Government efficiency drive cuts spending by £500m

Savings have been achieved by renegotiating contracts and cancellation of major projects

The government expects to save more than £3bn in one year as a result of the efficiency and reform measures it has introduced.

Of this, £500m in savings will come from the efficiency drive in consulting, ICT, recruitment, marketing and property spending.

The measures were introduced when the government was elected into power in May.

Measures have included a programme of renegotiating contracts with major suppliers (including Logica, HP and Cisco), most of which have since released memorandums of understanding with the government stating, rather blandly, that they have accepted the government’s single client approach to buying ICT services. This means they will recognise the government's push for collaborative procurement.

Although the financial details of the deals have not yet been released, analysts have predicted that many of the suppliers will slice 10 per cent or more from the cost of their contracts.

Savings include £402m from cancelling major projects such as the ID card scheme and ContactPoint, the child protection database.

Details of ICT projects over £1m across government have also been published by the Cabinet Office.

The data published captures government ICT projects and contracts at various stages of their lifecycle as of 31 July 2010.

An impediment to the reform programme until now has been the poor quality of data held by government, according to a release on the Cabinet Office website.

Some of the key issues are highlighted by the Operational Efficiency Programme Benchmarking Report for April 2009 to May 2010, which the government released today.