Too big to fail? The scale and nature of government contracting in the UK
A new report from the Institute for Government (IfG) takes a close look at the scale of contracting and outsourcing in the UK, and reveals that “four departments – the Ministry of Justice (MoJ), the Department for Transport (DfT), the Department for International Trade (DIT) and the Department for Environment, Food and Rural Affairs (Defra) spent more than half of their entire budgets with external suppliers last year.”
Indeed, over the last year, around 20% of central government procurement spending went to so-called “strategic suppliers” (companies that take over £100m in revenue annually from state contracts), as compared to 12.5% in 2013 — and the trend shows no signs of falling away. The fate of Carillion earlier this year (among other such failures and collapses in recent times) shows clearly the extent of risk that this situation represents.
But that’s not the only problem — also of concern is the opacity of this arrangement, with the government often left with little or no solid data as to where the money is going and how it’s being spent. The report recommends that getting a clearer picture on the extent and effectiveness of this expenditure would be a vital first step toward improving decision-making and achieving significant savings.