25 March 2010 | Jake Kanter
As part of the 2010 Budget UK central government departments will be expected to save £11 billion a year, over the next three years.
Each department has committed to its own efficiency savings target and provided some information on how they intend to achieve it. Common themes are cuts to marketing and consultancy spend, more collaborative deals and increased use of shared services centres.
Here’s what the departments say their announcements mean for procurement:
Department of Health, savings target: £4.35 billion
Purchasers will be required to save £1.5 billion a year through negotiating better prices with suppliers. Cutting energy use and adopting a “new approach” to the National Programme for IT will also be on the agenda.
Ministry of Defence: £700 million
The department plans to save up to £120 million by boosting collaborative procurement on construction, food and IT. A further £30 million will be saved by reducing the use of consultants and spend on marketing and communications.
Department for Environment, Food and Rural Affair (Defra): £194 million
Defra said it was “developing plans” to save £100 million on finance, HR, ICT and procurement administration costs. This will include ending “low-priority activities”, such as some IT projects, and improving efficiency. In addition, £25 million will be shaved from its consultancy bill by 2012-13.
Department for Transport: £90 million
Functions, including finance, HR and procurement, will be “streamlined” saving £40 million. Consultancy and marketing spend will be reduced by £30 million and £15 million respectively. The Highways Agency will also contribute £90 million savings to the DfT’s pot by 2012-2013, by making highways maintenance more efficient.
Home Office: £350 million
Committed to achieving £350 million savings a year by March 2013 through its own work and that of its arms-length bodies. In addition, the Police Service will deliver (by 2012-13) £346 million savings from procurement, IT and business support functions.
Department of Communities and Local Government: £2.3 billion
The department itself will be expected to contribute £200 million savings, while local authorities will cut costs by £2.1 billion. Of the department’s target, £130 million will come from back office and purchasing efficiencies, as well as cutting consultancy and marketing spend. Councils will also look to boost collaborative procurement.
Department for Children, Schools and Families: £1.1 billion
Schools will expected to substantially increase joint buying in a bid to contribute £650 million savings. DCSF will help schools through its procurement programme and a shared schools business manager will support up to 250 groups of mainly primary schools each year.
Department for Work and Pensions: £350 million
Purchasers will save up to £180 million getting better value out of contracts by working closer with suppliers and cutting demand. Other savings will be made through improved management of property and streamlining support services.
Ministry of Justice: £343 million
Buyers have been working to renegotiate deals and will continue to do so in a bid to save £25 million by 2012-13. The MoJ is also setting up a shared service centre for HR, payroll, finance and procurement transactions.
Department for Business, Innovation & Skills: £300 million
Committed to saving £180 million though improving procurement processes, and cutting marketing and consultancy spend.
Department for International Development: £150 million
Procurement professionals have been asked to make “significant savings” by reducing the price of goods and services, improving value and buying collaboratively. The department also said it was in a position to halve consultancy spend because it has built capability in finance, IT and procurement.
Department for Culture, Media and Sport: £60 million
Joint buying across DCMS’s non-departmental public bodies will help save £15 million, while reductions in marketing and consultancy spend will cut costs by a further £35 million.
Cabinet Office: £25 million
“Smarter procurement” will be adopted to save £7 million, the department said. In addition, improving use of consultants and building on the success of its shared service centre with the DWP will deliver a further £18 million in efficiencies.
Foreign & Commonwealth Office: £50 million
The department did not provide much information on its plans, but said £10 million will be saved through a “corporate services reform programme”. It added that already improved finance, IT and procurement capability will enable it to “significantly” cut consultancy spend.
The Chancellor’s Departments (Treasury, HMRC): £261 million
HM Revenue & Customs is set to save £100 million decommissioning and rationalising outdated IT systems, following the successful renegotiation of deals with technology suppliers. In addition, the Treasury Group plans to save £20 million by cutting consultancy spend and improving use of office space.
The Department of Energy and Climate Change: £30 million
The Nuclear Decommissioning Authority is targeting £30 million of savings by 2012/13 through collaborative procurement across its estate. This includes aggregating facilities management suppliers and increasing co-ordination for professional services. The DECC already makes extensive use of shared services and aims to reduce its reliance on consultants.
