Leadership and the Vision for Growth

In twenty ten, we spent three point six billion a year on consultants. You know, peopleople reading our watch telling us the time, Civil serervice Steven is like an infinite war. Infinitely high, infinitely wide. Every ten billion pound we save is half a million junior Nurses service is three million primary school places. When you running a business and the civil service is fundamentally a business. needs to have a strategy, a vision, a plan, and then you've got to execute the plan. you want to have the best talent in the right swim lanes to deliver that. What percentage procurement that's government purchase of goods and services. A went to British companies and B went to smaller companies. and how did that change on your watch? That's a great question. So government spends on public procurement at four hundred thirty billion a year. four hundred thirty billion We're delighted to say that this year, the rest is Money is powered by Octopus Energy. so we're joined by it Founder and CEO, Greg Jackson. So Greg, I heard that the prices of solar and home battery storage are falling. So is it worth waiting before you invest in them First of all, we never know what's going to happen to the future price of energy. It could go up or go down So I think when people try to do a really detailed payback calculation, the problem is you don't really know what the alternative is. But I don't know many people who haveve regretted getting these technologies because the one thing, whenever you get them is it helps insulately against the volatility of the market prices. And so as far as I can tell, the vast majority of people have made that decision happy with it. Greg, thank you very much. Now on with today's episode So good, so good, so good. 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I'm with me, Robert Peston, and what we want to find out today is is there a way to make the civil serervice more efficient, cut civil service numbers while simultaneously buying more from British companies, particularly small British companies that would have this virtuous effect of freeing up a ton of money for investment in public services, but also stimulate growth. Yes, and we've got the perfect guest for this. We've got Stephen Kelly, who for many years has ran several big name tech and software companies started his career at Oracle, went on to become the CEO of Sage Group, which of course one of the largest software companies in the UK. And then he was brought into the public sector by David Cameron to improve efficiency, try and bring down the number of civil servants, cut the spending and essentially improve productivity in the civil service as well, which he managed. So we want to know how he did it. Here is our interview with Stephen Kelly. Stehven, lovely to have you on the show. Now, as we've just mentioned in an introduction, you were brought in by David Cameron to streamline the public sector. What we want to know is We need that now So how did you do it? What can we learn from you? Yeah, and obviously very different times. that was back in twenty ten and sixteen years ago And it was off the back of the credit crunch two thousand eight and then a whole period of what was termed austerity. But with this, effectively, I think fundamentally the civil service can be massively improved and made a lot more efficient so that we deliver much better services to citizens And that was the whole mission. So between George Osbourne and Francis M David Cameron, they determined that they should bring someone probably from the private sector who's got a lot of operational experience and create a role called the first Chief operating Oicer for the whole of the UK Government twenty four Dpartments And that encompasses all things like IT, commercial practices, procurement, digital services. So the launch I think like Gov UK, as well as major projects. So all the fun probably of Connecting for Health and HS two and Hinkley Point and all these sort of things. So it's a very wide range of anything touching taxpayer money would be effectively the responsibility of this role, working very collaboratively with the departments. And I guess the headline numbers, the Civil serervice started in twenty ten with four hundred ninety two thousand civil servants, all you very good people But then when I left, it was three hundred eighty thousand. So over that period, we actually had a smaller civil service by almost one hundred twenty thousand. And where did you leave? twenty fifty. So that's more than one hundred so about one hundred twenty thousand reduction In just five years. how much of that was essentially when people just left of their own accord not replacing them and how much of it was active management, essentially saying you've got too many people here or these people aren't to it and we're going to get rid of them. It was probably Probably about more than half or through natural Westage. So that was a terrible phrase, but inectively people retiring, people coming up to the end of their tenure, people going back to the private sector. And that was obviously a program put in place through HR to actually encourage some of that as well But then also there was some restruction. and some elements around the machinery government were modified to actually accelerate a more efficient government withith anything, you know you've got almost five hundred thousand people and the status quo takes over. And obviously the culture up to that time, particularly through The years of I guess the blay years of where the economy was grown fast, typically the civil service was grown in the same sort of traictory with the economy. So it was a kind of root and branch review, a restructure and a reform program that was put in place. But a lot of the actual