Government insists £15bn full-year savings are achievable

The Cabinet Office is adamant that it will achieve its full-year savings target of £15 billion, despite reporting that the government had only saved just over a third of the amount (£5.4 billion) in six months.

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The Cabinet Office is adamant that it will achieve its full-year savings target of £15 billion, despite reporting that the government had only saved just over a third of the amount (£5.4 billion) in six months.

The government reached a similar proportion of savings last year, reporting savings of £3.1 billion in the first half of the year, followed by £10 billion the rest of the year. However, it declined to specify where this year’s remaining £9.6 billion of savings would come from.

A Cabinet Office spokesperson said: “Yes, we have already delivered a 73 percent increase on our savings from H1 last year, from £3.1 billion in H1 2012/13, to £5.4 billion in H1 2013/14, and the Efficiency and Reform Group (ERG) is on track to exceed £15 billion by year-end, in line with targets set in 2010.”

The ERG aims to deliver savings of £20 billion by 2015, through reforms in procurement practices, improved online services, reviews of major projects and redundancies.

The government attributed £0.6 billion to the improvement of online services, money raised through the sale of empty buildings and exiting expensive rentals, to the savings made in the first half of this financial year.

Controls on the use of consultants and centralising procurement had helped to achieve £1.8 billion.

Meanwhile, £0.7 billion of savings was achieved by reviewing and reshaping large-scale projects, and stripping out inefficiencies; £2.3 billion was saved by making changes to civil service pensions and reducing the workforce. Since 2010, the government has cut 84,000 full-time employees.

Putting services online

In terms of IT, Cabinet Office minister Francis Maude said that the government is introducing a “complete culture change”, to create a “digital government for the future. This involves getting rid of dominant, big IT projects, and working in an open, flexible and agile way.

“By 2018, we expect all government services handling over 100,000 transactions a year to be offered online,” he said.

The government has started by putting 25 services, known as exemplars, online. The first, making student finance applications available online, already has a 92 percent take-up rate, Maude said.

“The lasting legal power of attorney will be one of the next, and others will follow as we seek to become digital-by-default in everything we do,” he added.

Shared services strategy

Savings had also been achieved through the government’s shared services strategy, Maude said, referring to the £1 billion contract that the Cabinet Office awarded to Steria for IT, HR and finance services as part of the Independent Shared Service 2 (ISSC2) programme.

This contracts sees the creation of a joint venture company, 25 percent owned by government and 75 percent by Steria, that will be responsible for these services.

“The way this contract is constructed, the bigger the volume, the lower the unit price goes,” said Maude.

“So it’s in everyone’s interests, for additional business from other government departments and from the private sector both in the UK and overseas to be won by that company. If business grows, public services can be delivered at lower cost.”

However, the contract has led to industrial action carried out by Public and Commercial Services (PCS) union members, who fear that jobs will be lost as work is offshored.

Maude recognised that future savings would be more difficult to achieve.

“These kinds of efficiencies are a quick win and will only take us so far,” he said.

“Our challenge now is to deliver more of the transformations necessary to ensure savings of this magnitude are sustainable in the future.”