Chancellor announces public-sector procurement savings

7 December 2005
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07 December 2005 | Anusha Bradley

Public-sector buyers had secured £1.9 billion in procurement savings by the end of September, according to government figures.

They have a further £100 million to find before next April in order to hit their Gershon efficiency review target for 2005-06.

In 2007, public-sector purchasers must make £5 billion of savings and the year after that £7 billion, in order to achieve an overall target of £14 billion by 2008.

Presenting his pre-budget report (PBR) to Parliament this week, the chancellor of the exchequer, Gordon Brown, said £4.7 billion of the overall £21.5 billion efficiency savings identified by Sir Peter Gershon's review had been achieved.

HM Treasury said the £1.9 billion procurement savings came from across the entire public sector and could not provide a breakdown of the figures. However, local authority procurement savings published in August stood at £56.7 million.

Brown also announced that the Office of Government Commerce (OGC) had achieved its procurement savings target a year early. In 2003, the OGC was given the task of making £3 billion of "value for money" gains by 2006.

The target is separate from the Gershon review and includes savings that the OGC assisted central government departments in making, and cost avoidance brought about as a result of its gateway reviews. It excludes savings made by the Ministry of Defence and NHS Purchasing and Supply Agency.

Top efficiency performers noted in the PBR include the Department of Health, which secured £1.7 billion in savings; the Home Office, which saved £838 million; and the Department for Work and Pensions, which saved £180 million following the renegotiation of an IT contract with supplier EDS.


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