Headlines: April 23rd, 2009

The public sector has delivered 5 bn pounds of efficiency savings above the target for the last three years and it can exceed this performance. The five advisors commissioned by HM Treasury for the year long programme examining operational spending in the public sector believe there is scope for an additional 15 bn pounds of efficiency savings. The advisors said: “The private sector never stops seeking greater efficiency in the ways that it purchases and provides services, and neither should Government”.

Each advisor examined the scope for savings in their area of expertise. Back office operations can deliver 4 bn pounds of savings a year and a further 3.2 bn pounds of savings a year on IT spending. This can be achieved through better management information, benchmarking and review of costs and better governance of IT-enabled change programmes.

Collaborative procurement can produce 6.1 bn pounds of savings a year through harnessing the public sector’s collective buying power by buying more goods in a collaborative way and driving more procurement spending through collaborative channels.

Asset management and sales have the potential to realise greater value from the commercial asset base including British Waterways, the Dartford Crossing, Land Registry and the QE II conference centre.

Property could result in savings of 1.5 bn of annual running cost efficiencies by 2013-14, rising to 5 bn pounds a year over a ten year period. A further 20 bn pounds of proceeds from property sales, excluding council housing, may be possible over a ten year period.

Local incentives and empowerment, such as empowering professionals to collaborate and innovate and creating the space for this by reducing burdens on the frontline, has the potential for further efficiency savings. This includes taking forward the new ‘Total Place’ programme that will map flows of public spending in local areas and make links between services to identify where public money can be spent more effectively.

Commenting on the Treasury proposals Margaret Eaton, chairman of the Local Government Association said: “Councils are committed to providing the taxpayer with ever greater value for money and will continue to make savings wherever they can. Town halls will work hard to make sure that next year’s efficiency targets can be met, but will need to see the detail on savings they’ll have to make over the coming years”. “Ministers must, however, realise that they can only keep on squeezing out savings for so long – there comes a time when vital frontline services to local people will be affected”, she added.