportion of the savings announced today will hit them directly.

So, for example, the Treasury has announced £1.15bn of cuts in discretionary spending by Whitehall on items like consultancy and travel.

Who receives the bulk of such largesse? Well, it's private-sector consultants and travel companies.

There'll also be £95m of IT savings - again a squeeze on monies handed over to private-sector contractors.

A further £1.7bn will be saved from delays and cancellations to contracts and projects - which is probably £1.7bn of revenue that won't be received by companies.

On top of all that, there are the reductions in funding for regional development agencies, which could have an effect on financial support received by many thousands of businesses.

In other words, the harsh reality of making government more efficient may not be quite so appealing as the theory to the many business leaders who sell goods and services to the public sector.

Is Peston an idiot, or just spinning a leftist line here about spending? We'll assume he's not doing that, seeing as how the BBC are so unbiased.

The businesses that signed that letter were the likes of Sainsburys, Diageo, Marks and Spencers, Easyjet and HMV. Their sales to the public sector are almost non-existent and is certainly outweighed by tax cuts and the resulting money being put into people's pockets.

Some other businesses are entirely agnostic about the state or the private sector. A friend of mine runs a software recruitment agency to both private and public sector. A cut in public sector means more spending in the private sector.

Then there are businesses that supply to the state that are entirely necessary. If you're in the heavy arms business, you aren't likely to see much difference as that government spending isn't going to be cut.

The types of businesses that will be affected are those who have attached themselves to the state. Either they supply something that government doesn't need and the private sector won't buy either (like contemporary art) or they are so wedded to government that they can't restructure quickly enough.

But "business" is neither in favour of less or more government. It's not about business, and being "pro business" is not better than being "pro state". It's markets that matter.

Excellent Value From The Simple Shopper

Gordon Brown will today promise free laptops and broadband access for 270,000 low income families so that they can better follow their children's progress at school.

...

To make that achievable, he will pledge £300m of investment to help poorer families who might not otherwise be able to afford it.

Laptop: £400 (retail)
Broadband: £150/annum

Multiplied by 270,000 = £148.5m

Apart from the fact that this is a bloody stupid idea (if you're a low income family that doesn't have access to a work PC, then you've got time to walk to school), it's also costing double what it should do.

This all sounds very good. But....

From David Cameron:-

But perhaps the biggest change will come through transparency. With a Conservative Government, every item of government spending over £25,000 will be published. Online. In full. No ifs, no buts.And if we win the next election, we’re going to publish online all public sector salaries over £150,000 too.
I don’t think people understand yet what a big difference this is going to make to government and how it spends.

Actually, it will make very little difference. If Cameron had any real world operational experience, rather than being a PR flunky, he'd know this.

Because anyone who's been through a bureaucracy knows that getting around these rules is fucking easy.

Let's take Cameron's favourite example: The yacht that the NHS has that sits on the Humber. Yup, it sounds like a spectacular waste of money too. The yacht is valued at £400,000 and used for encouraging youngsters to do healthy things.

Now, if you think that Cameron's plan is going to expose things like that, you should think again. What will happen instead is that instead of buying and running a yacht, they'll just rent one each time they need it. If they have to pay for youngsters to get there, that will be paid for separately. See how that works? Everything disappears into sub-£25000 invoices and none of it appears.

It's just like the impact of targets in how they create incentives. People just work to meet it over and above things like delivering value.

The only answer is to accept that government generally performs badly and that the answer is to just have a lot less of it and leave as much as possible to the market.