The government spending cuts will prove tough for workers in the public sector, say travel industry bosses.
The Lib-Con coalition government has announced a 20% overall cut in departmental spending, and around half a million job losses.
Nigel Turner, director of programme management at Carlson Wagonlit, said the cuts will prove a “major challenge” for the government.
The cuts are not a shock, however, and public sector clients at the travel management company have already started to prepare, said Turner.
“We’ve already been doing lots of work on quick wins – how they can change their procurement habits to make better use of buying travel,” he said.
“It mainly revolves around trying to implement best practice across the government, to consolidate more the way they do things and to look at common policies.”
Improving the management of travel, and reducing its cost, is vital if the government is to be successful in its cost-cutting efforts, according to Dean Forbes, UK executive VP at travel and expense management company KDS.
Forbes said the government must “avoid multiple contracts and policies for travel management and hotel booking, which in turn lead to significant – and therefore potentially costly – price differentials”.
Centralised procurement means data can be better managed and avoids issues of inconsistencies, he added, which means the public sector can “leverage” its weight.
KDS has been working with the Ministry of Defence to reduce its travel spend by £35 million a year, through enforcing travel booking policy compliance and controlling spend – targets that are being met, said Forbes.
Ian Burnley, Expotel’s CEO, said public sector clients using the hotel, travel and event management company have achieved savings of 30% since the general election.
He said better discipline and planning over the past few months has led to the reduction, often led by travel procurement managers.
Burnley added: “The most important part of controlling hotel and travel spend is to ensure only essential trips and meetings are undertaken.”
Turner said a number of government departments have put in more controls, and now they know their budget they will be able to start planning better, and to start travelling again.
“Nobody has been quite sure what budget they have,” he said. “There have been huge cutbacks already on travel, just through people not knowing what they are allowed to spend. In general, they have not been travelling.”
Turner is hopeful that the job cuts announced won’t affect the travel industry too badly. “In the business travel arena we’ve seen a far faster move to recovery on business travel than we’ve ever expected. We think it is a more healthy position than predicted.”
One area of concern, however, is the planned rise in the caps on the cost of rail travel, which Turner said is a “double blow” to public sector workers, who often travel by train.
The government announced it would be raising the cap to 3% above inflation on regulated rail fares, in a bid to shift some of the cost of rail subsidies it provides onto the user rather than the taxpayer in general.
According to Matt Selby, sales and marketing director at Capita Business Travel, the rise will hit commuters hardest as these are the main routes with regulated fares.
Travellers on busy commuter routes, with standing room only, will question why they are paying more, but not getting a better service, said Selby.
The rail companies will also need to adjust their rolling stock to reflect the inevitable move away from first class, he said.
“It’s not an easy thing for them to turn around,so they’ll have to be more creative in terms of yield management,” added Selby.
The rise in ticket prices may also mean travellers favour air over rail on some routes, but it’s early days to make real predictions, said Selby: “There will be an impact, but we can’t really quantify it at the moment.”
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