CBI calls for urgent action on poor public procurement

18 October 2009

19 October 2009 | Jake Kanter

Cutting waste and reducing "lengthy" procurements could help the UK government save at least £13 billion by 2016.

That's the view of business group the Confederation of British Industry (CBI), who made the claim in its pre-budget report submission Doing more with less: A credible strategy for restoring the public finances.

The report, out today, said significant improvement had been made on purchasing, but "delays and administrative burdens" still inflate project costs for government and the private sector.

The CBI said urgent action was needed to address cost overruns as a result of poorly managed procurement processes for complex programmes and manufactured products, which could save the government £13 billion by 2015-16. This included improving Ministry of Defence procurement, as pointed out in the Gray review published last week (Web news, 15 October).

Halving consultancy services and advertising budgets could save £3 billion over the next seven years, the CBI said. By reviewing what is essential and what is not, it said the government must determine where consultants bring real value and what promotional campaigns have the most impact.

In addition, it added the public sector could save £30 billion by 2015-16 by sharing back office functions and outsourcing them to private sector suppliers. As part of this, £24 billion could be saved through collaborative procurement.

The report explores all areas of public sector spend and suggests, pay freezes, better management of staff sickness, and a new approach to public sector service delivery are all ways to help save money.

John Cridland, CBI deputy-director general, said: "Our calculations suggest that an extra £120 billion will need to be taken out of current spending to achieve budget balance by 2015-16. Such savings cannot be achieved by tinkering at the edges, but will require radical public sector reform.

"We have identified how the required savings might be achieved by re-engineering the ways in which public services are delivered. By introducing new technology and competition, eliminating waste and inefficiency."

SMoct2009

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