Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Brown's measured handout

SPENDING REVIEW: Chancellor aims to free up cash to improve e the nation's infrastructure with a major cost-cutting and efficiency drive

THE GOVERNMENT unveiled a raft of new measures to increase efficiency in procurement this week in a bid to free up more cash for front-line spending.

It is hoped that the moves - announced in Sir Peter Gershon's efficiency review published with Gordon Brown's spending review on Monday - will help the Government meet its target of £21.5 billion in savings by 2007-8.

The Office of Government Commerce is planning to set up specialist support teams in construction, facilities management and commodities procurement to deal with problem markets which cross several departmental boundaries.

And the Department for Transport is leading a drive to shake up road procurement among local authorities by applying Highways Agency expertise, which is aimed to make £190 million a year in efficiency savings.

Highways Agency procurement director Steve Rowsell said: 'The work done to date has identified the potential for savings in areas such as standardisation of contracts and specifications, joint programming, packaging of work and standardised performance measurement.

'The agency has established a team to further these initiatives and we will be putting liaison arrangements in place shortly.'

CECA economist Jim Turner said: 'If they're talking about Highways Agency staff in local authorities I'm not sure where they are going to come from.There aren't that many procurement staff to go around at the Highways Agency.'

The DfT is looking to save a total of £785 million by 2007-08, but it is facing a 10 per cent cutback in its capital budget next year.

Although overall expenditure will rise on average by 4.5 per cent, capital spending will fall from £3.7 billion in 2004-05 to £3.3 billion in 2005-06, before recovering in the two years following.

The Government is also planning to role out a new national network of local collective 'purchasing consortia' for housing repair work based on the Fusion 21 model on Merseyside.

Sir Peter - the former chief executive of the Office of Government Commerce - confirmed that Fusion 21 is making savings of 25 to 30 per cent on the cost of materials for repairs and an overall net saving of 7.5 per cent.

He said that Government departments currently lack 'strategic visibility and influence' over what they spend, and added: 'Too much public procurement is undertaken without professional support which results in sub-optimal value for money and unnecessarily high prices being paid for goods, works and services.'

Health and education will benefit industry

CONSTRUCTION is set to gain from hefty increases in health and education spending as Labour threw down the gauntlet ahead of next year's likely general election.

Capital spending on health will nearly double from £3.4 billion this year to £6.1 billion by 2007-08, growing by around 20 per cent a year.

And education will see a rise in capital spend from £3.8 billion to £5.5 billion over the three years of the spending review. Including alternative methods of funding, such as PFI, capital spending is increasing from £5 billion in 2004-05 to £7 billion in 2007-08.

The Construction Confederation welcomed the increases but warned the Government not to flood the market with work.

Chief executive Stephen Ratcliffe said: 'It is crucial that this planned expenditure is delivered steadily and consistently providing contractors with stability of workload and enabling them to invest in and gear up their operations to meet demand.'