personal excess and the human story was done through again, another terrible HR phrase of natural trition. Okay just ask Gen that you've spent most of your life in the private sector. Yeah. And you know most private sector employers say to me that there's always a risk if you shrink numbers through natural wastage that essentially you keep the underperformers, you keep the poor performing members of of staff. Were you able to assess when you left whether the quality of the civil service was what it should be Yeah, that's a great question, Rob. I think I guess my experience and why did I take this on? because that's the genesis. I kind of grew up in the world of US technology and spent ten years with a startup company at the time called Oracle in the eighties and nineties. and that was how to build global growth companies. But then I had to do a number of restructures. And again, probably the US model was pretty focused and very on point in the UK when I came back to government, my interest was could I actually apply the playbooks of what I learned in the US when I came back to the UK? I did that in a public company called Microfocus. and then the intellectual challenge, my curiosity, was tweet by thinking could those same sort of business practices, the tone of the top, the strategies be employed in one of the oldest institutions in the world, the British Civil Service? And it was the case. So coming directly back to your question, it was the case that on the sort of restructure agenda, we called it the reform agenda was very focused on making sure the good people took around. So a lot of obviously the process, you know, inevitably when you're losing colleagues and in the first couple of months, actually there was a lot of, you know, retirement parties and leaving parties and all those sort of things. it does set The tone within the company and the culture and very important to me is a vibrant culture within all the sort of responsibilities I've had. So we had to actually personally put our arms around the shoulder of the most talented people. and actually during a time of major change, major restructuring, it is a great time for opportunity because people want to taking on more responsibility. So the best people actually rose to the top. It's interesting you say that because you're suggesting that people were then happy with the changes because you would think them knowing you were come in to essentially get rid of people would create a negative atmosphere amongst people. And people would be thinking, o he's the I don't know, the grim Reaper coming in to get rid of jobs. So what you're saying is it was kind of easy to implement then? No, nothing to ex You know notothing actually wow,'ve been in business for forty five years, notothing that you build of substantial value is easy to do unless you win the lottery or something and you know I don't do the lottery. It's a lot of hard work. I think the start point you've got to have a vision for what Britain wanted to be. and then you've got to have a plan We had a very clear vision. and we used to, you, honestly, with any institution, particularly like people who have been in the Civil serervice twenty, thirty years, they become institutionalized. And sometimes I hate to say this, but in big companies it's the same. They become saboteurs. They forget the enemy' always on the outside and they start picking kind of internal tur fights. It's just crazy. And what we sought to do was say actually the reason why you came through you the turnstiles at horse Guards or Cxton House was to improve public service, you've got that mission, that zest for better public services serving citizens and we want to reconnect you to that. and we want to actually eliminate all the wastage, all the noise, the bureaucracy and create efficiencies to allow you to do that. And then what we did and we measured this and actually had the National Office Auditor and I sat in front of Margaret Hodger, the Public Acounts commommittee and M Hillia, I don't know a doz times to say we had to measure. So number one we had a vision, number two and that was a vision for Britain, why it's important, why we need to save money. and then we connected it to real life stuff. So we said every ten billion pound we save is half a million junior nurs' salaries for year It's three million primary school places. Yeah. It's like a massive impact on the fire services and it gives the chancellor the Exceeker huge latitude if we're making great savings in the civil service and public service, number one to improve the services, but most importantly to actually give the chancellor a latitude to invest in public services that we're all proud of. And that's the genesis of why we started in the civil serervice in the first place. But you must have come up against resistance from people because no matter how much you tell people, if we get rid of your job, that'll be a nurse or whatever. its people care about themselves, too Yeah, definitely. definitely. And before I joined, this is back in probably about twenty ten, just around this sort of election period. I worked years back in the eighties for a guy called Peter Gershen And he was chairman of Taylor Lll and all these great things. But he hadd done, I think, with Michael Barber in the Blair government, a similar role in about two thousands. And I said, Peter, you know, what's he like? Because I have witnessed because I've done stuff with the government, some amazing people from the private sector literally go back into government and sort of become zombies within six months, just lose their spark and energy. And I thought, wow, I don't want to do that. So I sort of went to Pe and a couple of other people who had worked in the civil serervice and said What can you tell me? What's the lessons you