Wednesday, December 12, 2007

Efficiently inefficient?

You have to love the way figures get shifted around sometimes. The Office of Government Commerce (OCG) for example "saves" everyone money apparently by reducing administration costs. If you look at this 2005/06 report you will see on page 13 how they saved £84 million in administration costs by introducing the Government Procurement card.

Yet, when asked in Parliament about the level of reduction to the administration costs of OCG, the Treasury minister Angela Eagle said that in 2004/05 the net cost of adminstration to OCG was £34,896,000 and the following year it was £44,271,000, that's an increase of £9,375,00.

In fact, since 2003/04 the adniminstration costs at OCG have been rising every year, and apparently the reason it leapt up so much in the same year that it said it had saved £84 million was because it was "improving efficiency across the public sector.".

Seriously, I kid you not. They said that they saved £84 million in administration costs in a year when it actually increased by almost £10 million to just over half the amount that they said they had saved and it was all because of an efficiency drive.

6 comments:

Tony Kennick said...

So it cost £10 million extra in the OGC budget to run a procurement card scheme that saves £84 million in the rest of the public sector's budgets.
Sounds like a £74 million pound saving to me...

Anonymous said...

Their workload has increased substantially over the period in question. The 'cost saving' arises from the fact that the out-turn costs are lower than they would have been were it not for efficiency improvements.

dizzy said...

That does sound like 74 million saving, however that would suggest that the year prior to the card would show much larger administration costs but they do not. The point is that the OCG said it was attempting reduce it's administration costs, but it hasn't. It's administration cost have risen each year.

Tony Kennick said...

however that would suggest that the year prior to the card would show much larger administration costs but they do not.

Not in OGC's budget.

dizzy said...

So the OCG budget wouldn't show their own administration costs?

Tony Kennick said...

It would show their own costs, but that isn't where the big savings are. The OGC is like Jim Hacker's department of administrative affairs, it keeps being given more staff and money to reduce costs. So any efficiency savings they make in their own admin costs are swamped by the fact that they have been given some of the projects like the procurement card that save the rest of government. The same model has OGC spend money on development work for Prince 2 and Itil while most of the gains for that work happen elsewhere in the public purse.