Buyers face uncertain future

22 October 2010
22 October 2010 | Lindsay Clark

Central government buyers will not know the full effects of the spending review – including job losses – for a few weeks.

Individual departments are producing business plans which will include the shape of their procurement teams, and until these are finalised uncertainty remains.

Speaking to SM, John Collington, head of procurement for the Efficiency and Reform Group (ERG), said he could not comment on job losses within the profession as it was up to individual departments to set out their plans in line with the budgets they have been set by Treasury.

“Each department will have business plans, within those I would assume we will start to see the head count reduction numbers and how they are going to work within the financial settlement with the next four years.”

Last week (20 October) Chancellor George Osborne revealed that central government administration budgets would be cut by a third over the next four years, as part of a public sector-wide push to reduce spending and  the deficit.

During his spending review speech to UK Parliament, Osborne confirmed that job losses would result from the cuts. “That is unavoidable when the country has run out of money.”

Collington said his analysis on government buyers suggests, on average, each was in control of around £14 million spending. As the sector moves towards greater sharing of categories between departments and other government bodies, he expected that figure to increase.

“I believe it can be improved as a consequence of the changes we have embarked upon.”

The cross-government procurement initiative had moved forward on three broad fronts.

Cabinet Office minister Francis Maude has led on contract renegotiations with the largest government suppliers, which a department statement said is expected to save £800 million.

The ERG is identifying categories for centralised procurement based on aggregated demand across departments, such as ICT, and categories for spot buying such as professional services, Collington said. 

“The minister has said that centralisation of category procurement is going to happen and we are not going to make that happen through collaboration in the hope that people will come along and participate. It will be done through mandatory policies.”

This would allow savings of £400 million per annum for the next four years, he said.

“We have identified of £12 billion of commonly used goods and services that currently today are predominantly bought in departments. Lets start sourcing and making those categories on a pan government basis.”

Collington said more detail of the new model for central government buying would be revealed in the next few weeks. It will be fully operational in April next year.

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