Sir Philip Green lambasts government in Efficiency Review

Sir Philip Green's Efficiency Review is available to read online. In the foreword, Green writes: "This report gives a fair reflection of the inefficiency and waste of government spending, which is due mainly to very poor data and process."

"I think from this report it is clear that the prize for the taxpayer is too big and significant not to chase."

The report identifies a number of areas where significant savings can be made. Interestingly, job cuts are not part of Green's solution. The Arcadia boss has highlighted savings of some £20bn a year, all without a single redundancy.

It would have been rather tough for Green to call for jobs cuts given that he worked closely with hundreds of civil servants to compile his report. Perhaps Chancellor George Osborne's 490,000 government job cuts were only discussed behind closed doors.

Nevertheless, some of the numbers in this review are staggering. "You can't run anything like this," says Sir Philip. "The light's would be out. Look at hotel rooms. There are 400,000 hotel nights in central London from Central Government. Have they not heard of videoconferencing?"

These overnight stays cost the tax payer £38bn a year. Room prices range from £77 to just under £200. There is no consistency and, more worryingly, no accountability within government. "This is unacceptable," says Green. "Nothing is mandated.  If you cut that in half, that's a saving of £1m a week. And it would take a week to implement."

What about travel expenses? When Green and his team attempted to find out actual spend, the waters were muddied by poor accounting and worse reporting. "The first number we were given on travel was £2bn," says Green. "A week later it was £500m. Eventually one of the very senior civil servants we were working said, 'Look this is embarrassing, Philip' and he phoned the suppliers to confirm the spend." The final figure rests somewhere around £551m, but Green's report clearly states: "There is considerably more spent on travel outside central Government but we were unable to confirm actual spend."

"This is unacceptable," says Sir Philip. "Procurement data is shocking -it's both inconsistent and hard to get at. There's no reporting. There's no accountability."

Here's a snapshot of the numbers: the government currently spends £25bn on property and rates every year, £166bn on procurement (including travel, IT and consultancy), wages accounts for £164bn, benefits and grants take up £270bn of the pie, with a £25bn spend on miscellaneous expenses.

But who's watching the numbers? "The FD doesn't have to tell anyone anything for a year," says Green. "Budgets just get renewed. How can you operate like that?"

Sir Philip, an expert at slashing costs within his portfolio of businesses, has advised government that it can save over a third on its £2bn IT and telecoms spend by negotiating contracts. He has also trained his eagle gaze on personal spending. Government credit cards currently tot up bills of £1bn a year and are completely unregulated. "[At Arcadia], we make everyone use their own credit cards where possible and then expense it," says Green, outraged. "It's interesting what happens to the bills: the bills half!"

Green was originally advised that there were 10,000 government credit cards currently in use. This figure was completely fictional. There are 138,000 in circulation, each with a maximum spend of £1,000, no questions asked. "Is it spent efficiently?" asks Green. "Respectfully, it can't be."

In his CSR earlier this week, Osborne called on all government departments to account for their overheads and present detailed business plans to show how improvements can be made. Music to Green's ears: "When purchasing on behalf of Government, civil servants must focus on cash, applying the same principles as if the money were their own," he says.

However, there was one detail of Green's recommendations that has caused uproar among small business owners. The Topshop boss believes that government pays its small business suppliers too quickly and has called for an extension to the payment terms.

The response has been instantaneous and scathing: Alistair Tebbit of the Institute of Directors says: "It would be highly damaging to small suppliers for the government to take up big company practices of paying bills late. One of the only significant improvements made to the SME environment by the previous Labour government was to move government payment to business to ten-day terms. Unfortunately some larger companies have failed to deliver similarly responsible payment terms."

The majority of Green's recommendations, however, boil down to plain, old-fashioned, common sense. Government has utterly failed to use its buying power to negotiate better terms, or to standardise spending across departments. Take the astronomical printing bills of £104m per annum. There are huge discrepancies between costs per unit: one department spends 11 pence a leaflet, another £1.31.

But one this is clear, Sir Philip has shown that with a bit of good housekeeping, savings can be made quickly and painlessly in government. What remains to be seen is if his advice falls on deaf ears, or provides a template for future operational best practice.

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You can watch Sir Philip Green's interview with the BBC below:

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