How the Government could cut £20bn without cutting jobs

08/07/2015

Lowendalmasai

George Osborne’s emergency Budget outlined plans to cut £37 billion from public expenditure, with £12 billion planning to be saved by 2019-20 via benefits cuts and welfare reform alone, and a further £5bn by 2019-20 from initiatives to combat tax avoidance and evasion. In the autumn, the Chancellor will outline his plans to cut the remaining £20bn to achieve a surplus.

Francis Mainoo, Deputy Managing Director, UK, Ireland and USA at specialist cost consultancy Lowendalmasaï, looks at ways in which the Government could cut £20bn of spending, without cutting jobs:

  1. Companies should thoroughly examine their procurement contracts for basic services to ensure they’re working effectively: are departments spending unnecessary money on mobile phone contracts, paying over the odds for electricity and gas, or wasting paper by not automatically printing on both sides of the page? In addition to cost savings, these can provide environmental benefits too.
  2. The Government should ensure that any third party contracts in place have provisions for non-performance: this ensures that if a supplier does not deliver what is agreed in a contract, it can either be corrected without incurring further costs or the contract can be cancelled.
  3. The Government should look to review its IT spend – an area which historically has been difficult to manage as IT procurement often sits outside central procurement functions: spending on technology should be centralised in certain cases and coordinated across government, with a full review of IT contracts and the software used to ensure IT spend meets needs, is efficient and fit for purpose.
  4. A review of temporary HR costs should be conducted. Temporary staff can be more expensive to use in the long term and the process and cost to on-board fraught with challenges. The Government should seek to ensure that all spend on temporary staff is effective both in terms of meeting public sector needs, costs and performance.
  5. Review Consultancy costs to ensure they provide value for money: centralising costs and ensuring contract performance can help reduce expensive legal and accountancy services. This should include moving from fixed cost contracts to performance based contracts where the interests of professional advisers are aligned with that of the Government.
  6. 6.       Review property strategies: properties can be a significant fixed cost and a coordinated and cohesive property strategy across Government departments could provide real and sustainable cost savings.