CXO

Spending review: IT cuts will chop out innovative suppliers

Young firms with new ideas won't get a look-in...

The government's austerity plan will claim many victims. Sadly, principal among them will be young vendors with new approaches, says Mark Kobayashi-Hillary.

Last July I told everyone who would listen that the government was guilty of short-termism for inviting a group of technology contractors into the Cabinet Office and asking how they could 'help' the nation.

Perhaps the phrase 'how can they cut their rates and perhaps do more for less' is a better description of how they were expected to help. Now the Comprehensive Spending Review is finally out in the open, we can all see that suppliers are going to be squeezed as departmental budgets have been slashed.

It's only natural to want to criticise hopeless contractors as they fail to deliver on time, lose prisoners, or leave laptop computers containing state secrets on trains. But were things really any better in the days when the public sector directly employed every person that provided a public service?

Judgements about outsourcing
There is an ideological discourse around this debate, which believes outsourcing from the government to the private sector is bad and creating more public sector jobs is good. No one would argue against job creation, but the increased pressure to focus on the austerity programme is going to force some uncomfortable decisions - decisions that most public sector management never thought they would need to face.

The Comprehensive Spending Review will have a major effect on government spending

The government's austerity plan could be bad news for young vendors
(Photo credit: Shutterstock)

I spoke recently to the chief executive of a council in the north of England. His authority manages a number of call centres spread around the county, dealing with citizen enquiries. You don't need to be a hard-nosed, private sector advocate to see that this operation involves a great deal of duplication and could probably be reduced to a single centre handling all enquiries.

That approach is exactly what management consultants would advise, though they might go even further and suggest the calls are answered offshore. But the local authority boss is not measured on financial prudence alone. He has to balance the books, but he also has to ensure a local service is provided to local people and that his spending decisions favour the region.

In a part of the country where nearly half the working population relies on the public sector for a salary, making hard-nosed financial decisions on rationalisation - redundancies - can be career suicide.

Pressure for change
But my sense of unease with the present process is really related to the speed and unrelenting pressure to change that will be enforced on local authorities, universities, colleges, hospitals, and essential organisations such as the police and fire service.

The senior management in these organisations might want to trim the fat, but the public sector has a different...

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