CBI members 'sceptical' about efficiency targets

13 April 2005
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14 April 2005 | Cara Whitehouse

Almost 90 per cent of businesses believe the government will miss its three-year, £21.5 billion efficiency target, according to a member survey by the Confederation of British Industry (CBI).

Scepticism is pretty widespread, with 37 per cent of the 404 respondents, who were all at board-level or above, "not at all confident" that Gershon efficiency goals will be achieved.

Another 49 per cent were "not very confident", according to the survey.

Only 4 per cent of respondents expressed any confidence.

A senior policy advisor at the CBI told SM: "There is a general perception that the public sector is not as good at improving efficiency as the private sector.

"The system is a monopoly, not a profit-making structure and its incentive is not always the bottom line. Value for money is one of a number of priorities to be balanced within a political context."

A Treasury spokeswoman said private-sector profits and the public sector's search for value for money and improved delivery of services are not comparable.

She pointed out that some CBI members sit on the efficiency programme board.

"We have already made good progress with £2 billion of efficiencies delivered since the pre-budget report," she added.

Around £14 billion of the £21.5 billion savings are to come from procurement, according to the OGC (see News and Feature, 3 March).

But the CBI spokesman said that there were fears that savings targets could lead the government to buy on the cheap.

"Procurement reform is one of the things that keep businesses awake at night," he said.

"There is concern that to meet targets the government will trim budgets and squeeze suppliers."

A spokesman for the Federation of Small Businesses said its members are also concerned that efficiency savings "could spell reduced opportunities for them to get government contracts".

He said awarding large contracts to large companies will seem a safer way for authorities to drive efficiencies.

Graeme Leach, chief economist at the Institute of Directors, confirmed its members were similarly sceptical.

"There is unease about many efficiency gains hinging on IT projects, which do not have a good record of success.

"Members fear savings may not be realised, necessitating a rise in taxes that could then fall on business."

The CBI added it could run the survey again in six months' time after the general election and any policy changes that might follow.


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