Cautious welcome for government spending cuts

IT's role in the efficiency measures is key

Cuts are broadly welcomed

Business leaders have given a cautious welcome to chancellor George Osborne’s spending review, which aims to slash £81bn from public spending over the next four years, without wrecking public services or undermining the economy. That balancing act will only be possible with more effective use of IT.

“The spending cuts, though painful, are essential to balance the UK’s books and build its future prosperity,” said Richard Lambert, director general of the Confederation of British Industry. “Now the government must deliver its promised savings by re-engineering public services.”

Delivering changes to public services would have to make them more productive, said Miles Templeman, director general of the Institute of Directors. “If today’s spending review is to succeed, the government will have to deliver fundamental root-and-branch reform which transforms the productivity of the public sector.”

The only way to introduce such changes was to make better use of IT, said Alan Downey, head of public sector at KPMG. Technology has transformed the way retailers, banks, airlines and other businesses interact with their customers – the pubic sector now has to do the same, he insisted.

“It is vital that the spending review is seen as an opportunity rather than a threat – an opportunity to launch the largest and most far-reaching programme of public sector reform that we have seen in modern times,” said Downey.

But those far-reaching programmes cannot be done on the cheap, warned Martyn Hart, chairman of the National Outsourcing Association, despite the obvious pressures to minimise costs. “There is a danger that today’s announcement could prompt the public sector to outsource cheaply, at the cost of improved service, in order to achieve quick gains over the next four years,” he said. “It is clear that any project initiated on cost alone is more likely to end in failure.”

Delivering those types of changes would be tough, said Claire Hall, consulting partner at PwC. If the government wants to deliver on this huge programme of savings and change, it should recognise that project delivery and transformational change can only happen through outstanding project management. These skills are already in demand in the private sector, meaning the government will have to work hard to get access to them in their own (reducing) workforce and the private sector,” she said.