Service-saving role for buyers

29 March 2010

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

Defence: £700m

Collaborative buying, cutting consultancy and marketing

Environment: £194m

Improving buying and ending low priority IT projects

Transport: £90m

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

Education: £1.1bn

Schools buying together

Work and Pensions: £350m

Better value from existing contracts, reducing demand

Justice: £343m

Contract renegotiations, shared service centre

Business: £300m

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

Treasury: £261m

Better IT management, cutting consultancy, improving use of office space

Energy: £30m Shared services and buying

 

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