7 June 2010 | Nick Martindale and Lindsay Clark

The UK Prime Minster today warned that the state of public finances is “even worse than we thought” and “painful cuts” are on the way.

David Cameron said that interest repayment on the UK’s £156 billion deficit would reach £70 billion a year unless a determined effort was made to cut the debt. Necessary spending reductions would have an impact on everyone in the UK, he said.

Cameron particularly singled out defence procurement under the previous Labour administration. Fourteen major projects had overrun, and were, in total, £4.5 billion over budget, he said.

Meanwhile, SM has confirmed some of the steps Whitehall procurement teams are taking to save money. Cameron’s government has created a group to oversee the shift of government spend for non-strategic items to a central procurement body and ensure compliance.

Ian Taylor, commercial director at the Department for Education and former CIPS president, devised the “aggregation layer”, an advisory group that will liaise between the 140 public sector buying organisations, suppliers and a new central body called the Efficiency and Reform Group (ERG).

Taylor said: “There is a need for a central organisation that will mobilise everything, act as a connection point for all these different organisations and determine what the strategy is for each category.”

The first area to be tackled is likely to be office supplies, with travel, IT and training expected to follow. Although the aggregation layer would be temporary at first, Taylor said it could have a role in managing and policing the new regime.

The creation of the aggregation layer came under the remit of the ERG, which was formed by coalition government last month. The Government Procurement Services Council is also expected to be involved in the new setup.