Chancellor counts on government buyers to deliver £6bn in savings

21 July 2004

22 July 2004 | David Arminas

Gordon Brown has asked government purchasers to deliver £6 billion in savings over the next four years in an effort to boost investment in front-line services.

The savings - announced in the chancellor's spending review last week - are part of the government's ambitious target of getting £21.5 billion of efficiency gains from the public sector by 2008.

These savings will come from a mixture of 105,000 job losses and lower operating expenditure, including procurement.

Targets for the latter will be split almost equally between central and local government (see News).

The spending review is based on the controversial efficiency study by Sir Peter Gershon, former head of the Office of Government Commerce (OGC), the Treasury's procurement advisory body.

Gershon's study, Releasing Resources to the Frontline, published at the same time as the spending review, specifies annual efficiency gains but there are few details about how or where purchasers will be asked to make these savings.

A recent National Audit Office report showed that purchasers just surpassed the OGC's target of £1.6 billion value-for-money savings in three years to 2003.

It also set out a target of £3 billion savings by 2006 but noted that there are still some departments that have trouble making and measuring savings.

Chris Browne, e-procurement strategy manager at the Environment Agency, said the £6 billion "seems achievable when you think of how much is spent overall by government", upwards of £120 billion annually. But he said the problem was trying to co-ordinate procurement across decentralised organisations.

Earlier this month CIPS warned the government that job losses among purchasing staff could hamper savings targets and urged more departments to create top-level purchasing posts (see News, 8 July).




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