Francis Maude reveals further savings that beat expectations

>>Watch a video explaining the savings figures on YouTube.

9 August 2012
CAB 076-12

A ruthless approach to eradicating wasteful spending across Whitehall enabled the Government to save over £5.5 billion for the taxpayer last year - even higher than predicted - the Minister for the Cabinet Office, Francis Maude, announced today.

The staggering savings were driven by the Cabinet Office’s Efficiency and Reform Group (ERG) which applied spending controls to cut expenditure by departments on IT contracts, property, marketing, temporary staff and consultancy. These new savings are in addition to the unprecedented £3.75 billion saved during 2010/11.

The savings, which have been independently audited, are equivalent this year alone to:

• around £500 per working household in Britain;
• the salaries of around 250,000 junior nurses; or
• the cost of around 1.6 million primary school places.

The Minister for the Cabinet Office confirmed that the spending controls will be a permanent feature across government to ensure that taxpayer money is spent carefully.

Minister for the Cabinet Office, Francis Maude, said:

There’s never an excuse for wasting taxpayers’ money in the way it was in the past, but given the size of the deficit this Government inherited and the ongoing tough economic climate, we were determined to cut the fat from Whitehall. Because our controls on spending are working well and saving unprecedented amounts of money, I’m determined they will be a permanent feature of good governance.

"Last year, this Government beat its own prediction and saved a staggering £5.5 billion from departmental expenditure, on top of the £3.75 billion from our first year in office. The real question is: why were such savings never made before and why was so much taxpayers’ money squandered on things like unnecessary consultancy, wasteful marketing and underused property leases?

"In 2010 we set up an Efficiency and Reform Group in the Cabinet Office to beef up government’s operational centre and to ensure that Whitehall operated in a more business-like fashion. It’s working well, but we are determined to go even further, because when it comes to spending other people’s money we must always strive to find more efficient and better ways of providing public services."

The savings of £5.5 billion announced today include:

• £1 billion in savings achieved last year through the moratorium on consultancy spend and on extending existing consultancy contracts.  Since 2010 consultancy spend has been cut by over 85%.
• £390 million of savings from freezing all marketing spend - except when operationally necessary. This builds on the £400 million the Government saved in 2010/11.
• The in-year cost of the Government’s property estate was reduced by nearly £200 million by exiting unnecessary properties, and questioning each and every lease break before they were extended. This is more than double the £90 million in savings achieved the year before.
• Almost half a billion in savings were achieved last year by using the Government’s bulk-buying power and pooling spend on goods and services used by different government departments. This comes on top of the £360 million saved in 2010/11.
• Reductions in the size of the Civil Service through stronger controls on non-essential recruitment has contributed to a reduction in salary costs for 2011/12 of nearly £1.5 billion. This is an enormous increase on the £300 million in savings the Government made the previous year.

Notes to editors

1. The Cabinet Office oversees information and communications technology spend, procurement, marketing and consultancy spend, and Civil Service expenses and recruitment.  Much of its work has never been tried by government before, such as renegotiating contracts with major suppliers to reduce costs, and introducing a freeze on all new advertising and marketing spend. 

2. The Efficiency and Reform Group reports to Francis Maude, and is overseen by an Efficiency Board chaired jointly by the Chief Secretary to the Treasury, Danny Alexander, and the Minister for the Cabinet Office and Paymaster General, Francis Maude.

3. The Efficiency and Reform Group recently announced it is bolstering the Government’s ability to match best practice in the private sector by merging the existing procurement and commercial relationship functions in the Cabinet Office into a single Commercial Procurement and Relationships Directorate, which will be run by the Chief Procurement Officer, Bill Crothers.

In 2011 the Cabinet Office introduced a new team of skilled negotiators (Crown Representatives) from the private and public sectors who act as representatives of the Government and interact with key suppliers, ensuring government acts as a ‘single client’.

These representatives sit within the Commercial Procurement and Relationships Directorate and negotiate better deals on behalf of taxpayers. Contract renegotiations in 2010/11 delivered £800 million of savings across suppliers and £437 million were delivered in 2011/12.

For more detail on the network and supplier renegotiation programme see A new approach to supplier relations in government.

4. The Cabinet Office ensures departments work together to tackle waste and improve accountability across a range of areas, including information and communications technology (ICT), procurement, projects, HR and property.