HM TREASURY News
Release (PN 40/09) issued by COI News Distribution Service on 21
April 2009
The findings of
the Operational Efficiency Programme (OEP), a year-long programme
examining operational spending in the public sector, are published
today showing scope for £15 billion of efficiency savings.
The five senior external advisors have identified a total of £15
billion annual savings from back office operations and IT,
collaborative procurement, asset management and sales, property
and local incentives and empowerment. Their assessment is that
around £6 billion of these will be delivered as part of plans in
the current spending review period, contributing to the £35
billion efficiency target, with the rest being delivered by the
end of the next spending period.
These findings make it possible to deliver efficiency savings
alongside continuing to increase investment in frontline services.
The delivery of the full £15 billion of savings will take time to
achieve, due to the nature of the areas being considered.
Procurement contracts will need to be renegotiated, back office
functions merged, and market conditions considered before property
sales are undertaken. However, on the basis of their interim
findings, at the Pre-Budget report the Government increased the
previous target of £30 billion savings over the current spending
review period to £35 billion.
These savings follow on from the significant overachievement of
the Government's efficiency target for the previous spending
review. The Gershon efficiency programme, which considered
spending between 2004-05 and 2007-08 delivered £26.5 billion of
efficiencies against a target of £21.5 billion. Significant
progress has also been made towards achieving the target for the
current spending period.
The Government will also announce an increased target for
relocations of civil service posts from London and the South-East
by next year, as it is significantly ahead of schedule in meeting
its current target of 20,000.
In the foreword to their report, the five advisors stated
that:
"the private sector never stops seeking greater
efficiency in the ways that it purchases and provides services,
and neither should Government. There is scope to go further and
increase the value for money the public sector achieves from both
its activities and from some of its most valuable assets - the
insight and energy of its people, as well as its bricks and mortar."
Today's publication of Operational Efficiency Programme:
Final Report sets out the advisors' findings and recommends
structures and tools to help organisations achieve savings and
improved accountability and performance management to encourage
greater value for money throughout the public sector.
The report contains an ambitious series of recommendations from
each advisor to deliver the savings they have identified in their
specific areas of expertise. Government is expected to respond to
the advisors' recommendations in tomorrow's Budget, but
the advisors believe the following savings can be realised by the
end of the next spending period, including some savings which are
already included in plans for this spending review period:
* Back office operations and IT, led by Dr Martin Read,
recommends better management information, benchmarking and review
of costs and better governance of IT-enabled change programmes to
achieve £4 billion of savings a year on back office operations,
and £3.2 billion of savings a year on IT spending;
* Collaborative procurement, led by Martin Jay, has found that
£6.1 billion of savings a year are possible through harnessing the
public sector's collective buying power by buying more goods
in a collaborative way and driving more procurement spending
through collaborative channels;
* Asset management and sales, led by Gerry Grimstone, has
concluded that there is potential for the Government to realise
greater value from its commercial asset base, and reports progress
on studies into specific assets (including British Waterways, the
Dartford Crossing, Land Registry and the QE II conference centre)
that were launched at the 2008 Pre-Budget Report. He has also
identified a number of further assets that will be the subject of
a second wave of studies to ensure that their commercial potential
is being considered and fully harnessed;
* Property, led by Lord Carter of Coles, has found that up to
£1.5 billion of annual running cost efficiencies could be achieved
by 2013-14, rising to £5 billion a year over a ten year period.
Furthermore, £20 billion of proceeds from property sales
(excluding council housing) may be possible over a ten year
period. To achieve this, he has recommended a series of specific
incentives and mechanisms, including the creation of a small,
strategic central property function to drive the efficiency and
rationalisation agenda across the public sector;
* Local incentives and empowerment, led by Sir Michael Bichard,
has made a series of recommendations aimed at empowering
professionals to collaborate and innovate, and creating the space
for this by reducing burdens on the frontline. This includes
taking forward the new 'Total Place' programme that will
map flows of public spending in local areas and make links between
services to identify where public money can be spent more effectively.
Notes for Editors
1. The full Operational Efficiency Programme: final report will
be published online at http://www.hm-treasury.gov.uk/vfm_operational_efficiency.htm
2. In the Pre-Budget report, the Government announced that it had
overachieved against the Gershon Efficiency Programme target for
the 2004 Spending review, delivering £26.5 billion efficiencies
against a target of £21.5 billion.
3. The target for the current spending review was efficiencies of
£30 billion. On the basis of the interim findings of the 5 OEP
advisors, the Government increased this to £35 billion by 2010-11.
4. Advisors
Dr Martin Read (Back office and IT)
Martin is
a non-executive director of British Airways and a senior adviser
to Candover Partners. He was chief executive of international IT
services company Logica from 1993 to 2007 and has served as a
non-executive director of Boots (1999-2006) and ASDA (1996-1999).
Prior to 1993, he was supervisory managing director of the
GECMarconi Radar and Control Systems group of companies.
Martin's other interests include being a director of
homelessness charity Shelter, a trustee of the Council for
Industry and Higher Education and the Vice Chair of the Council of
Southampton University.
Martin Jay (Collaborative procurement)
Martin Jay was
appointed a non-executive director of Invensys in January 2003 and
became Chairman in July 2003. He retired as Chairman of VT Group
plc in July 2005, where he was also Chief Executive for 13 years.
He previously held a range of leadership positions at GEC and was
a member of the GEC Management Board. Martin is the Chairman of
the Tall Ships Youth Trust.
Gerry Grimstone (Asset management)
Gerry is Chairman of
Standard Life plc, having been a Standard Life director since July
2003. Prior to this Gerry Grimstone held senior positions with the
Department of Health and Social Security and HM Treasury until
1986. He then spent 13 years with Schroders in London, Hong Kong
and New York prior to becoming Vice Chairman of Schroders'
worldwide investment banking activities. Since then, he has held a
number of senior appointments in the private and public sectors.
Lord Carter of Coles (Property)
Lord Carter of Coles is a
Labour Peer who, in addition to a career in business, has advised
the Government on a wide range of issues and has chaired a number
of government reviews. In 1985, he founded Westminster Health Care
which he built into a leading health care provider and sold in
1999. He is a private investor and director of companies in the
fields of insurance, healthcare and information technology. He was
Chair of Sport England from 2002 to 2006, was a member of the Home
Office Board and of HM Treasury's Productivity Panel.
Sir Michael Bichard (Local incentives and empowerment)
Sir
Michael Bichard is Director of the independent Institute for
Government, a charity dedicated to supporting the development of
leadership in government, and Chair of the Design Council. In a
career spanning both central and local government, he has served
as: Rector of the University of the Arts London; Chair of the
Legal Services Commission; Chairman of the Soham Inquiry;
Permanent Secretary for the Department for Education and
Employment; Chief Executive of the Benefits Agency; Chief
Executive of Gloucestershire County Council and of the London
Borough of Brent.
Non-media enquiries should be addressed to the Treasury
Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk
This Press Release and other Treasury publications are available
on the HM Treasury website hm-treasury.gov.uk
For the latest information from HM Treasury you can subscribe to
our RSS feeds or email service.