Deloitte: Debt of UK Government 79 per cent of GDP

20 November 2014 Consultancy.uk

At current state, the debt of the UK Government is as high as £1.4 trillion, which is 79% of its GDP. This debt is caused, among others, by the Government’s decision to borrow funds to balance its deficit. This decision is part of its deficit reduction plan and burdens not only the tax payer but also UK’s financial security, conclude Deloitte and Reform in their report. As a result of this, the UK Government should not only focus on reducing its deficit but also its public debt.

The ‘State of the State 2014’ report, recently released by professional services firm Deloitte and think tank Reform analyses the operation of the UK public sector. In this year’s edition, the analysts focussed on the Government’s deficit and the challenges the Government faces in successfully completing the deficit reduction plan.

As a result of the global financial crisis, the UK Government’s deficit reached an all-time high in 2010, when its annual spending was £159 more than its income. Since then, the Government has set out to reduce its annual deficit, and has, according to the figures, been successful at this so far. Looking at the fiscal balance of 2014-2015, it can be concluded that the UK Government, with an ‘income’ of £648 billion and a spending of £732 billion, faces a deficit of £84 billion for this year. A number which is considerably lower than the £159 in 2010, but is still £7 billion a month, just over £1.6 billion a week, or £0.23 billion a day. The researchers state that if the government is able to complete its deficit reduction plan, the deficit will be eliminated by 2018-2019 for the first time in 18 years.

Declining deficit

 

Although the Government is on track, Deloitte states that the toughest decisions are yet to come, decisions that will involve public spending cuts that will implicate many public entities. According to the report, 80% of the entire deficit programme is to be achieved by cuts in public spending. The first round of which was announced in 2010 and a second in 2013, but still 43% of the cuts need to be made in 2015 to meet the requirements. As most public money is spend on social protection (30%), health (19%), and education (13%), these cuts could create resistance and a real challenge for the Government, but only if those cuts in spending are met, will public spending as a percentage of GDP return to its 2001 level.

Public money spend on

However, Deloitte and Reform do point out that reducing the deficit is not enough. The UK Government should also turn its attention to reducing its debt, as its public sector debt has multiplied by three in the past 10 years as a result of the Government borrowing money to fund its shortage in spending. In 2014-2015 the total of the UK Government’s public sector debt is £1.4 trillion, which is a staggering 79% of the GDP. This is again a 2% rise in GDP from last year, when the percentage of 77% or £1.3 trillion. The UK’s current debt level is the ninth highest in the EU as percentage of GDP, and at this point, the Government spends more on debt interest, £1 billion a week, than it spends on education. This issue must be addressed accordingly, say the researchers, as this debt creates excessive financial insecurity and a big burden to the tax payer.

Public Sector net debt

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Project management industry adds £156 billion of value to UK economy

15 April 2019 Consultancy.uk

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.

Outlook

Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”