Saturday 16th June 2012
By Francis Maude MP, Minister for the Cabinet Office and Paymaster General
When we came into power the state was spending £4 for every £3 in revenue. The Government was having to borrow £1 in every £4 just to keep the lights on, the pensions paid, teachers in schools, and doctors and nurses in hospitals.
That could not carry on. It was imperative that we reduced Government spending and brought our finances under control. But that was not simply about spending less; it had to be about spending better. We took decisive action to ensure resources were targeted at protecting frontline services, boosting growth and rebalancing the economy.
Over the years there have been countless mutterings about “efficiencies”, conjuring up images of civil servants being asked to count paper clips or pot plants in Whitehall’s corridors.
But real efficiency is not about just doing less or tinkering with budgets here and there. It is far more radical. Our ambition was to turn a sprawling, uncoordinated array of departments and bodies into a leaner, more effective machine that managed its finances like the best run businesses. That meant building an effective operations centre at the heart of our government that acts as the taxpayer’s champion.
In 2010, we introduced tough spending controls for central departments-controls that will stay in place for years to come.
It was clear that for lasting efficiency, we needed to adopt a steely business-like attitude. Take procurement; far too often different parts of Government were paying different prices for the same goods or services. When we came in we found parts of the government were paying seven and a half times more for standard black toner cartridges than others.
Immediately we started renegotiating contracts with our biggest suppliers-dealing with them as a single customer instead of letting them play one part of government off against another.
Those contract renegotiations yielded savings of £800 million in the first ten months of the programme alone. This March, we announced a new deal with one of the big IT suppliers, Oracle, that will deliver in excess of £75 million in savings by 2015. There are more of these on the way and our new business-like ethos means we no longer sign inflexible contracts that tie taxpayers’ money into unfavourable terms.
We also saved £147 million by reviewing the Government’s biggest projects to see where costs could practically be reduced within contractual constraints, or wasteful projects stopped altogether. We are not simply stopping projects-we are doing them better.
Another example of our spending reforms is the taskforce I lead on reducing Fraud, Error and Debt. We have discovered that the government loses between £20 and £30 billion each year, due to fraud, error and overdue debt. Those losses occur mainly in the collection of our taxes and the payment of benefits and pensions. Through better processes, incentives, more use of private sector partners and sophisticated technology, we believe this is a huge opportunity to save money.
Our approach delivered £3.75 billion cash savings in the first ten months of coming into office. The National Audit Office has confirmed these figures-the first time the NAO has ever corroborated government savings figures in this way. We are expecting to report cash savings in excess of £5 billion for the year ending 31 March 2012.
Nor is that the end of the efficiency story. We are building a modern Civil Service for a modern world; both more efficient and more business-like, doing better with less. The efficiency of the government is intrinsically linked to the reform of its civil service.
We are also more transparent about how we spend money and more accountable to the taxpayer. By becoming more business-like we are proving that you can do more for less and that delivering first-class public services more efficiently is no longer a vague manifesto promise-it is a reality.