This afternoon, Spend Matters would like to welcome back our UK and European Correspondent, Peter Smith.

I had the pleasure of meeting Jason for the first time on his recent trip to the UK, and I was trying to explain to him our rather strange UK political process, which means we know there will be an election before the middle of June -- but we don't know when as of yet.

"Why don't you just have a set date for it?" he asked, and I admit I struggled for an answer. Everybody always gets into a state of over-excitement until the announcement finally comes, and then a sense of anti-climax dawns.

We have had a rash of policy announcements from the opposition Conservative party over the last couple of weeks in readiness for the event. And strangely, virtually every one had a significant procurement / supply chain connection or implication.

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Economic issues in Europe have dominated the news over the last few days. Greece is in real danger of going bust; years of corruption, government overspending, and tax avoidance are coming home to roost.

Will the EU -- Germany and France in particular -- bail Greece out? If not, the contagion has the potential to spread around the Eurozone to Spain, Italy, Ireland. At least the UK can depreciate its currency to help get out of trouble; Greece is locked into the Euro and has not made the structural changes necessary to adapt since it joined.

If the EU does support Greece, will there be enough incentive for the Greek government and people to make the necessary painful adjustments, which will mean real cuts in living standards? Or will they keep on spending, like the rich kid on heroin who knows that when things get really tough, Daddy will bail them out? (“Daddy” in this case being Germany, with some help from France and the Benelux countries.)

Last week, however, we saw poor indicators from Germany in particular and the Eurozone in general, in terms of the economic recovery, so voters in the stronger countries are less likely to be comfortable with bailing out their profligate neighbors. As the BBC reports:

“Economic growth in the eurozone has slowed to a crawl -- and that's bad news for the UK as much as it is for member states. The 0.1% growth figure for the fourth quarter of 2009 was worse than expected and puts into perspective the UK's similarly anaemic performance over the same period.”

I have always feared that the UK was in for a “double dip” recession; I am probably a bit of an economic pessimist by nature. These figures suggest, however, that this may be an issue for Europe more widely. And once public-sector cuts start to hit home in countries including the UK, that must act as another kick to an already weak economy.

So ... no answers or predictions, other than this: If you are a service/solution provider/supplier to the Eurozone or the UK, don't bank on a robust recovery and booming sales any time too soon.

- Peter Smith

We are now no more than 4 months away from a general election in the UK; it must be held by June 3rd, although under our system the government can choose the specific date within this timeframe. The strong favorite is May 6th, which would mean combining the national elections with the already scheduled local elections, saving the political parties money, which for Labour is a major issue as its finances are shaky.

Given the state of the economy, reducing public expenditure will be a major issue in the campaign, so public-sector (government) procurement is likely to be a stronger theme than usual. This can be seen in the campaign of David Cameron, leader of the opposition Conservatives, who appears to be making “openness” a major element of his proposition. In a speech this week, he said:

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I know that many readers of this blog represent both service and solution providers in addition to practitioners; so here's one for you in particular (but also of interest to procurement folk). It has the rare combination of real business interest, with some entertainment on the side!

Last week, Mr Justice Ramsey in the High Court in London decided that EDS had given "fraudulent representations" to BSKyB, the UK's largest satellite broadcaster, and held it liable for damages. EDS was engaged by BSKyB way back in 2002 to provide a new customer service- system. The project was supposed to run for 2 years, but there were delays and cost overruns. The relationship between the companies broke down, and BSkyB finished the project itself in 2006, spending £265 million rather than the £50 million contract value.

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Last weekend, as I reported on my blog, I attended my first top-level soccer match in about 3 years. This was courtesy of a friend who holds season tickets for Chelsea, now one of the biggest teams in Europe, and funded by Russian billionaire Roman Abramovich. They were playing the team I have followed since I was 4 years old: Sunderland, in the far Northeast of England. My hometown.*

To cut a long story short -- we lost 7-2. (That's equivalent to something like a 56-15 score in American football, by the way.) And we were lucky; Chelsea could easily have scored 12.

What struck me most, however, was the absolute humiliation of my team. Their inferiority and failure were obvious to all 50,000 people there. There was no place to hide. You could see it in their faces and body language, even from the stand. "Thank goodness I never had to face that as a procurement executive," I thought.

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Jason wrote last week about the UK Government's increased focus on diversity in purchasing. As your UK correspondent, I couldn't let his comments pass without comment -- particularly as they were somewhat critical. (I'll ignore his dig about how Britain has "the distinguished legacy of spreading bureaucracy worldwide," other than to say I would characterise it as “spreading good government worldwide.”)

I have to declare an interest here: Over the years, I have worked on a number of occasions as a consultant with the UK Treasury's Office of Government Commerce, whose role is to improve public procurement. I have even worked a little around the whole “equalities” issue in public procurement and on projects to help smaller businesses (SMEs) gain a better chance of winning government contracts. I do, however, have some sympathy with Jason when he says, "at the end of the day, government should be in business to get the best value for taxpayers, period." But perhaps my issue is with the word “period.” Is “best value” the only goal, and anyway, how do we define “best value”? Clearly, it is not just lowest price. These days, very few of us are absolute, red-in-tooth-and-claw free marketeers. The bank bailouts probably cured that dream.

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If you're expecting any urgent “just in time” deliveries of materials from suppliers in the South of England -- actually pretty much anywhere in England -- I hope your supply chain risk processes are robust and ready to go! And as for that big meeting in London on Friday; forget it. We woke up today to 9 inches of snow, the most I've seen in the South of England in my adult life. Given that UK airports and most of our infrastructure tends to close given an inch or two, I think we can predict not much will be happening in much of the UK today, and the freeze is forecast to continue for some time.

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I’d like to wish all the readers of Spend Matters a happy and prosperous 2010. Having started blogging in 2009, it was an honour to be asked by Jason to be a regular contributor here as a 'European correspondent' and I look forward to developing that dialogue through 2010.

On my own blog, I have posted a piece looking forward to this year here, but to whet your appetite, the three big issues for 2010 covered there are:

1. Technology and how it is sorting the supply–chain sheep from the goats

2. The future of our ‘function’ and the role of the CPO

3. Measuring the benefits and value that we add to our organizations

All subjects I’m sure Spend Matters will return to regularly!

Best wishes and Happy New Year.

- Peter Smith

The big news here is that the UK government has announced it will tax bankers' bonuses at 50%, a measure supported by most of the public (but, not surprisingly, by many bankers). It looks like France may follow, but in Germany Angela Merkel says she thinks it is a "charming idea," which we understand is German shorthand for, "we have to show some support for our EU comrades, but we will also be delighted if disaffected bankers would like to relocate to lovely, charming, dynamic, exciting Frankfurt, our own competitor to horrible, smelly, crowded, inefficient old London."*

What does this have to do with purchasing? Well, I wrote some time ago in my blog (in response to a London Evening Standard article) about whether clients of the banking and finance industry are at least partly to blame for the huge earnings in that industry, and some of its consequent problems.

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Every so often you read something that just makes you go, "wow."

Paul Hopes was a 58-year-old with greying hair and a double chin who lived in a modest house outside Reading, a mid-sized town 40 miles west of London. He had risen to the dizzying heights of purchase-ledger manager at the UK head office of Toys 'R' Us. Paul was happily married and served as a volunteer for his local Soccer Association -- as Finance Director. Everyone liked him; he was nice quiet guy. "We just knew him as 'Paul from Finance.' He was a quiet, likeable chap," said a colleague.

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