24 March 2010 | Jake Kanter
UK central government departments have set out how they will contribute to savings of more than £11 billion a year over the next three years.
Publishing details of their efficiency plans alongside today’s Budget, most departments are looking to procurement to achieve the cutbacks in the period up to 2012-13.
Chancellor Alistair Darling said the deficit means the savings are vital to protecting frontline services.
Collaborative purchasing, renegotiating contracts and cutting spend on consultants and marketing are prominent in the strategies of all the departments.
Highlights include the Department of Health’s plan to save £1.5 billion by negotiating better terms with suppliers, and the Ministry of Defence’s aim to reduce costs by £700 million through joint buying on construction, food and IT.
In order for departments to work more closely with suppliers and reduce duplication, the Treasury has published a “detailed categorisation” of public procurement spend.
The Budget announcement also revealed the government will create a team of experts who will report to the chief secretary to the treasury and “set new standards” for shared services, standardised processes and efficiency efforts.
Initially this team – including civil servants and private sector executives – will work with the Department for Transport, Department for Business, Innovation and Skills, Department for Environment, Food and Rural Affairs and the Treasury to improve procurement and other business processes.
These efforts will feed into plans to expand the role of shared service centres for functions including procurement and HR.
Four departments will join the DWP’s shared service hub by April 2011. The Treasury refused to name these departments because negotiations are ongoing.
The government also confirmed it will press ahead with plans to cut IT spending and “lower-priority” budgets.
Responding to the Budget, CIPS CEO David Noble said it was clear public spending could be reduced by better procurement but warned the government against making “poor choices and false economies” in the rush to reduce spending, which could have disastrous long-term implications. “It’s crucial that greater value, creativity and innovation, not just lower cost, drives any cost-cutting,” he said.
He called on the government to appoint a ‘minister of procurement’ to “ensure best practice becomes standard practice” and to ensure purchasing decisions are made by professional buyers. “Now is not the time to reinvent the wheel – any procurement change must come from a centralised point so the model is as streamlined, consistent and impactful as possible.”