learned? And he said, interesteresting, he said, Civil service Stephven is like an infinite wall. Infinitely high, infinitely wide. And someone like you, but just because your energy is going to every day wake up, seven o'clock, you'll go in there and you'll bang, run in, sprint in and smash into that wall. Full crumpled on a heap. And then analogy. And then you'll dust yourself up and you'll think, No, you never fail. Failure is not an option. Next day you'll do exactly the same thing. And you'll keep doing this And then you realize if you keep doing it and you keep talking sense and keep doing the right things, eventually that wall has doors and windows, but they only open from the inside So you have to be invited in. So I'll tell you one of the sort of guerriilla stories, in the first two weeks I had meetings with treasury colleagues and I was based in both a White H, seenty White Hall and horse guuards And the meeting was at the Scottish offffice, which is right at the almost Trafalgar end of Trafalgar Square End. And then I got sent up there, went to the meeting, no one there. And then I found that the meeting had been rescheduled down the other end of Whitehole, so I missed it And I went back to everybody has private offices. so I'm not sort of used to this because I'm just I get my own coffee and stuff, but I had six people looking after me. Did you not get rid of them in the process? I It's a good point, but they are actually some of them are the most talented people. and a guy called Simon French at Pamu, he was the guy running my private office. What a talent now Chief economist, Do doing great things for that. So these are super smart guys. And actually I'd say all the civil servants, I was very privileged. I worked with some amazing people like Jeremy Hayywood Mark said, well, they're just brilliant people. But he said, Avin, wow Hmm, I've heard that. has been one of the tricks to play. seend you off to a different meet in different locations. Oh they did it on purpose. Well, who knows? Wh knows? I've never like to speculate that here real I'm telling you the story. It's real life, Yes, Mister. it is, it is and some of it was. but fortunately a few things. what did we learned from that time The alignment between the ministers, we treated them as the board And we were the executive I think the efficiency during that period' never been wr and And actually Cameron deserves a lot of credit for this. Osborne that team of consistent ministers doing their job for five years. They' all stayed in place. Theresa May at the home office. G stability because again, what the civil serervice could do if you believe the sort of Yes Minister and Thickab bit stories, which can be the case, is if you rotate and door on the ministers, literally you never get anything done. becausecause new minister brief them six months, they come up with their own ideas. eighteen months later they're gone The five year consistency was very powerful. Also, you couldn't put a sheet of paper between the Lib Dem mininisters and the Cervatives. I work very closely with Nick Clleg and Danny Alexander, Fantastic people and the Conservatives, you know really good, like people like Philip Hammonds, all these sort of folks. Getting all the names in this episode, aren't you? T' M good. Yeah. Well they were good people. and David Gore, really, really high quality people Before we move on to what might be the potential lessons for the current government, if we're going to make the state more efficient. We've got to get the private sector in. We've got to get more private sector people in. And I have to say, in the many years I've been an observer of these things quite often It just doesn't work. You get some guy, I'm not going to name names, but I can think of quite a few private sector people who've been absolutely useless. What role in general do you think the private sector can play usefully? And why do you think Because it sounds to me as though you did relatively succeed compared to many other people from the private sector. Why do you think that is that some people are just so useless when they transfer across? So I think Robert and it sort of cuts across and privatization, all these things. I thinks the sad thing about Britain is in terms of politics very ideologically driven. Right. Well when you run in a business and the civil service is fundamental businessusiness is a business. It needs to have a strategy, a vision, a plan. And then you've got to execute the plan. You want to have the best talent in the right swim lanes to deliver that. And the policies any government come in with, and I'm sort of a non partartisan, I'd work for labor, Lem as conservatives. You do what the government will day, and we see it ourselves as the executives. Some of the best private sector people have been very successful. But you're right. I think If you don't adapt to the environment you find yourself in. Is it like a respect problem sometimes? I mean because you obviously do respect the people you work with? Yeah. and I was very privileged. I did have, you, I'll be honest, imposter syyndrome, Im a state school kid working class, and I'm sitting in these rooms in Sventy White Hall with all these dames and lords and sirs. And you know, just amazing people like Jeremy Hayw one of them And he very kindly asked him in the first two weeks, would you mentor me Just go for a coffee every. And he was already cabinet seecretary at that point. He was just taking over, Gus O'Dnell was there. So when he arrived it was Gus and then he handed over to Jeremy Y Yeah. And Gus, again, wonderful guy from clapping down the road actually. Yeah. But these people, you know, they've got a public perception very different than R the realality and they were very helpful getting me acclimatised and supporting me and also just saying, actuallyually, Stephven, you could probably do this differently. Because invariably as a leader, I think the crux of it, come to the right point. I think with great leadership, they can inspire any organisation whether it's public or private sector. And I think honestly In the last forty years, since all that privatisation of water industry itself, we've lost sight of actually what matters. Stehen, lot smartter ask here, but we're going to go to a quick break Hi, this is Garalinka from Goldhangers. The restest is Football. This episode is brought to you by Wise. 