29 March 2007 | Antony Barton
Annual government efficiency savings of 3 per cent should release £26 billion a year by 2010-11 for front-line services.
In his budget speech, chancellor Gordon Brown also told the Commons he had agreed with departments savings in administrative costs worth £1 billion a year.
He said some £2 billion would be released by budget cuts for several departments, including Revenue and Customs, Work and Pensions, the Cabinet Office and the Treasury.
Total expenditure will rise by £34 billion next year to £587 billion, with £48 billion investment in schools, hospitals, security and defence and infrastructure.
Roy Ayliffe, director of professional practice at CIPS, said the rise of just 2 per cent in public sector spending was less than the rate of inflation, in effect a cut in spending. This would affect suppliers and add to the pressures on public sector purchasers to achieve efficiency savings.
He said it would, however, enable those in procurement to raise their profile by achieving those savings.
The CBI welcomed the 2 per cent cut in the highest rate of corporation tax to 28 per cent, saying Brown acknowledged the need for the UK to compete with other countries.