Government Cuts ICT Costs By £249m

The government’s “ruthless” cost-cutting campaign reduced its expenditures by more than £5.5bn in the 2011/12 fiscal year, including £249m of savings in ICT costs, the Cabinet Office announced on Thursday.

Efficiencies in ICT included reducing maintenance costs on the Business Link website and redesigning the G-Cloud store in-house instead of using large service integrators, according to the Cabinet Office. In May, the government confirmed that the estimated cost for the G-Cloud programme stood at around £4.93 million.

Spending controls

Contract renegotiations with large ICT suppliers such as SAP and Microsoft have reduced the government’s software expenditures by more than £70m through 2015.

The government said its ICT savings were primarily the result of tougher controls on procurement, with any significant expenditure requiring a thorough business case to prove any improvements are “necessary to bring government in line with standard business practices”.

The civil service bore the brunt of cost reductions, with a cut in salary costs of nearly £1.5bn for the fiscal year, up sharply from £300m in reductions the previous year. The Cabinet Office said the savings came through stronger controls on non-essential recruitment, while unions have said the reductions – which aim to cut civil service posts by up to 60,000 by 2015 – will stretch the civil service to the limit.

The Cabinet Office’s Efficiency and Reform Group (ERG), set up in 2010, achieved other savings through spending controls on IT contracts, property, marketing and consultancy.

The reductions, which have been independently audited, follow £3.75bn of cuts carried out in 2010/11, according to minister for the Cabinet Office Francis Maude (pictured).

He promised the cuts would “go even further”, while the controls introduced over the past two years are to stay in place indefinitely.

“Because our controls on spending are working well and saving unprecedented amounts of money, I’m determined they will be a permanent feature of good governance,” Maude said.

Consultancy, marketing reductions

ERG saved £1bn for 2011/12 through a moratorium on consultancy spending and on extending existing consultancy contracts, as well as nearly £500m through using the government’s bulk-buying power to reduce spending on goods and services. It also saved £390m from freezing marketing spending, except where “operationally necessary”, and £200m from reducing the government’s property estate.

Maude noted that businessman Sir Philip Green had aided the effort to identify unnecessary IT costs, discovering some government bodies were paying seven times more for black toner cartridges than others.

The government’s cost-cutting plan, introduced in March 2011, renewed its commitment to encouraging small business innovation and embraces open source technologies, and promised to create a level playing field for open source software and impose compulsory open standards, starting with interoperability and security.

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