Watch out for a surge in Government contracts early next year

25/09/2009 by Steve Barclay.

I suspect we will see a surge in last minute Government contracts being signed early next year before the General Election. Ministers can then claim credit for any success from these projects in the future, whilst the cost attached is picked up by the next Government. It will also allow them to cite these projects when trying to justify the massive debt already incurred. As many of these ministers are also about to lose their seat and so will soon be looking for work, they may also be tempted to curry favour with a potential future employer.

Firms seeking Government contracts will also be in on this.  The next Government‘s Ministers starting their careers will often delay signing new deals until they have had time to understand their departments.  Even if they want to sign, an emergency budget straight after the election will likely tie their hands and require quick cuts (even “savage cuts“ in the very unlikely event that the Lib Dem leader gets his fantasy of playing Prime Minister).  Firms will therefore push to bring forward any Government contracts whilst the current minister is still at their desk. 

The loser will be the taxpayer (again).  We will all have to pay for these contracts signed in haste, by ministers heading for the exit door.  It is not the best environment in which to negotiate a hard bargain.  Expect them to sign quickly whilst they still can, further increasing the error in the Government‘s debt forecast.  Last year the Government forecast they would borrow £40 billion this year.  It now looks like being £200 billion - more than five times an estimate made only last year.  How much will be on the country‘s credit card by the end of their last minute dash to the shops?

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