Tighter budgets on the way

12 April 2010

13 April 2010 | Lindsay Clark

Buyers are set to face increased pressure following the UK’s general election, as debate intensifies over the public sector’s ability to achieve efficiency savings through better purchasing practices.

The Conservatives have said, in government, they could avoid Labour’s proposed National Insurance (NI) rise by making £6 billion savings from this year’s budget without cutting front line services, on top of savings already promised by Labour. The Tories would renegotiate current supplier contracts for price cuts and make operational changes to reduce costs.

Business leaders backed the claims, writing to the Daily Telegraph saying removing “arcane procurement rules” could contribute to savings.

Some public sector procurement experts have, however, cast doubt over the assertions. “There is going to be blood if the Tories win,” said one, who asked not to be named.

Historic corruption had created the need for procurement rules, Colin Talbot, professor of public policy and management at Manchester Business School, told SM. “You cannot just strip them away without creating problems again.”

The European rules might stop the renegotiation of large public sector contracts without them being re-tendered, Ian McPherson, director of operational transformation at Tribal, a public sector consultancy, said. “That does not mean you cannot be clever, and manage cost effective procurement. But it takes time.”

Peter Smith, managing director of consultancy Procurement Excellence, said buying practices would become exposed, no matter what the outcome of the election.
“Until now efficiency savings have been kept within the department. They are now told the budget is going to be cut… and to assume efficiency savings will make up the gap. If the saving is real you can do the same things; if not, then you have to make cuts.”

 Liberal Democrat leader Nick Clegg said the Conservative’s NI would have to be paid for by other tax rises, probably VAT, and Tory efficiency savings figures were not robust.

Labour has also said government contractors would have to offer workers a “living wage” of £7.60 as part of the tendering process. 

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