Analysis of 38 million published government transactions reveals new information on sums received by private companies
But greater transparency on government contracts is needed to get fuller picture, say Institute for Government and Spend Network
Extensive research to establish which companies government contracts with and at what cost has been published for the first time today.
The Whitehall Monitor bulletin, produced by Spend Network and the Whitehall Monitor team at the Institute for Government, looked at financial transaction data published by government from in both 2012 and 2013. It shows information on which private companies received most government spend by Whitehall department. The analysis also reveals the need for improvements in the way government publishes data – both to improve accuracy and to make the information more useful for the public and for government.
The project examined the transactions of 247 government entities, including all central government departments, many central agencies and the majority of local authorities (see Notes to Editors). Researchers studied 38 million transactions with over 180,000 suppliers. The project required over 16,000 hours of analysis over two years.
Some of the companies identified in government data said our analysis relating to them came very close to their own figures. Where they differed, this was often due to the fact that the published data makes it difficult to determine the ultimate beneficiaries of payments to joint venture and Public Finance Initiative vehicles. Some private companies noted that they supported greater transparency regarding their contractual arrangements with government (see Notes to Editors).
Who are the ‘Big Four?’
The project calculated the top 20 suppliers to central and local government, according to the data government publishes on its transactions with private suppliers.
These top 20 suppliers accounted for at least £10.2bn of government expenditure during 2013. Six are IT suppliers, six are construction companies and two are business process outsourcing companies. Some commentators have referred to Serco, G4S, Atos, and Capita as the ‘big four’ suppliers to government but our data suggests some large IT suppliers are receiving more revenues. It should be noted that our data does not include contracts with the NHS and some government agencies.
Our research also shows which government departments companies get their revenue from and whether suppliers receive more from central or local government. It shows that some departments rely heavily on just a few suppliers and it shows that local government spends more than central government contracting directly with SMEs.
What else does the public need to know?
The government’s commitment to transparency means that for the first time it has been possible to get a detailed insight into spending with suppliers. Much of this insight is published in the Whitehall Monitor today and Spend Network’s website also allows you to type in the name of any significant government supplier and see how much business it has done with government, according to published transaction data.
However, the IfG and Spend Network recommend that the government improve the quality and quantity of its data on spending with private suppliers, for example government should:
Set clear standards requiring the publication of far greater information on contractual terms, levels of performance and sub-contracting arrangements.
Establish a reporting regime for PFI contracts and joint ventures that allows the public to identify commercial beneficiaries
Lower the £25k threshold for publication of public sector transactions to £500 for all public sector entities.
Acting on these recommendations (for a full list see report pages 25-27) will ensure data becomes ever more accurate and fulfil the government’s ambition to use transparency as a means of driving growth, improving public services and strengthening accountability and democracy.
Leading this research for Spend Network, managing director Ian Makgill said:
"This is the first time that anyone has been able to get a detailed insight into what is being spent by both central and local government. We believe this data can be used by government and business to reduce waste, create efficiencies and deliver better public services. However, our research also found that the source data government provides could be improved.”
Leading this research for the Institute for Government, Gavin Freeguard said:
“It reflects well on the Government’s commitment to transparency that we’ve been able to produce this analysis of independent suppliers to government. Nonetheless, this research shows how difficult it is to analyse who is contracted to provide our public services and what it costs. Cost is also just one part of contract transparency – government needs to be equally transparent about contract terms and the performance of suppliers funded by taxpayer money.
“We hope our analysis will prompt government to improve the quantity and quality of the data it shares so future analysis becomes ever-more accurate. We’re also grateful to those companies named in the report for their cooperation and for providing their own data.”
Jim Bligh, CBI Head of Public Services, said:
“Nearly 200,000 charities and companies of all sizes help the government provide the public services that we depend on up and down the country.
“Yet the government’s ability to design effective contracts depends in large part on understanding the current composition and effectiveness of its supplier markets. More spending data are available than ever before, but often government is data rich while being information poor.
“This report is a welcome and overdue analysis of government spending with external suppliers. It illustrates the scale and complexity of government contracting, and underscores the need to ensure government commercial capabilities are fit for purpose.”
Jeni Tennison, Technical Director of the Open Data Institute said:
“The publication of open spending data has been one of the major open data commitments by this government. This analysis shows how open data publication can increase accountability and has the potential for driving savings and improving how government procures services. But the report also highlights areas for improvement. Providing more consistent and higher quality open spending data would enable more robust conclusions, and there is still not enough open data available about contracts and the performance of suppliers.”
Please note that as this project is ongoing some of the information will be revised as further data becomes available. This may mean that the rankings outlined in the report will change.