25 March 2009 | Jake Kanter
The public sector could save as much as £2.5 billion a year through improved contracting and reducing procurement delays, according to the Confederation of British Industry (CBI).
In its proposals for next month's Budget, the CBI called on the government to avoid making "crude" cuts to procurement budgets and focus on driving supplier competition to get the best value for taxpayers' money.
In an open letter to Chancellor Alistair Darling, the business group said creating a level playing field between private, public and third sector suppliers would help generate innovation and new technology. Such a move would also maximise savings and deliver better quality services.
Kevin Beeston, chairman of the CBI's Public Services Strategy Board, said: "We all need to cut our cloth to reflect these constrained economic times, including the public sector. The government has few options left. Greater use of competition is the most effective tool it has at its disposal to help secure higher-quality services and better value for money. The best providers, regardless of sector, must be given the opportunity to deliver services."
The CBI added the government should ensure purchasing processes are as efficient as possible, and that contracts deliver value over the long-term.