Procurement saves UK government £3.8 billion

Adam Leach is a freelance business journalist
3 June 2013

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Better procurement has enabled the government to cut £3.8 billion from its cost base and beat its total savings target for the year by 25 per cent, Cabinet Office minister Francis Maude has announced.

Speaking at the Treasury this morning, Maude praised buyers in Whitehall for radically changing the way they work to save taxpayer pounds, with procurement contributing the largest share of the savings. He announced £1.6 billion had been saved by reducing the use of consulting and contractors, £800 million through better supplier relations, £1 billion through centralising procurement across the whole public sector - of which £600 million came from central government - and £380 million on advertising and marketing.

Announcing the figures, Maude, who has overseen public sector spending since the start of the coalition administration, said: “Civil servants across government are changing the ways they work and we are on the way to managing our finances like the best-run FTSE100 businesses. I’m pleased to announce that this work has saved £10 billion, the equivalent of almost £600 for each hard-working family."

In addition to the savings made through improved procurement, transformation of the civil service delivered efficiencies of £1.1 billion, with the 1.5 million square metres of property that has been vacated and the £42 million saved by replacing the Directgov and BusinessLink websites with the gov.uk website identified as strong examples. A further £1.7 billion was saved on projects, with £145 million from reducing project costs on Crossrail. Workforce changes have also saved £3.4 billion.

The government said it intends to increase the savings over each of the next two years, with a target of £15 billion set for 2013/14 and £20 billion by 2014/15.

To support continued progress in making government spending more efficient, it will move to centralise commercial skills within the civil service and adopt a lean methodology to how resources are assigned. It was indicated savings made on consultancy and contractors are unlikely to increase significantly in future.

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