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This is a job for indndeed sponsored jobs Often the argument from those people who've done that have gone private sector into public sector for whatever reason, for whatever type of job They talk about it being like this dinosaur system. It's really impossible to change. You know, when we talk about the NHS and things, it's this huge tanker that's impossible to change direction of or whatever. Do you think that that's not the case then? I think you know, maybe I'm oversimplifying it, but actually business is simple, it's about, you know delighting citizens in this case It's treating the taxpayers's money as if it's your own spending money wisely on behalf of the taxpayer and for the government to make sure you align and drive the policy initiatives. So with these things, honestly, and the civil serervice is no difference, you know people run a mile if you're not successful But success has many followers. So what I sought to do in the first three, six months, and I took this through the mininisters, I said, rightight, here's the plan. This is what we're going to do. this is what we're going to deliver. And it was like this is so we went to actually start back. We went to Francces Mord, who was the mininister in the cabinet O office and said by the end of twenty fifteen, the next election, fixed term Parliament coming What do you want to stand up and say you delivered either at the cabinet or to the people? And he said, three things. I said, rightight, we'll make those three things happen. That was the genesis of the plan. And if you look at the most successful companies the world, people like Mark Benny off for Salesforce He uses exactly the same methodology and result planning. He has a methodology called V two Mum vision values. but essentially it's having a plan for what you want to achieve and then everybody align with that plan and then executing to be successful and breaking it down. We had it on a quarterly basis And that derived at the end of the twenty fifteen, fifty two billion pounds of savings that were delivered during that period. And can I just ask therefore, if we just bring it up to date? I mean fifty two billion is a big and useful N as you say, and that was for fifty two billion pounds per annum on what the salaries that you were no longer paying. that was the whole of it? So there was again, when we turned up Robert in twenty ten, there was no data on anything. We didn't even have data on what supplies we spent money with. So we we didn't have anything, Steph, nothing. So we had to write to the supplers, we wrote to the departments and we started building a very basic sort of management information system It was basic, it was rudimentary. But we use that as the baseline and then that fifty two billion, that's not misrepresented. it was cumulative savings. Oh sorry. so that's everything. So by twenty it's cumulative it's adding all the savings over the years over the five years. So by the baseline was twenty ten But in twenty fifteen, we actually generated that year against the baseline twenty billion pounds of savings. So that's annual saving, twenty billion. Yeah. correct. cororrect. Well that's a very substantial you, that's a know a couple of pennies on ' whats necessarary or something. I mean' income tax, isn't it? So it's three pennies of income tax for everybody. But therefore, if we now apply it to where we are today, I mean there may be for all I know, somebody in Whitehall with your breadth of responsibilities from the private sector, but I'm quite close to one hundred percent certain there is nobody in your kind of job doing that today you look at the sides of the Civil serervice before COVID, right? The sides of Civil service has exploded since the COVID crisis. I mean, I think it's up more than one hundred thousand. And Brexit is now is Brexit' suddly more than thirty thousand. Yeah. So it's gone up one hundred fifty thousand since I left since you left one hundred fifty thousand. You've got reform talking slashing numbers. You've got the Tories talking about slashing numbers You don't you know we've even had the government talking about reducing numbers, but without very clear specific targets. If you look at the more than five hundred thousand, what would it be reasonable as a target to reduce white the size of whyite size of civil servants without damaging the quality of public services. What would be a sensible target at this moment Everybody wants that headline number. and I remember Steve Hilton giving those headline numbers and it was two hundred fifty thousand or whatever it was. I'm going to answer your question, but we lost sight of it. It wasn't just about savings. Is it possible to massively improve the productivity of government, the efficiency of government and by doing two things O improve know the way they work and to reduce the numbers. Yeah. So I think there's sort of three elements of the strategy we put in place. One is massively reform the civil serervice to have reeductions and create huge savings. And that was the fifty two billion cumulatively twenty billion do runway Secondly, innovation. So and innovation on our watch, when I turned up, you used to