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Government 'on track' to hit 25% SME spending target

The government’s chief procurement officer has admitted its target of 25 per cent spending with SMEs will put it under pressure, but stressed it was committed to the spending.

Bill Crothers insisted that increasing spending with multiple SMEs, compared with one larger contractor, was cost-effective and more efficient.

Speaking at a briefing on efficiency savings in government, he admitted it would put more pressure on the government and made their “job more difficult” but said it was necessary.  

Chancellor George Osborne told the meeting the government was on track to ensuring a quarter of its spending will go to SMEs by the end of 2015.

Mr Osborne reiterated the pledge to SMEs as he announced £14.3bn of savings across government for 2013/14.

Cabinet Office minister Francis Maude, who also attended the briefing, added that the government hopes to have made savings of £20bn by the end of next year.

On infrastructure and construction cost-cutting, Major Projects Authority chief executive John Manzoni said that more had to be done to improve the execution of projects.

Highlights

The government has secured savings of £14.3bn for 2013/14 against 2009/10 baseline, which include recurring and one-off savings.

Procurement and commercial total savings of £5.4bn.

This included £1.4bn centralisation of procurement and £1.8bn better management of contracts and commercial relations.

Project total savings of £3.3bn.

This included £2.6bn reducing costs as well as cancelling or reducing the scope of major government projects and £0.8bn taken out of the construction process.

Mr Manzoni said the government had to provide “tighter specifications” for contractors working on projects such as schools.

He added that “leadership and strategic prioritisation” had to be improved, with little in-house experience and skill within the civil service in this area to date.

The MPA created a Major Projects Leadership Academy to address this issue, which will have 340 participants by the end of 2014, up from 169 at the end of 2013.

Leaders from more than 45 per cent of government’s major projects have taken part in the MPLA.

Mr Maude has led the government’s work around efficiency reforms to tackle wasteful spending in government, through the Efficiency and Reform Group.

Mr Osborne said reform had been necessary when the coalition came to power, as spending was in “a pretty dire situation”.

Other key efficiency reforms included further transparency around government data, which Mr Maude admitted “had been a struggle in the past”.

He said the drive for transparency had been met with “resistance” from government departments but that ERG had overcome this and uncovered common overspending.

Among the savings announced by the government was £600m through selling buildings and exiting expensive rental agreements.

It said the Highways Agency major roads programme had saved nearly £380m and rail network repair costs had been trimmed by nearly £250m.

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