Government action to cut wasteful spending saves taxpayers over £1bn

16 December 2010

The Government expects to save over £3 billion in one year as a result of the efficiency and reform measures introduced by the Coalition Government.

Around £1 billion savings have been achieved so far, of which £500 million has come from the moratoria on consulting, ICT, recruitment, marketing and property spending introduced in May 2010.

To help tackle the budget deficit, the Government introduced a new and ambitious approach to take out costs and waste in central government operations in order to protect essential jobs and services on the frontline.

Measures include a significant programme of renegotiating contracts with major suppliers and a strict moratorium in five key areas of discretionary spend: consulting, ICT, recruitment, marketing and property.

 Savings so far from the moratoria include:

• 50% less was spent on consulting compared to the same period last year – saving £300 million.
• Over 60% less was spent on marketing and advertising contracts through COI in the first six months of this year – saving £133 million compared to the same period in the previous year.
• £18 million less was spent in rent payments, achieved by vacating 20 properties.
• Our initial estimates suggest that external recruitment has fallen by around 75%, saving £120 million in this financial year through the on-going freeze on recruitment.

Further savings made by the Efficiency and Reform Group were highlighted in the Autumn and include £402 million from stopping major projects, such as abolishing ID cards.

Also, as part of the transparency agenda, the only exceptions to the moratoria permitted in the five key areas above have today been published by all Government departments.

Details of ICT projects over £1 million across government have also been published by the Cabinet Office. The data published captures government ICT projects and contracts at various stages of their lifecycle as of 31 July 2010.

An impediment to the reform programme has been the poor data quality in government. To illustrate this, the Cabinet Office has also published today the Operational Efficiency Programme Benchmarking Report for April 2009 to May 2010 with the full accompanying data set. The report highlights the exceptionally bad quality of previous data.

Minister for the Cabinet Office, Francis Maude, said:

This Government is leaving no stone unturned in cutting unnecessary and excessive expenditure to protect jobs and the frontline services on which people depend. Measures introduced so far have already saved more than £1 billion.

This reform programme has required a culture change in Government, as the system is not set up to operate efficiently. As Sir Philip Green pointed out, the quality of basic management information that Government has previously collected is appalling. The Operational Efficiency Programme Benchmarking Report for data covering 2009/10 released today underlines that fact.

There is no excuse for Government not to produce the same standards of management information achieved by the best in the private sector.  Robust data is the foundation of Government acting in a more business-like manner and operating as efficiently as possible.

The announcement today of new Non-Executive Board Members with huge experience of financial management and improving operational performance will help ensure that the right leadership is in place to meet our challenging efficiency and reform agenda.”

Notes to Editors

1.      The only exceptions to the moratoria permitted in the five key areas above have today been published by all Government departments including Cabinet Office exemptions.

2.     Details of ICT projects over £1 million across government.

3.     Operational Efficiency Programme Benchmarking Report for April 2009 to May 2010 with the full accompanying data set. The report highlights the exceptionally bad quality of existing data including:

• the apparent variance of the cost of the Finance function per capita is 5,000%
• the apparent variance of the cost of the HR function per capita is over 3,000%
• the apparent variance of the cost of procurement is over 2,000%
• in several cases, year on year cost for the same function apparently varies by over 1,000%.

CAB 229-10