get McKinseyyss and Banes doing studies. proroject was a disaster. Connecting for Health is a good example. fourourteen billion wasted, and there wasn't a GP in the room. What's that one? It's Connecting for Health. You know, there was horror shows where these massive gargantuman projects never delivered. When I turned up twenty ten, we spent three point six billion a year on consultants You know, people reading our watch, telling us the time. And then the assurance you have, you go to the public accounts committee, Well, we got McKinsey in. Well, we got the best people in the industry. and I know it's a disaster, but well, we did all the right things, No. So we said, no, we're going to insource us We're going to hold civil servs accountable and responsible. So we actually cut the consultant spend from three point six billion twenty eleven twelve, it was eight hundred million. Wow. Now I was the most unpopular person with McKinsey Baine. Yeah It's not you've never had a highly paid advisory position when you' kid something R that as well. Day one, I found out The companies were spending a million on hospitality at Wimbledon and the FA Cup fininal, and civil servants who were involved in procurements were attending. So I banned hospitality all over private Eye for a couple of editions. And then obviously you know they find some senior civil servant actually attended you know a ballet with McKinsey So that's the story. But no come back to this. So massive savings, secondecondly, innovation and growth. So great Gov UK the people I worked with were brilliant. They all delivered in house, Gov UK in eighteen months and it won United Nations most digital government in the world in twenty fifteen, sixteen. And the final thing is growth, growth, growth. What we need in this country is sustainable growth. So what we worked on were these SME strategies and procurement strategies to really pump prime and use government procurement to really fuel regional growth. What percentage of procurement, that's government purchase of goods and services, A went to British companies and B went to smaller companies and how did that change on your watch? That's a great question. So the small the SME was effectively ninety five percent UK companies. And we found that out because we didn't have the data of the stuff. I ninety five percent of the SMEs were UK companies UK taxpayer, UK don. UK employ. was that the government were using when you came in. Yeah, but that was two point six billion do of spend. So the government at that time was spending about forty three billion a year on it's obviously expanded. Now the government spends on public procurement at four hundred thirtyill Yeah. So actually in context, it's probably worth knowing that sort of I guess, my direct responsibility was central goverment, which is these twenty four departments like DWP and HMRC and the Foreign Office. But beyond that, there's much greater spend happening across the health service education and local government. And this was again part of the strategy. We had a plan and it involved changing the procurement policy, training the procurement folks. Engagement, Cs going around the country, people like Liam Maxell, the CIO went round to Newcastle, went aroundound to Edinburgh, Cardiff and went and said with people like British Chamber of commommerce, we' governments open. The message was governments' open. And is it British SMEs you're talking about here that six percent was British SMEs And that went up at the end and a credit actually Cameron set a target and he bought into it. He said, it's got to be twenty five percent in twenty fifteen. We hit twenty five percent. So that's eleven billion do. How so the difference all these. interventions we made were shifting the dial to actually, so again, I remember sitting in front of Margaret Hodgon talking about public procurement. I think in the early days, twenty ten, the average procurement was like three hundred thirty seven days So if you're a small business in Macklesfield, you're going to lose the will to live. We got it down to like thirty days. These are This is the payment terms, is it? No, no, no The contract from start to getting the contract was Okay. It could have been over a year. Yes, which business mult they can't survive. So they've been in the procurement, they have to go through all these states So we introducce all these things like G clloud Government cloud, like Gamazon for small business. Gamazon, you know, whatever it was called, you know, but it was G clloud. Yeah. But essentially it was in those early days like just making government open for business and having the systems and the marketplace is to allow small businesses to bid for government services. So when we talk to small businesses who want to get contracts with the government, one of the arguments that's put to them is that they're more expensive Did you see in that increase of percentage of small businesses you were dealing with an increase in cost as well? No, clearly not because we've made the massive savings. So the savings were derived and probably the biggest kind of element of the savings was around procurement and commercial practices. Obviously a headcamp was a factor. IT was a factor, all these things major projects, property, all those sort of factors. But the biggest one was really around the reforms on procurement and commercial practices. And we therefore increased from six percent to twenty five percent of spend. sa money buy even while And sagetes save money while buyinges. saave money, but drove loads more innovation on the Gv UK project with civil servants and some of these small and medium businesses, The best IT shops in you know, we put GDS, Gvernment digital services up in Hoban. They work with a number of SMEs. IT agencies that had the