New government spending controls to deliver billions more in savings
2 March 2011
Following the Government’s pledge to leave no stone unturned in the hunt for Whitehall efficiency savings, Francis Maude, Minister for the Cabinet Office and Danny Alexander, Chief Secretary to the Treasury today announced a new set of controls on government spending which are expected to save billions of pounds.
These new spending controls and financial processes follow the temporary measures on Government spending imposed on Civil Service recruitment, consultancy, property, information and communication technology, and advertising and marketing in May last year. Together with those temporary measures, the new controls and processes are expected to deliver more than £3 billion in savings by the end of this financial year.
Today’s new efficiency measures limit and set out approval processes for spending until the end of the Spending Review period in 2015. They include:
- All leases and lease extensions over £100,000 and new property freehold purchases to require central approval.
- Spending on new information and communications technology (ICT) contracts with a lifetime value of above £5 million will be subject to central approval. This will ensure best value is achieved and that ICT solutions bought have a common infrastructure and open standards, allowing them to be used across public bodies.
- Only essential expenditure on new advertising and marketing will be allowed. Central approval is required for government campaign spending over £100,000.
- The temporary freezes on recruitment and consultancy into the Civil Service will continue in the interim, subject to ongoing review. All Civil Service redundancy schemes will additionally be approved by Cabinet Office before being offered to staff to ensure value for money.
- A Major Projects Authority is set up to oversee the effective management of all large-scale projects which are funded and delivered by central government.
- Nine categories of common goods and services, including energy, office suppliers and travel, will be procured centrally by October 2011 to achieve better value for money for the Crown estate. Negotiations and legal disputes with strategic suppliers will be channelled through Cabinet Office to harness bulk purchasing and negotiating power.
The new procurement measures follow Sir Philip Green’s findings in October 2010 that government had failed to make the most of its scale, buying power and credit rating.
Francis Maude said:
We promised that we would do everything we could to ensure we were in the strongest possible position to protect services and jobs on the front line. What we have shown today is that if you are prepared to really look, billions can be saved from overheads and unnecessary costs at the centre of the Government - without touching front line services. I really hope that when people look at the numbers they too will want to replicate this kind of approach elsewhere in the public sector.
The taxpaying public is entitled to expect a good deal and that is what we will continue to push for. As well as immediate savings, some of the new measures introduced today will enable us in the future to get rid of previous inefficiencies in the way we have bought goods and services and reinforce that as one of the country’s biggest customers – Government expects to receive a scale discount.
Chief Secretary to the Treasury, Danny Alexander, said:
Giving departments the tools to be tough on wasteful spending is essential to help reduce the deficit whilst protecting the Government’s priorities.
A seismic shift in Whitehall’s spending culture is needed and, building on the measures we have already taken, these new controls are the next stage in delivering that change.”
Savings already made as a result of the previous temporary moratoria and spending measures imposed in May 2010 include:
- £800 million expected through renegotiating contracts with key suppliers to Government
- £350 million on consultancy - 50% less than in the same period in 2009/10
- £133 million on advertising and marketing spending
- £120 million through the freeze on external recruitment
- £48 million as a result of the freeze on new property purchases, leases and lease renewals. Government bodies have now vacated 147 properties. The Crown Prosecution Service has vacated its Ludgate Hill headquarters in London, saving £9 million per annum.
Notes to Editors
- The original temporary spending moratoria and efficiency controls were announced by Francis Maude and Danny Alexander on 24 May 2010, with an expiry of the end of the financial year 2010/11.
- Office for National Statistics figures indicate that employment in the Civil Service fell by 8,000 between Quarter Two, when the recruitment freeze was introduced, and Quarter Three. Initial Cabinet Office estimates suggest that external recruitment has fallen by around 75% in 2010/11.
- The new actions and controls come into effect immediately.
- The Major Projects Authority will form part of the Efficiency and Reform Group within Cabinet Office.
- The common commodity goods and services to be procured centrally include energy, office solutions, professional services, travel, fleet, learning and development, ICT commodities, advertising and media, print and print management.
- Sir Philip Green was appointed by the Prime Minister to review Government efficiency. The review was overseen by Francis Maude and Danny Alexander. Sir Philip’s findings and recommendations were published on 11 October 2010.
- For further details on the Government’s Efficiency and Reform programme, please see www.hm-treasury.gov.uk.