Sir Philip advises Government to centralise spending
03 June 2011 10:26
The Government is to centralise the way it buys common goods and services across different departments in a bid to cut costs, it was announced today.
It follows an efficiency review carried out last October by retail tycoon Sir Philip Green which concluded that the Government was not making the most of its scale, buying power and credit rating.
Sir Philip, the owner of Topshop and Bhs, recommended that civil servants should apply the same principles to buying goods and services as if they were spending their own money.
The self-made billionaire said multiple contracts had been signed with major suppliers by different Whitehall departments at different prices.
Examples of the "staggering" amount of money wasted included expensive printing of leaflets, spending up to £117 a night on hotels, £73 on a box of paper while other departments spent £8, and the £2 billion-a-year telecoms bill which Sir Philip said could be cut by up to 40%.
Under the plans, a central Government procurement team will be created to contract for widely used goods and services across Government at a single price.
The move aims to halt poor-value contracts where Government departments and agencies paid between £350 and £2,000 for the same laptop and between £85 and £240 for the same printer cartridge from the same supplier.
Francis Maude, Minister for the Cabinet Office and Paymaster General, said: "It is bonkers for different parts of Government to be paying vastly different prices for exactly the same goods.
"We are putting a stop to this madness which has been presided over for too long. Until recently, there wasn't even any proper central data on procurement spending."
He said central procurement of common items was expected to save more than £3 billion a year by 2015 - 25% of the Government's current annual spending on these items.
He added that the Government had made "significant changes" in the last 12 months to reduce procurement spend by £1 billion.
Initial goods and services to be procured centrally will include energy, fleet, information and communications technology, office solutions, print and print management, professional services and travel.
Mr Maude also underlined the Government's commitment to buying more of its products and services from smaller suppliers.
It published a set of actions detailing how each department would seek to reach the Government's overall aspiration to do a quarter of its business with small and medium-sized enterprises (SMEs).
The new Government procurement team will be made up of a "streamlined" version of Buying Solutions, the Government-buying agency, supported by specialist departmental buying teams, the Cabinet Office said.
A Cabinet Office spokeswoman said the procurement reforms would result in the loss of 120 jobs, mainly through voluntary redundancy.
"The new Government Procurement will deliver the centralised procurement programme through the application of streamlined processes, effective systems and clearer roles," she said.
"All across Government, departments are reducing their headcounts and the Cabinet Office and its agencies are no exception.
"The new Government Procurement will involve reducing the headcount of the existing Buying Solutions organisation by over 30% from its current 392 to 272.
"Highly targeted training programmes will also be undertaken to upskill procurement staff, with a clear focus on the delivery of sustainable savings through effective sourcing, category and data management.
"It is hoped that the majority of the headcount reduction will be achieved through a voluntary redundancy scheme which is currently in progress."
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