skills to actually deliver gov UK, you a world winning award, United Nations, all that stuff. But it's changed the way we deal with as a citizen, DVLA, passport applications. That was the platform. It was light years ahead of anything else. and know, just simple stuff Started with the user need. what does the citizen want? How do they want to interact with government? And obviously you have to be sensitive to elderly people and people who aren't with laptops and mobile phones. The numbers. So it started at six in twenty ten. We got it to twenty five percent. We agreed that for the next government Effectively, obviously this has got cross party support. So everybody bought into this. It's common sense. It was going to be thirty three percent over the next five years Honestly, the last ten years it's been chaotic. Pretty much all the things we put in place, controls, procurement policy, commercial reforms, the literally the tide has washed over the sand.intince are gone. So now civil service numbers five hundred thirty thousand, gone from three hundred eighty thousand.n procurement, we've gone backwards It was twenty five percent in twenty fifteen. It's now twenty percent and actually credit and a shout out for British Chamber of Commerce. They're really holding the torch on this. They're working with these guys trustsle to provide all the data. But it's gone backwards. And here I Why do you think that is? Is it the shock of COVID what No, I think you know there is something one is COVID probably didn't help in terms of procurement, then the civil serervice reacts or any organization reacts very negatively. they're constantly criticised. And obviously the PP and all these sorts of things what they did in that period was a shambles And Brexit, the bureaucacy around Brexit. Yeah. Yeah. But effectively, we've lost We've lost the genesis of really the growrth gene SMEs British business. And it a lack is it a lack of leadership at the top of Whitehold? Is it a lack of leadership at the top of government? I mean, you talked about How? destabilizing it is to have constant churn of Chancellors and you know, ministers in general, which we did see up until the last general election. I am struck L there is nobody apparently in the government with your authority. focusing on these twin aims of improving procurement purchases of goods and services and you know, making sure we got the best civil servants of the right number of civil servants. Correct. Robert. So all these things are simple. they are common sense, but when you dive into the detail of dealing with the civil service and reforms, it becomes massively compon But you have to have a vision. you have to have a plan, and then you have to have strategies or policies or whatever you call them. And then you've got to have awesome execution. Execution is driven by high, highly competent, capable people. So if those are missing now I left and I'm not sort of doing the spill milk kind of routine. It's been pretty chaotic since about twenty seventeen politically and up to the election. And obviously, I think people in this country voted for stability. But you've still got to have a plan and you've got to have a vision And you know, people this phrase sort of you know this a non political phrase,' a common. vote for change. Well, what change? I want to know the specivity of actually, what are you going to do for health service? What are you going to do for infrastructure in this country? What are you going to do for growth? What are the strategies for growth? What are the strategies for small businesses And on your last question, Robert, I'm now running a small business, UK listed company, so we want more of those on the London Stock Exchange. Fantastic development centers in the North of England and Belfast. Pay UK taxes, employ UK people, no offshoreing. everything's here in the UK And growing one hundred and eighty percent last year. And yet, we struggle to get into government. And why? in twenty twenty three, they changed the rules Yeah. When I was there with Francis Moore, we obliterated there was a crazy thing in two ten. You had to be or something like Profitable for five years and all these quick asset tests and all these sort of things to become real people out. Yeah, exactly. So that rule' probably ninety percent of SMEs out. So we actually looked sensibly about how do we protect the government but actually take a lot more risk in terms of supporting the private. Youot got to do SMs. you have to do that. In twenty twenty three, they reintroduced Dond Bradstreet scoreing and all this sort of stuff. So they've got now what is that? credit rate, credit rate. Oh yeah yeah. So so a lot of SMEs now will be ruled out. because they financially, you know, you look at an SME when you start off, you might make a loss for the first year. That's the reality. You probably have to invest in the business. If you're a technology company, you have to invest in a product. And then you get sales and you get momentum and there's a sort of crossover point where you start generating cash and profitability. But what we need I mean the thing from what you've just said is the government is currently putting really quite a lot of money through its sovereign AI fund and the British Bus Bank into these tech startups whose credit ratings will be Well, they won't have them because they're new and b they've been broadly putting money into businesses they won't be able to purchase from. Exactly. But the perverse thing about that is the quantum as well. So that sovereign AA fund, big fanfare, lots of ministerial speeches, which obviously they five hundred million. Yeah sure. R? The US this year spent six hundred billion just between five companies. Your four hundred billion is procurement, not just central. but we're including