7 January 2010 | Jake Kanter
UK public sector buyers must go further than ever before to cut costs, prime minister Gordon Brown has said.
Unveiling a raft of new savings targets last month, Brown said: “Every penny spent by Whitehall must count.”
Later outlining the plans in the pre-budget report, chancellor Alistair Darling confirmed buyers will be central to rebalancing government finances. The sector now spends £220 billion a year on third-party goods and services.
The measures were set out as heads of prominent government suppliers discussed a radical overhaul of public procurement at a roundtable debate.
The government said purchasers would be expected to contribute to a revised efficiency savings target of £12 billion over the next four years – £3 billion more than identified in the Budget in April 2008.
In addition, it aims to save £5 billion by 2012-13 through scaling back “lower-priority budgets”, such as the NHS National Programme for IT.
“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 said. The government will aim to boost collaborative purchasing and appoint directors responsible for service delivery and contract management to Whitehall departments.
Last year, a record £1.4 billion was saved through joint procurement across the public sector, according to the Office of Government Commerce. Chief executive Nigel Smith said getting maximum value for money has “never been more important than now”.
But the Confederation of British Industry (CBI) and think-tank the 2020 Public Services Trust (2020 PST) said procurement must be reformed.
During a CBI roundtable, with participants from services firms Serco and Interserve, CBI deputy director general John Cridland told SM the government shouldn’t “nibble at the edges”. He said senior officials must be freed up to boost strategic procurement and vendors should be more involved in decision-making.
At a separate London event, Lord Geoffrey Filkin, chair of 2020 PST and honorary CIPS fellow, said the public sector must introduce payment on performance for suppliers, rather than focusing on how contracts are delivered.
Meanwhile, the Conservative party also underlined its commitment to find savings if it takes office. Some of the government’s top efficiency gurus, including Sir Peter Gershon and former defence official Bernard Gray, have joined a shadow productivity board to advise on cutting costs.