Reducing costs could limit public spending cuts

13 September 2009

14 September 2009

Scrapping procurement projects and cutting consultancy spend could help the UK government save £50 billion by 2012, according to a report.

The paper by the TaxPayers' Alliance (TPA) and the Institute of Directors (IoD) published last Friday includes 34 steps the government should take to reduce costs by £50 billion over the next three years.

It said the government could save more than £1 billion by abolishing the much-maligned NHS National Programme for IT. The project to digitise patient records is "way behind schedule" and where it has already been delivered, some aspects "don't work properly", according to the review.

Other projects the TPA and IoD would like to see scrapped include the Building Schools for the Future programme and the identity card scheme, which could save more than £2.3 billion in total.

The report said the public sector could cut costs by a further £1 billion by halving consultancy spend. It said many businesses have made deep cuts to third-party advisory services and the government should follow suit.

In addition, the study suggested introducing a one-year pay freeze across the public sector and cutting budgets for non-ministerial departments.

Miles Templeman, director general of the IoD, said: "Businesses are right now making savings and cutting back on costs to get through the recession, and there is no reason why the public sector should not have to do the same. Any cut in spending naturally has the potential for some pain, but our list shows that large sums can be saved without hurting vital services."

It follows Conservative party leader David Cameron's pledge last week to publish all government purchases over £25,000 in a bid to make savings of £120 million a year (Web news, 9 September 2009).

Ahead of the Trades Union Congress (TUC) conference opening in Liverpool today, general secretary Brendan Barber warned against cuts. He told BBC's Radio 4 reducing the deficit would be achieved "more than anything else if we achieve strong economic growth".

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