schools, we're including the health service, we're including welfare. This is a m is a massive amount of money that if deployed effectively by the government could really help help The y to get out of the doldroroms, isn't it?ly it would be number one in front of Rachel Rese when she comes out of eleven, in plain sight, right in front of her how she could just literally adjust and provide some levers in public procurement to pump prime growth in the economy is sitting there and the evidence so just give you a couple of examples. Kanos, great company out in Belfast, started, I think, in twenty ten with about seven consultants into government, A small and medium business. They ended up with hundreds They did an IPO on the London Exchange, one of the most successful tech companies over the last fifteen years. They hired just before the IPO four hundred jobs in Belfast and Derry. You know this is and they announced yesterday a twenty million investment again in Belfast and Derry, another three hundred jobs and apprentices and AI jobs and all these sort of things. But that was spawned off the government procurement reforms to actually invite them into government, which initially they'd never consider because it's too hard, takes too long and they would lose money on it. So we had to change that completely But there's so many cameos, and actually just stepping back, because in the wider public sector, there were six hundred thousand job losses during that twenty ten to fifteen. One of the things we were agonizing about is can we pump prime the growth in the economy through some of the reform side and supply side to actually get the growth moving and so you look at growth in that period, I think twenty twelve to fifteen, two to three percent economic growth, GDP growth in the UK after the credit crunch. So you could argue the comparables a bit underweight But there was strong growth in the economy. And the private sector job growth was really fueled a lot by government being on the pitch with this procurement helping small and medium businesses across the UK. There's a lot of small businesses we talk to who are saying they're getting the kind of verbal enthusiasm from government. So for example, I've been talking a lot about work that Rachel Reeves has been doing in the North with the mayor there Kim McGinnness. There's been lots of events at number eleven, getting business owners in, female founded businesses. There was a big event like that. There's lots of, you know, we've talked to manufacturers in the North who have said that they've had ministers round like the defefense minister visiting this company in Sheffield that makes clothing for the military Nothing is going any further than that. so it's like they're getting the lip service, but then it's not following through into contracts for people, into actual real investment and money So Steph I think that's very fair And I think the data says we're going backwards here. And I'll come back could you ask a question about what's the price? The price is probably one hundred billion pounds. If we did fifty billion in that. ten to fifteen with the waste and expansion that's happened since and the opportunity for things about artificial intelligence within government, we're probably looking at a prize of one hundred billion do. And a thirty billion run rate? Oh at least Guinely at least off the baseline of today, att least thirty billion do. I'll come back. and I did actually make some suggestions to the current government around how they might achieve this Dusting off it's not just us having done this. You know we looked at Singapore, Estonia, some of these really innovative governments and credit to Frananceces Moore for doing that, and we brouought the best in and then got the best people to actually drive us. The opportunity is even greater now. And as a company, it's not just us saying this. There's lots of companies and I know you talk to be, Malex, Stephanie. what's happening is governments seem to be addicted to non UK technology in our space, particularly obviously from the US. I think ninety percent of the cloud services provided for the government are provided outside non UK suppliers. So basically we're just shipping taxpayers money off abroad to the West coast. And you know what happened is so the US with DAarper really in terms of robotics, AI SpaceX two trillion dollars IPO last week, but that was all backed by contracts in the early days from DOD and NASA and you know, that was public money in the US that actually fueled these companies these billionaires and a new trillionaire You know, they've all been effectively subsidized by the American government. Absolutely. The American taxpayer through DOD and all the programs they put together are DARPA to do that. And so to your point, The rhetoric. Iiously when I worked in government, ministers love a headline. they'd love doing the morning rounds with good news. Everybody loves good news, but you've got to follow it through with a plan and execute it. Honestly, in government you talk about policies and delivery. But it's the same in the priv. That's a point you made earlier you both made, it's that short termism as well, isn't it? So the ministers are looking for instant results from things because they're worried about whether they're going to survive the next election In some cases, they're worried they're even going to survive the next few weeks. So that has a real impact. and you know you talk about the days of Cameron and Osborne, that was a stable time, wasn't it? likeike you say. So now it feels like everyone is just running around trying to make quick decisions and that's a big problem for the economy? Yeah, you guys obviously are much more connected in terms of the political establishment But I would say every one of these