Pre-budget report: Darling outlines savings targets

9 December 2009

9 December 2009 | Jake Kanter

Procurement savings are at the heart of plans to rebalance UK public finances.

Unveiling the pre-budget report in parliament today, chancellor Alistair Darling said improving collaborative purchasing, cutting consultancy spend and streamlining back-office functions would be crucial to delivering the £12 billion savings announced earlier this week.

Darling also said the government has launched a “root-and-branch review to examine every area of spending to drive through efficiency, cut waste and cut lower-priority budgets”. In addition to the £12 billion in improvements, the government plans to save £5 billion by 2012-13 by reducing spend on a number of programmes. Included on a shopping list of cuts are scaling back the NHS National Programme for IT, outsourcing inefficient prisons and introducing smarter procurement of rail franchises and new trains.

“These are tough choices, but they are essential if we are to stick to our plan to halve the deficit and protect the front line,” Darling told MPs.

Going further, the NHS will be expected to reduce costs by £10 billion a year by 2012-13. This will mean improving the way it buys patient services and “driving down” procurement and back-office costs. Schools have been told to save £800 million over the next four years by doing more joint buying, while the Department for International Development must improve its buying to help to save £593 million a year by 2013-14.

But James Fothergill, head of public services policy at the CBI, told SM there was “very little detail” on how procurement savings would be implemented and delivered. “We would like to see more information on how the government plans to re-engineer frontline and back-office services.”

Elsewhere, the report said 95.7 per cent of central government bills are paid in 10 days, an increase of 24 percentage points on November 2008. The government introduced this policy to improve cash flow for businesses.

As part of the government’s response to the Glover review last year – which aimed to improve contracting with small suppliers – all deals above £20,000 will be published online in 2010. In addition, improved information for SMEs on public procurement processes will be introduced in January next year.

The government will also publish a “policy through procurement action plan” later this month. This will demonstrate how it intends to use purchasing to deliver policies on apprenticeships, skills and employment, small businesses and low-carbon resource efficiency.

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