Government could cut back-office and IT bill by £7.2bn per year

The Budget is aiming for £15bn efficiency savings

The Treasury review of public sector IT spending has identified the potential for £7.2bn of annual savings.

The review, led by former Logica chief executive Martin Read, has recommended better management information, benchmarking and review of costs and better governance of IT-enabled change programmes to achieve £4bn of savings a year on back-office operations, and £3.2bn of savings a year on IT spending.

The plan is one of five streams as part of the government’s Operational Efficiency Programme, that has identified a total of £15bn of savings that will form a key aspect of chancellor Alistair Darling’s Budget tomorrow for balancing the public sector’s books after the multibillion-pound bailout handed to UK banks and other sectors of the economy.

Read had previously suggested the task of putting an accurate figure on UK public sector IT investment was a big challenge. He said in February that total annual government spending on IT could be anywhere between £13bn and £21bn – the sprawling nature of the public sector made it impossible to tell.

Read and his team used five different methods to evaluate public sector IT spend, and came up with results as low as £13bn and as high as £21bn, finally settling on an average figure of about £16bn in 2007/08, though he admitted it was a "very inexact science".