Procurement drives government's £3.75bn savings

3 August 2011

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3 August 2011 | Adam Leach

The amount of money spent by central government has been cut by £3.75 billion in 10 months, an independent audit has revealed.

Through a combination of cutting services, re-negotiating contracts and consolidating buying power to drive down costs, the Cabinet Office was able to reduce the amount it spent between May 2010 and March 2011 by £3.75 billion. While some of the savings have previously been alluded to, the latest figures have been confirmed by an independent audit from within the Cabinet Office.

Included in the overall cost reductions is more than £1.5 billion savings from changes to government procurement. Marketing spend through the Central Office of Information (COI), which the Cabinet Office closed down, was reduced by 80 per cent over the period. This generated savings of £400 million. A further £360 million savings were made by centralising procurement for common goods and services, such as stationery, while £800 million resulted from renegotiating existing deals with some of the government’s largest suppliers.

Francis Maude, minister for the Cabinet Office, said: “We promised to drive out inefficiency and unjustifiable costs in central government. Following an independent audit, I can confirm that these measures have saved central government departments £3.75 billion.”

He went on to say that were it not for this action, the money would have been “frittered away” on unnecessary buildings and government advertising projects

In December Maude said coalition government spending policies would produce £3 billion in savings in less than a year.

The breakdown of reductions:

• Consultancy spend reduced by £870 million
• Temporary agency staff expenditure cut by almost £500 million
• Marketing spend reduced by £400 million
• Common goods and services spend down £360 million
• Expenditure on suppliers cut by £800 million through contract renegotiations
• Halting or curtailing of major projects produced savings of £150 million
• Increased scrutiny on low value ICT projects saved £300 million
• Better management of lease renewals saw spending fall by £90 million
• Salary costs for 2010/11 reduced by £300 million as a result of cutting 17,000 civil service roles.

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