Welcome to the real world

How is travel management in the public sector going to be affected by the looming budget cuts? Bob Papworth reports

"Dear Chief Secretary, I'm afraid there is no money. Kind regards - and good luck!"

When outgoing treasury secretary Liam Byrne's flippant note was made public back in May, the hapless MP for Birmingham Hodge Hill protested that he had only meant it as a joke. Whether his constituents will see the funny side - Birmingham has one of the UK's highest concentrations of public sector jobs - remains to be seen. New boy George Osborne, Tory chancellor, and his Lib-Dem colleague, were distinctly not amused.

Nevertheless, Byrne's remark, though ill-judged, wasn't that wide of the mark. The public sector net debt currently stands at around £890 billion. Public sector net borrowing is expected to top £45bn in 2010/11, while receipts will add up to roughly £35bn.

As Fred Astaire so presciently pointed out back in 1955, something's gotta give - and, in announcing his £6bn first-tranche of spending cuts, Osborne has made clear exactly what it is that's gotta give.

The Department for Communities and Local Government is having to make £50 million in "back office savings and running costs"; the NHS has to make 3 per cent "efficiency savings"; the Department for Work and Pensions has to find £200m from "back-office efficiencies"; Energy and Climate Change is expected to save £85m from "administrative efficiencies"... the list goes on.

The chancellor has made clear that he wants as far as possible to protect frontline services - the bits that the electorate sees - and that the biggest cuts will be made behind the scenes. Savings of £1.15bn, the Treasury says, are to come from "discretionary areas like consultancy and travel costs".

However, while it's relatively easy for 'Dave' Cameron to eschew his official car and walk to Westminster (to the undisguised horror of his security team), it is rather more difficult to see where further, bigger savings can be made on the travel front.

Nigel Turner, director of public sector and industry affairs for Carlson Wagonlit Travel, says: "I suppose the key thing is that the public sector cuts have been around for a while now, and they are already having an effect. We are seeing our public sector clients changing the way they travel.

"Spend-wise, it has dropped about 18 per cent on Q1 of last year, but the number of transactions has remained pretty stable. They are buying better and they are buying differently - less air and less hotel business, but more train tickets. There's a definite switch from air to rail."

Turner goes on: "The public sector, by its own admission, has not been able to control its travel spend as well as a lot of private sector organisations, partly because they are so very large and diverse.

"However, we have made considerable inroads. We now work a lot closer with our public sector clients, and they are a lot more willing to listen, and a lot more willing to change their policies and travel patterns.

"There is still scope for more saving. Obviously the first area is to question whether you travel in the first place. Jobs will disappear, so numbers will go down, which will give greater control over who travels. And there are still savings opportunities arising from changed customer behaviour - for example, by booking farther in advance."

Trevor Elswood, group managing director at hotel booking agency BSI - which numbers the Crown Prosecution Service among its public sector clients - tends to agree.

"It goes without saying that there are challenging times ahead, but this is something that the hotel industry and public sector travel managers can plan for," he says. "At BSI, we have certainly seen great interest in new ways of thinking from public sector clients who are seeking a third way from the traditional travel management company and hotel booking agency suppliers. Public sector clients have been embracing technology and cost-avoidance models such as internal meetings-space management and robust travel authorisation processes, along with the cost-reduction opportunities that apartments bring."

What of the buyers themselves? Matthew Griffin, head of business services at the Department for Work and Pensions (DWP), was under no illusions that travel would escape the attentions of immediate efficiency cuts - and was quickly proved right.

"These are interesting times in the public sector," he says, "especially within business travel, which is seen as one of the areas where they can make big wins - perhaps not as large as they would like, but quick nevertheless."

The scale of the potential savings was limited, at least in the DWP's case, because the economic downturn increased the workload of the department.

"If you look at our unit rates, they have come down, but volumes have gone up dramatically," Griffin explains. "That's because when the economy is doing badly, we have a lot more work to do - we have recruited some 20,000 extra temporary staff in the past 18 months. That said, although there was only an 8 per cent increase in spend last year, volumes have increased by 18 per cent. We have had great success in reducing our average transaction rate, but the volume increases have negated any savings we would have made."

The business services' chief is being unduly modest. The economy may be partly to blame for lower-than-expected savings, but the prime reason there is less fat to trim is that an established - and ongoing - efficiency drive has already dramatically reduced costs.

A continuing campaign to force the department's travellers out of their cars and on to trains "has proved really successful," says Griffin. "We have had a 20 per cent rise in rail transactions over the past two years and a reduction of 30 per cent in 'grey' mileage."

A revised travel policy, introduced last month, takes that a stage further by outlawing the use of 'any time' train tickets.

The DWP's hotel spend is also under scrutiny. The DWP books some 140,000 room nights a year, a figure which has remained broadly stable despite the increase in travel volumes.

A consolidated hotel programme, initially focused on key cities, has generated savings of around £250,000 to date, and is now being rolled out across the UK.

"The real key to future savings lies in travel avoidance," Griffin believes. "For example, we have invested heavily in video-conferencing and telepresencing - that's really a technology issue, but we have taken a lead. We're not yet using it as efficiently as we would like, but that will come.

"Basically, we are trying to change travel behaviour, and we have won great support for that, both from the executive and among travellers themselves."

The May election result, of course, has had its own impact on the travel behaviour and patterns of a sizeable number public sector workers, as Liam Byrne could probably testify. Even at the height of summer, those platforms at Birmingham International rail station can be pretty draughty...