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August 20, 2014

Labour: Local authorities deserve more ownership of G-Cloud

Interview Part II: Why Labour shadow minister Chi Onwurah wants a mix of SMBs and Big IT suppliers.

By Joe Curtis

This is part two of a two-part interview with Labour’s shadow Cabinet Office minister, Chi Onwurah, about the party’s digital strategy. To read part one please click here.

Local authorities must have a larger say in the G-Cloud, according to Labour MP Chi Onwurah.

The shadow Cabinet Office minister warns against central government imposing digital innovation on the wider public sector after recent complaints that G-Cloud is too Whitehall-centric.

G-Cloud was set up in 2012 by the Cabinet Office to open up more public sector IT contracts to SMB cloud IT suppliers.

But in an interview with CBR, Onwurah voices support for councils that have criticised it for being too focused on central Government’s IT needs.

She says: "It’s dangerous and difficult to impose things from the centre and it can often be ineffective.

"Giving local authorities more ownership of something similar to G-Cloud, local authorities can have more ownership of the marketplace of digital services."

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However, she stopped short of suggesting local councils should have their own procurement framework.

Her comments follow figures in June that show 26 county councils spent just £385,000 of a possible £440m via the framework in 2012/13.

Public sector IT body Socitm responded by criticising the procurement framework for offering short contract lengths of up to two years, as well as a range of services that often do not meet council requirements.

Its director of policy and research Martin Ferguson now tells CBR: "The problem is there’s this notion that one size fits all is the answer to everything, but there’s no one best way."

TechMarketView analyst Georgina O’Toole questions if G-Cloud is even necessary for councils.

"Outside of these major government departments, there has been limited success in encouraging organisations, particularly in the wider public sector, to adopt the framework," she says.

"I would question whether it is important. As long as local authorities are getting good value for money, does the procurement channel really matter?"

Nevertheless, Socitm is working with G-Cloud director Tony Singleton to tailor G-Cloud to meet more of local governments’ needs: of the total £249m spent via G-Cloud so far, 79% came from Whitehall.

He wrote in a recent blog: "As a first step, we are going to carry out a joint piece of research to establish what those needs are."

A Cabinet Office spokesman says: "We know more needs to be done to raise awareness of its potential and encourage use. Only then can organisations benefit from access to the most innovative, cost-effective solutions by a wide range of suppliers and pass these savings on to the taxpayer.

"For our part, we will continue improving G-Cloud, making it easier for suppliers and buyers to use."

Hampshire County Council’s CIO, Jos Creese, is one IT head who would be keen to work with central government on councils’ IT needs.

"I’m personally very keen to work with the GDS and central Government in developing any sort of services, whether G-Cloud or the PSN, to make them more suitable for local government," he says.

SMBs and Big IT

Onwurah is spearheading Labour’s digital strategy ahead of next year’s general election, and wants to see a greater mix of large and small IT suppliers selling to government through frameworks like G-Cloud.

Of the total £249m G-Cloud spend so far, just 54% has gone to SMBs.

"What we want is a mixed economy of suppliers. We want to use open standards to do that," she says.

That’s something the Tories and Labour appear to agree on, with the Government recently choosing Open Document Format over Microsoft’s Open XML as its standard format.

But crucially, Onwurah feels the Government has failed to achieve its goal of using more small suppliers.

Figures from think tank Institute for Government reveal that the public sector spend on the traditional Big Six including HP and Capita hit £4.3bn in each of the last two years.

"Not enough government spend is going to small businesses," states Onwurah. "That’s clear. There’s been a lot of talk about encouraging small businesses by this Government but it hasn’t translated into reality.

"When I speak to small businesses this Government isn’t that popular because there are still real barriers, one of which is being paid on time. It’s a Big IT mindset."

The Cabinet Office’s Mystery Shopper Service – an anonymous feedback process for Government suppliers – filed a report in June that found 64% of all contract management issues raised regarded payment, adding that many suppliers were not being paid at all.

Onwurah wants to see Labour commit to increasing spend with SMBs beyond the Government’s record, which stood at 10% of its total budget as of 2011/12, according to the latest figures.

In fact, she goes on record to prioritise SMBs as a key focus for a Labour government.

"We want to look at the barriers for small businesses taking on [public] IT contracts and to try and knock those barriers down one by one," she contends. "We need to look at contracting, we need to look at tendering processes, contract lengths, access and engagement.

"One of the thing’s Labour’s promised to do is set up the equivalent of the Small Business Bureau and we can see good arguments for a digital government change agenda to make sure small businesses are at the forefront of what we’re doing."

A Cabinet Office spokesman responds by attacking Labour’s record in charge before 2010.

"Before the last general election smaller business were almost excluded from working with Whitehall," he says. "Our reforms have levelled the playing field for innovative IT and digital suppliers of all sizes. Despite some progress supporting SMBs we know there’s a long way still to go as legacy contracts signed before 2010 unwind."


Striking the right balance

But at the same time, Labour would be happy to work with some of the larger firms.

Onwurah is critical of what she sees as the Government’s demonising of large suppliers like HP, Microsoft and others, and believes the Coalition has shunned Big IT to chase small suppliers in the hope of cost savings.

"It’s good to have the insight of particular groups like Big IT suppliers," she says. "The experiences of larger companies in engaging with government can be very useful in showing where the shortcomings have been in the past."

It’s about striking the right balance, she says.

"Small businesses also need larger businesses in the supply chain in the market to share risk with," Onwurah explains. "They need someone they could talk to who understood the industry, understood the challenges, understood the business.

"What we see from the review, funnily enough, is there’s a lot of consensus about why Big IT public sector fails. A lack of leadership, a lack of good project management, a lack of changing requirements."

O’Toole reflects this view, saying: "They all have a role to play. Often large IT suppliers were criticised for unfair treatment of SMBs, eg: late payment.

"But equally, Government was also criticised for forcing the large suppliers to flow down the T&Cs/risk to their subcontractors. A little bit of change in behaviour on both sides is a good thing."

She points out that the Government is picking Big IT firms as strategic suppliers, who work with SMBs on large contracts. "That is a big turnaround from 12 months ago," she says.

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