Silly season and the public sector purchasing cards scandal that is overdue

Silly season and the public sector purchasing cards scandal that is overdue

Posted by Pete Loughlin in Purchasing Card 14 Aug 2014

We’re in the middle of August and there are two unusual things about the summer in the UK. Firstly, we’re having one and secondly, we haven’t seen the scandalous use of purchasing cards in public sector exposed.

I’ve been looking out for the story that emerges every year about the £1 billion spending spree that public sector workers go on each year. Apparently, they use “state credit cards” to fund all manner of things like “taxi rides” and “business lunches”. Food from Marks and Spencer is often quoted as the disgraceful example of a waste of taxpayers money. Daily Mail readers from all over the UK are aghast: “Food from Marks and Spencer! I wish I could afford to feed myself at M&S.”

Purchasing Insight logoWhen there’s nothing else to write about, write about baby pandas or stir up some hatred by finding easy targets. If it’s not foreigners coming over here taking our jobs it’s work-shy civil servants living the high life at the tax payers’ expense. It is of course, to anyone with a modicum of intelligence or knowledge, lazy and ill-informed journalism that is behind these stories.

It is true that within the UK about £1 billion is spent every year within public sector using Purchasing Cards. That sum of money represents only three-quarters of 1% of total Government expenditure according to Ian Watmore but it’s not the amount that is important it the number of transactions that counts.

Speaking before the Committee for Public Accounts in the UK in 2012, Ian Watmore from the Cabinet Office explained that the saving to the taxpayer by avoiding what would be a relatively expensive purchasing process saves the UK about £8.5 million each year. He based this on an estimate that each of the 1.7 million PCard transaction would save about £5 a time. From my own experience, I think this is an underestimate but whether it’s 8.5 million or £85 million – it is a real and significant saving – and this is the point of purchasing cards.

Sometime the cost of a purchasing transaction i.e. the cost of peoples’ time to raise, approve and process a purchase order, is greater than the cost of the goods themselves. It makes no sense at all to initiate a bureaucratic process to buy £10 worth of stationery. And sometimes it is simply impractical. People who travel as part of their work need transport. They need to feed themselves and stay somewhere. Purchasing cards facilitate this sort of buying and at the same time capture the important line item detail that allows for proper control and accounting.

They don’t always work well. Outside of low value transactions Purchasing Cards can be problematic. Using a card to purchase across international borders can bring with it some ludicrous FX costs that aren’t immediately obvious to the users and the merchant fee can negate the cash flow benefit to a supplier but where cards work well they do deliver a saving and Taxpayers should feel comforted when they see their Government using best practice tools and techniques like PCards.

It’s a story that comes out every year and I haven’t seen it for some time – so, unless I’ve missed it, expect to see it any day now – the scandal of Government Purchasing Card. It will be – as it is every year – absolute nonsense.

Pete Loughlin can be found on twitter @peteloughlin

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