ministers I' may, they want to do the right thing. They're passionate about Britain. But sometimes, and they obviously love making great speeches, but they need to understand you've got to have a plan and you've got to be surrounded by really competent, capable people who can execute these plans. And if I look who would want to be motivated to go into politics today. It's one of the problems when you are trying to bring in efficiency gains when you're trying to cut budgets, when you're trying to cut staff that it becomes a bit of a land grab between ministers though who don't want to lose anything from their department because then you know there's a lot of egos at play here and if your budget's cut and your number of your headcs cut, it looks like you loseing power. And you see that in business as well. Do you think that's an issue in government It could be. But again, I think you need to reframe it and it's all about it sounds so simple, but it is all about leadership and the narrative and the vision and then aligning everybody in the organisation with that vision with the same values. simple as that. And if we had people competing on the gov UK candidate applications to be the first And obviously the implication of digitizing your services, whether it's a rural payments agency is it will evolve to technology rather than people manually doing these things. So there will be savings and the implication is you'll have a smaller department. But actually if you're providing excellent servs serervice to agriculture and the farmers then when you go out to the farming communities, you're going to get rave reviews You know, now if you go down to this is just a funny story. You used to have what twelve articulated trucks driving down the M four every day, taking paper driving licenses every day. Why you do that? When you can now we all sit here and we think that must have been out there with steam engines And it's just crazy. So now the world is digital. the opportunity and you asked me a question, I didn't answer it. So I think the prize for this government could be a hundred billionars savings, probably on an annual basis about thirty billion. because we've really gone backwards on this. You're a great optimist And you plainly, you know, it's tangible. You have an enormous respect for the public service. The problem we've got at the moment is We have got expenses that gone through the roof and a lot of concern about civil service inefficiency, but it's also combined with a sort of relentless negativism actually, you know, not just of some on the right who you would expect that of, whether you know, they're ories or reform, but actually ministers in the current government relentlessly negative about their own officials, you know, saying they get in the way or they're no good. Somehow, I mean, I think you this is on the basis that Andny Burnham is taking over, I hope he's listening to this podcast because if I were him, I'd be listening to you and I would be thinking there are two things I could do here. I could really get the morale of the public sector up, but I could also make it way more efficient because if you can somehow make a partnership with Whitehall that you got to get the numbers done. You got you got it down. You got to get the efficiency up, but you're on a mission to make the whole of the UK more productive. And you know perhaps, sayve thirty billion a year that you can then put into hospitals and schools if those are your priorities. you know, there's a massive opportunity. Yeah and But it comes back to that thing you've said so many times, which is quality of leadership I mean in the end, that seems to be something that we've just lost in recent years. it's leadership and culture. and again, I know Obviously, particularly in the Sigar environment, everybody's presented it as a binary choice. Do you want to spend more on defence Oh, will you have to spend less on health? It's much more nuanced than that It's much more complex the way government works than that. But you could definitely say probably thirty billion on a run rate per annum out of the public sector that you wouldn't have had to had the battles on winter fuel payments. orr you know, winter fuel payments was four hundred million doars. Is' trivial D the oan. A drop in the ocean. There's a prize of probably in this parliament still one hundred billion cumulatively, thirty billion a year. Welfare? what were they after three or four billion Look at the big picture, where the savings is literally in the front door of number eleven. justust look around Whitehall and how do they reform that with great leadership, innovation. and it will the thing that's missing, Rot and that breaks my heart, everybody in the government started talking about we're going to be focused number one priority. number one priority, number one priority Cross. growth, sustainable growth, get back to that two we have to be ground at two to three percent. because otherwise we're falling behind, we're falling behind in terms of productivity. You know, we're way off the benchmark now. And it's not really good to compare yourself to France and Germany. Why don't you say we're going to be ground at three percent? How do we do that? Yeah exactly We can use that pool of government procurement to be on the pitch, but also much more collaboratively working with industry. And I think that's the prrize that's missing. Stephven, that was such a fascinating conversation. Thanks so much. and yeah, I You know, Andy Burnham, if you are listening, it's qu quite a few useful ideas for you here, I think. He might be a bit busy today, I think, but when he listens to it later on after today we'll find out. But thank you very much, Stehven, lovevely to have you here. that's it from us on the rest of money. byye bye Goodby