Central government must focus on sustainable savings

16 April 2013

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17 April 2013 | Adam Leach

The Efficiency & Reform Group (ERG) has been praised for helping deliver £5.5 billion in central government savings, but warned by the National Audit Office (NAO) not all are sustainable.

A report, The Efficiency and Reform Group published today by the NAO, verified the £5.5 billion savings attributed to being influenced by the ERG. But it questioned the sustainability of the savings, as both efficiencies from contract renegotiations and an advertising moratorium were down compared with last year. By 2015, the government must deliver £20 billion a year in savings. The ERG is the part of the Cabinet Office responsible for efficiency, including through procurement.

Amyas Morse, head of the NAO, said in a statement: “As a relatively new organisation, ERG has assessed the obstacles it faces and has begun to tackle them energetically. However, it needs to get going on moving beyond the role of imposing central spending controls to placing more emphasis on changes aimed at promoting sustainable savings.”

Savings influenced by ERG and signed off by the NAO, included £1.5 billion from reducing staff costs, £1.8 billion through reducing spending on consultants and temporary staff, and £800 million from cutting expenditure on capital projects. But, while welcomed, these will not contribute to returns in the next spending period.

The report called for the ERG to publish a long-term vision on how it plans to deliver annual savings. In support of this it recommended sustainable reductions in departmental cost bases be differentiated from other savings and that it should report on progress in each area of spend.

Margaret Hodge, chairwoman of the Committee of Public Accounts, said: “Savings grew more slowly in 2011-12 than in the previous year. The ERG needs to up its game if it is to achieve its target of £20 billion savings a year by 2014-15.”

In response the Cabinet Office said in a statement: “This government is working to drive up efficiency, slash costs and help us get ahead in the global race. It’s this tough, new approach which has clamped down on the waste of taxpayers’ money we saw in the past and helped us save hundreds of pounds for every working household."

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