ICT suppliers asked to ‘contribute’ to efficiency

Francis Maude, the minister for the Cabinet Office, has met with 19 of the Government’s largest information and communication technology (ICT) suppliers to discuss their role in helping to meet government efficiency targets. The suppliers, which include IBM, CapGemini, Capita, Steria, Microsoft and Vodafone, were asked what they could do to “help cut the cost of the services they provide to government”.

This event marks the start of the process to renegotiate key government contracts to release savings, a practice already used by many big UK businesses to drive down costs. When it starts officially, the negotiation programme will cover the majority of the Government’s suppliers and will be conducted centrally for the top suppliers and via individual departments for the smaller ones.

Contract renegotiation is the latest in a series of initiatives introduced by the recently-created Efficiency and Reform Group (ERG), which is based in the Cabinet Office, to tackle the deficit, by achieving £6.2 billion of savings from government spending in 2010-11.

Mr Maude, who co-chairs the Efficiency Board which oversees the work of the group, said the meeting demonstrates the importance and urgency the Government is attaching to the efforts to reduce the deficit.

“Given the really difficult economic climate we now face, we have to do everything we can to deliver better value for money for taxpayers and that involves taking some tough decisions,” said Mr Maude.

“I am laying down the challenge to major government suppliers to ask them what they can do to take costs out of contracts. Some of this will come out of margins, but we will also invite ideas on how we can structure things differently to reduce complexity and cost. We will look to put into effect immediate savings and also create plans to further reduce costs in the medium to long term.”

The National Policing Improvement Agency (NPIA) has already revealed plans to help the UK police service save £150 million in the current financial year and at least £1 billion in total by 2015.

The savings will be across many areas but will be centred on more use of shared services, redesigned central processes and more efficient use of IT in general – £25 million cash-saving improvements for the service through better use of technology and procurement as part of a broader scheme of work to save £200 million on police IT by 2015.

According to market analyst IDC, the UK IT market is holding its breath as it waits to see what impact the new government’s ICT policies will have. It says new government initiatives to be announced in the autumn could affect not only direct government spending but also the overall economy.