Maude and suppliers in first stage of contract renegotiations

Francis Maude has met with 19 government suppliers asking what they can do to cut costs

The minister for the Cabinet Office met with government suppliers yesterday to find out how they can help cut the cost of the services they provide to government.

Francis Maude met with the CEOs of 19 of the biggest suppliers, including Microsoft and outsourcing firm Capita, for talks as part of the deficit reduction programme.

Contract renegotiation is the latest in a series of initiatives introduced by the recently created Efficiency and Reform Group (ERG), to tackle the deficit by achieving £6.2bn of savings from government spending in 2010/11.

The Cabinet Office said it hopes to renegotiate key government contracts to gain savings.

When it officially begins, the negotiation programme will cover the majority of government’s suppliers. It will be conducted centrally for the top suppliers and via individual departments for the smaller ones.

“Today’s meeting demonstrates the urgency the government is attaching to the efforts to reduce the deficit,” said Maude.

“Given the really difficult economic climate we now face, we have to do everything we can to deliver better value for money for taxpayers which involves taking some tough decisions. I am laying down the challenge to major government suppliers to ask them what they can do to take costs out of contracts.”

He said that some savings will come out of margins, but the government will also invite ideas on how it can structure things differently to reduce complexity and cost.

“We will look to put immediate savings into effect and also create plans to further reduce costs in the medium to long term.”