Demand control 'key to cuts'

6 July 2010

6 July 2010 | Nick Martindale

UK government spending cuts will work only if procurement savings are accompanied by demand management programmes, senior public sector buyers have told SM.

In the 22 June emergency Budget, chancellor George Osborne pledged spending cuts of 25 per cent in departments by 2014-15, with only health and international aid protected.

Following that, a letter signed by Prime Minister DavidCameron and Deputy Prime Minister Nick Clegg and obtained by SM was sent to all public sector workers asking them to identify ways of saving money to avoid job losses.

John Belza, head of procurement and property services at the Department for Culture, Media and Sport, said: “The Budget was what I’d expected but 25 per cent will be a challenge. It’s doable but only if we adopt a demand management perspective. We should also scrutinise and stop things before they’re even started.”

David Thomas, commercial director at HM Revenue & Customs, said: “We’re into clear demand management here. If you talk about certain commodities, one way is to reduce the range. We’ve done it very successfully and now have the lowest office cost per employee in Whitehall.”

David Smith, commercial director at the Department for Work and Pensions, said his department would be working closely with stakeholders to help them decide where the cuts could be made. He also said procurement “will be looking at the commercial agenda and demand management. That’s what our governance looks like.”

Michael Hawdon, a public sector partner at PricewaterhouseCoopers, said the government would need to engage the private sector. “There will be a requirement for parties on both sides of the contract to gain a deeper understanding of needs and objectives.”

David Pointon, head of procurement at Portsmouth City Council, said: “We have an unprecedented challenge and it needs a complete rethink.” This could involve councils combining spend with other government departments and making better use of purchasing cards.

Public sector cuts could have a devastating impact on small suppliers. John Boother, managing director of Berkshire-based software supplier Autoscribe, said: “We’ve been involved in several projects that have come to a dead halt because people don’t know if the budget that was approved before is going to be confirmed or not.”

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