Treasury review reveals scope for £11bn property savings

A Treasury-sponsored review of government spending has said the UK government could save £6.1bn a year on collaborative procurement and £5bn in efficient property management over a 10 year period.

The Operational Efficiency Programme, the findings of which were announced yesterday, showed scope for £15bn of efficiency savings throughout government, including back office operations and IT, collaborative procurement, asset management and sales, property, local incentives and empowerment.

Martin Jay, non-executive director of Invensys, led the one year study’s research into collaborative procurement said that the savings could be made 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.”

The report, researched by Lord Carter of Coles, who founded Westminster Health Care, which he sold in 1999, found that £1.5bn of annual cost efficiencies in property could be achieved by 2013-2014, rising to £5bn a year over a 10-year period. He added that £20bn of proceeds from property sales (excluding council houses) could be possible over 10 years.

In their foreword to their report, the five advisers said: “the private sector never stops seeking efficiencies in the ways that it purchase and provides services, and neither should the 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.”

In last year’s pre-budget report, the government announced it had overachieved against the Gershon efficiency programme target, delivering £26.5bn of efficiencies against a target of £12.5bn