April 2025 - Bad Buying

It is nine months now since the Labour Party was elected to power in the UK. Most of the country – including me – were happy to see the end of the incompetent Conservative government, and although I voted LibDem, I was pleased to see a change at least.

I had high hopes that Labour would take a serious look at government procurement, cost management and allied to that, fraud and corruption in the public sector. But in these areas, there has been little really to get excited or enthusiastic about. Yvette Cooper announced that the Home Office was taking some sensible steps, and we had the freeze on ‘purchasing cards’ in response to what seemed to be some lack of control on expenditure. But we haven’t seen much of a co-ordinated and structured drive to reduce costs, despite the looming economic crisis for the government and the country.

To be fair, there has been plenty to keep the government occupied. Ukraine and the seismic Trump upheaval, as well as ongoing pressures from immigration, the NHS and more has clearly led to an incredibly difficult agenda. But the lack of any real focus on tight management of costs is disappointing, and indeed government borrowing hit record levels last month, well above the expectation.

Some of us got excited by the creation of an ‘Office for Value for Money’. But that looks now like a performative move, creating an organisation without much power or pace. It has a part time chair, contracted just for one year, supported by “a multidisciplinary team of up to 20 civil servants based in HM Treasury”. That ‘up to’ is always a give-away. Members of Parliament on the Treasury Committee have already suggested it is under-resourced, duplicates the work of others and is unlikely to provide value itself.

It’s first recommendation was that Treasury should introduce “a rolling programme of VfM (value for money) thematic reviews in the years between spending reviews, with the first set of reviews to take place in 2026”. Well that really gets the blood racing, doesn’t it? Perhaps that is a sensible ‘machinery of government’ initiative but it isn’t going to help address the UK’s £151.9 billion 2024/25 deficit (which means the government borrowed £3000 for every adult in the country last year, a scary thought).

Another disappointment came with the appointment of the ‘covid corruption czar’ – renamed the Covid Counter-Fraud Commissioner. Tom Hayhoe was appointed in December on a one year contract for three days a week. (I can only assume they wanted him and knew he could only do three days a week so advertised the job like that). Again, he will have a ‘small team in the Treasury’. So what have they delivered so far? I can’t find evidence of anything.

Another indicator of a lack of real focus on procurement spend is that in the first six months of the Labour government, spend on consultants was the highest since 2020, during the pandemic, according to data firm Tussell. About £838 million in consulting contracts were awarded in the latter half of 2024, compared to approximately £620 million over the second half of 2023 and £480 million in 2022. And recent tenders issued by the government’s central buying organisation, Crown Commercial Services, seem to focus more on CCS revenues and profit (‘let’s make sure all the big firms get a place on our frameworks’) rather than trying to improve value for the taxpayer.

The revolving door between top officials and suppliers continues too. “Sir Alex Chisholm, who was the second most senior civil servant in the country, has become a senior adviser at Boston Consulting Group (BCG).” The committee that monitors these moves, ACOBA, continues to be a waste of space. At least Rachel Reeves, the Chancellor, has finally realised that accepting free tickets for gigs is not a good look for someone in her position. But then the Prime Minister didn’t initially seem to see anything wrong with gifts of clothes from donors.

Generally the whole climate around spending public money does not really seem to have changed since the Tories were in power. I hoped for a new era of probity, reform where it is needed, tight financial management, focus on procurement, and a crackdown on corruption. Unfortunately, I’m not seeing it so far.

The focus in the UK public sector is now firmly on cuts, saving money and trying desperately to stay within the chancellor’s ‘financial envelope”. There have been some signs of a structured approach that could save money in the procurement space, such as this story in The Times about more spend governance in the Home Office.

“An audit of costs, ordered by Yvette Cooper, the home secretary, has found evidence of “excessive spending” on awaydays, public opinion research and contracts handed out by the department to external suppliers. As a result, ministers have demanded personal sign-off of all large expenses in the department and have put some future spending plans on hold”.

The other initiatives that hit the news last week was the freezing of all government ‘Procurement (or purchasing) Cards’. Spend on the Cards has more than quadrupled over the last four years, apparently. As the BBC reported:

“Thousands of taxpayer-funded credit cards will be cancelled under plans to crack down on “wasteful” spending, the government has announced… the government said spending on the cards had quadrupled in the past four years without enough scrutiny.

The Cabinet Office will order departments to freeze almost all of the around 20,000 cards in circulation this week, with a strict new application process aiming to cut the number by 50% …

More than £675m was spent on the cards by central departments and core agencies last year, up from £155m in 2020/21”.

Now any procurement professional reading this knows that ‘procurement cards’ are in reality ‘payment cards’. In themselves, they do not define or dictate a particular procurement route. You might buy by making just one phone call, or run a 6-month long tendering process, and in both cases, ultimately pay with a Card.

So the key aspect (to avoid Bad Buying) is that the decision to make a purchase with a Card must be legitimate and controlled, as in the case of any other purchase. The difficulty is establishing just from the headlines whether this has been the case here. Examples quoted included “£1,200 on luxury coffee pods by one team in two months and more than £1,800 on a “value for money” course”.

At first glance, some of the expenditure does sound dodgy, but really we need to know what the process for approval, sign-off and audit was before we can talk about fraud or incompetence here. And sometimes there are innocent explanations for what sounds odd at first. This is from my Bad Buying book.

“Some years ago, I talked to a logistics manager based in the UK Ministry of Defence’s Head Office. He told me he had not long returned from Afghanistan, where he was working as a logistician in a big military camp there …

We talked about the need for buying processes to be flexible and for buyers and logistics people to be able to react quickly in military situations. The use of the Purchasing Card came up, and he explained there had been a bit of an internal furore when finance had looked at expenditure on the card in use at the Camp. One invoice related to expenditure on a range of golf equipment. That looked very strange, possibly fraudulent.

But it wasn’t. He explained that opportunities for rest and relaxation were limited for the troops in Afghanistan. Not many friendly bars, you couldn’t just go off for a run through the hills or take a trip to the beach. So, someone had the bright idea of buying some golf equipment and rigging up practice nets. Even non-golfers were getting into it, with more expert players offering lessons. The golf kit showed up on the Card bill, and looked odd, but most people would agree it actually was an appropriate and intelligent use of public money.

As a corporate executive, and on behalf of the firm, I’ve bought retirement presents, flowers for staff to celebrate a wedding or birth, strange items to be used on corporate away-days, booze, and many items that would have looked odd on that card bill. But all were justified and for the organisation’s benefit, not mine. Another case saw a government body chastised for spending money at a horseracing venue. But that was explained as the fees for a legitimate business meeting, booked in the hospitality suite on a day when no racing was taking place. Today, horse tracks and football grounds often have good meeting facilities, and can be cheaper than equivalent hotels, so again this might well have been good buying rather than fraud or failure”.

So don’t jump to conclusions when you see headlines about use of Cards. Having said that, it seems sensible and reasonable for the government to be taking a hard look at this. Looking back, we can now see there was precious little management of the civil service going on in the later years of the chaotic Tory government, so a bit more control and scrutiny now is no bad thing.

Is Labour getting to grips with public procurement?

Government Procurement Cards – Wasteful or Wonderful?