30 March 2010 | Jake Kanter
UK public sector buyers will play a leading role in achieving government‑set savings targets of more than £11 billion a year over the next three years.
Publishing details of their efficiency plans alongside last week’s Budget, all central government 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 protect frontline services.
But opposition parties attacked the plans. The Conservatives said waste was rife under the government, while the Liberal Democrats criticised the lack of detail in the savings strategies.
Collaborative purchasing, renegotiating contracts and cutting spend on consultants and marketing are prominent in the plans of all the departments. Moving procurement and other functions into shared service centres will also be a high priority.
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 cut costs by £700 million through joint buying on construction, food and IT.
The Budget announcement also revealed the government will create a team of private and public sector experts to “set new standards” for shared services, standardised processes and efficiency efforts.
There were also promises to increase spending with small suppliers by 15 per cent and publish more contracts online.
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” that could have disastrous long-term implications.
He called on the government to appoint a “minister of procurement” to ensure buying decisions are made by professional buyers.
Susan Anderson, CBI director of public services, told SM the savings targets are realistic, but more detail is needed. She said departments need to be held to account so savings are measured and delivered.
This follows a report by the Institute of Directors, which said better buying could save the government £25 billion a year. It criticised current arrangements for the sector’s £220 billion annual procurement spend as “fragmented” and organised in small buying points.
Budget 2010: Overall savings targets by departments
Health, savings target: £4.35bn Contract renegotiations, cutting energy, improving IT
Collaborative buying, cutting consultancy and marketing
Improving buying and ending low priority IT projects
Streamlining finance, HR and procurement
Home Office: £350m
Police services to improve procurement and IT
Local government: £2.3bn
Collaborative buying, better back office services
Schools buying together
Work and Pensions: £350m
Better value from existing contracts, reducing demand
Contract renegotiations, shared service centre
Improved buying and cutting consultancy and marketing
International Development: £150m Reducing price of goods and services, improving value
Culture, Media and Sport: £60m Joint buying, cutting marketing and consultancy
Cabinet Office: £25m
Improved purchasing and use of shared service centre
Foreign Office: £50m
Corporate services reform
Better IT management, cutting consultancy, improving use of office space
Energy: £30m Shared services and buying