Govenrment procurement savings – report and evidence out today

The UK Government Public Accounts Committee is publishing a report today which looks at the Efficiency and Reform Group (part of Cabinet Office) drive to cut public spending, and the savings that have been reported.

Margaret Hodge MP, chair of the committee, says this:

The Efficiency and Reform Group... has made a good start, but a lot of that is down to key players in government pulling in the same direction with a high profile target in mind. In the long term there will need to be a much deeper change in the cultural and institutional structure of government.

“The Group reported to us that its actions have so far led to £3.75 billion worth of efficiency savings. Sustaining these savings will be a challenge, requiring senior civil servants to strengthen their implementation and project management skills.

“We welcome the level of detail in the Group’s reported savings. This degree of transparency is a big improvement on the very poor standard of reporting by departments.

“Less clear are the respective responsibilities of the Group and individual departments for achieving value for money. The Group can now intervene in the management of major projects, but departments must remain accountable for their own projects and not duck responsibility.

“The Group has a huge task ahead in making an impact beyond Whitehall. About half of the £40 billion efficiency savings required over the next three years will have to be achieved by local public sector bodies over which the Group has no direct control.

“The Group has a short-term focus on cutting government spending but is less clear on what its aims are in the longer term. The Group needs to specify what constitutes success and how progress will be measured.”

Interesting comments. We understand that a detailed breakdown of the savings will be published later today - you may remember we commented on the need to have clear evidence of the £3.75 billion claimed.

A big part of the savings are "procurement" savings, and we suspect a large percentage of these is down to what we might call "demand management". And the drop in spend in areas such as consulting, marketing and recruitment, through basically stopping much of the work, has been well reported.  So it will be interesting to see just how much this accounts for, and the source of other savings.

And, as Hodge points out, the future challenge is significant, given that demand management cannot give ever increasing incremental savings, and there is a need to address the public sector beyond Whitehall, which has been the (pretty successful) focus for ERG to date.

We'll come back with more when we've had a good look at the savings reporting and evidence.

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  1. Final Furlong:

    Indeed Peter – please keep us informed.

    They have stated what they might be (see link, but I’ve extracted the key points). But it would be great to see the detail. Not a lot to do with ‘procurement’ from what I can see on the website…and those assigned to ‘smarter procurement’ look a little dodgy. The Marketing piece is simply demand management not procurement, the £360m on common goods and services couldn’t have been ‘saved’ yet because they’re contracts which have only just been let (and which contract are these…?), and the £800m weren’t delivered by procurement, but by a team led by Adrian Kamellard.

    Reducing non-essential discretionary spend
    • £870 million saved by cutting departmental spend on consulting
    • Nearly £500 million saved by reducing spend on temporary agency staff

    Smarter procurement
    • £400 million saved by taking stronger control of our marketing spend, we have reduced spend through the Central Office of Information on relevant categories by 80 per cent.
    • £360 million saved by centralising spend on common goods and services
    • £800 million saved from renegotiating deals with some of the largest suppliers to government, equivalent to 6 per cent of a full year of spend with those suppliers.

    Major Projects and ICT
    • £150 million saved from 2010/11 budgets for government’s major projects, by halting or curtailing spending; and
    • £300 million saved by applying greater scrutiny to our ICT expenditure, departments have stopped or reduced spend on low value ICT projects.
    Property and estates
    • £90 million reduction in the ongoing cost of our Property estate by exerting better control over lease renewals.

    A smaller civil service
    • An equivalent of £300 million saved on 2010/2011 salary costs by reducing the size of the civil service, for example by putting stronger controls on non-essential recruitment. This has contributed to a reduction in the size of the Civil Service of more than 17,000.

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