Q61 Stephen Barclay: Is that published? Is that something that we can see so that we can then look as a Committee whether activity is getting rebadged?
Ian Watmore: I can certainly let you have what we have and then you can decide whether that meets you needs.
Q62 Stephen Barclay: And you are benchmarking them between Departments on professional services on the different categories of what is being spent.
Ian Watmore: Yes. The difficulty is with the term "consultancy", which gets used as an umbrella term for anything that is not direct payroll. Lawyers count as consultancy if you buy them in from wherever.
Q63 Stephen Barclay: Yes, we saw this with the Department for Transport.
Ian Watmore: DFID, who spend all their money overseas, go and engage some local people in Rwanda or something and that gets counted as consultancy. There are all sorts of problems with the definition and so we have tried to hone it to be the professional services groups that you and I would probably recognise by that term, and we expect people to record to that.
Q64 Chris Heaton-Harris: You said a 70% reduction year-on-year on consultancy and 40% on agency?
Ian Watmore: Yes.
Chris Heaton-Harris: Congratulations, fantastic.
Ian Watmore: Thank you. I will pass your congratulations on to the team that has done it because they take a lot of abuse.
Q65 Chris Heaton-Harris: The taxpayers in Daventry are delighted by those statistics. Can I just ask about procurement because day-in, day-out in this Committee, we see examples of probably not the best practice in procurement when it is done by Government? How are you tackling this particular issue and is it one you actually tackle in equal measure across all the different Departments of Government?
Ian Watmore: It is a good challenge, because it is a topic that covers everything from buying paperclips to ten-year programmes to review military equipment.
Q66 Chris Heaton-Harris: Is there a possibility of outsourcing some of this procurement?
Ian Watmore: In effect what we are doing is establishing in one place a Government procurement service-that is what we have called it, but we will call it the central procurement arm of Government- to procure, on an aggregated basis across all Departments, 10 common categories: office supplies, travel, professional services, that kind of thing. We are trying to aggregate the 10 categories and get them all bought through one place. The one place can be our central team headquarters in Liverpool or Norwich, or it can be a bit of Government acting on its behalf. For example the Home Office and the Revenue have two very excellent procurement functions and we are using them more broadly now than we were before. The intention is over the next two years, to try and get all of that commodity spend going through that engine that will probably get to about, if we are doing well, £5 billion to £7 billion worth of spend through that central engine. That will take a lot of the debate out of things like why does an HP printer cartridge cost this in one Department and that in another. What it will then do is allow Departments to focus on what their real game is, which is strategic procurement. In each Department that is a specialty subject. With the Ministry of Defence, I am sure you read and heard the announcements yesterday that there is a major reform going on there trying to get defence procurement realigned. We have talked a lot about IT procurement in this, but they tend to be at a more strategic end. The Ministry of Justice has done some very innovative things recently in terms of both competing prisons but also in commissioning services from people like the voluntary sector to try and improve reoffending rates. What we are really trying to say to Departments is, "We will do the commodity stuff for you, that should free you up to focus on what is core and strategic to your business."
Q67 Chair: Let's be clear on two things. You said £6 billion or £7 billion. The figure in the report for procurement is £236 billion. Whilst it is really welcome that you are sorting out the paperclips and the cartridges, it is a minute element of the total procurement bill for Government.
Ian Watmore: But that is what the newspapers always go on about.
Chair: It doesn't matter. What we care about-
Ian Watmore: We read stories that Government procurement is in disarray because they buy this printer cartridge at £5 and this one at £10 and why is that? Whereas you and I know that the real story is on IT procurement, tanks and armoured vehicles and all that, which is where we need to focus the Department.
Q68 Chair: It is important on the £6 billion and to meet the agenda of the Mail as well, but it is much more important to try and eke out efficiency savings on the £230 billion that you are not touching. I was just going to ask you how you think that the work you are doing-it is going to be a positive question-on the £6 billion could in any way influence what happens in the much bigger bit, which is not necessarily just defence but across the piece on general procurement, which is what I think really matters.
Ian Watmore: I am sorry for jumping down your throat halfway through the question. The point I was trying to make is that we need to get that right to have credibility with the other procurement initiatives. When we are doing it for central Government we are going to say to the wider public sector, "If we have got deals that you cannot match, then come in and join our deals. We will give you the price breaks of those." What local authority or health authority would want to say, "I will go and buy my printer cartridges more expensively than you can."
Q69 Chair: It is still £6 billion.
Ian Watmore: I think I said over the first two years that is the figure. We have got a total spend. Commodity spend in central Government is £13 billion.
Q70 Chair: It is that £13 billion as a proportion of £236 billion.
Ian Watmore: The £236 billion is the wider public sector, which includes health, education and all of that. I think the total expenditure in central Government is about £60 billion, from memory. Of the £60 billion, the vast majority of that is things like MoD procurement, IT procurement, transport procurement, where you have to have a specialist focus on the approach. I am not saying we are ignoring all of that. I am just saying we are not doing that through the centralised procurement route. The centralised procurement route is for commodities. The targeted procurement route is on the strategic things. We have regular meetings with Bernard Gray, for example, who is the new chief of defence materiel at the MoD, because he can see that the agenda that he is trying to get across the MoD is precisely what we are trying to get across Government. Ditto with the other big Departments who face the wider public sector: Education, Justice Health, etc.