Pre-Budget Report 2008
The 2008 Pre-Budget Report, Facing global challenges: supporting people through
difficult times was released on 24 November 2008.
As part
of the Government’s fiscal stimulus package, the Government is bringing
forward £3 billion of capital spending from 2010-11 into 2009-10 and 2008-09 for
housing, education, transport and other construction projects. However the Pre-Budget
Report firmly emphasises the importance of delivering public services that represent
good value for money.
The Operational Efficiency Programme
Budget 2008 launched the Operational Efficiency Programme
(OEP) to examine opportunities for further efficiency savings in five areas – back
office and IT, collaborative procurement, asset management, property and local incentives
and empowerment. The Pre-Budget Report announced some initial findings. The OEP
has identified substantial additional savings from 2010-11 onwards through greater
efficiencies in back office operations including human resources, finance, estate,
security, marketing, travel and legal services.
The OEP has examined examples of good practice that already exist in the public
sector. The Pre-Budget Report gives two examples of shared services centres, one
set up by HM Prison Service and one in the NHS, and highlights the cost efficiencies
they allow.
On property, the OEP is examining the efficiency savings that could be achieved
across the UK’s public sector property holdings which have an estimated book value
of £370 billion. The review will focus on some of the larger holdings in areas such
as health, local government, defence and justice. This review will link in with
the review on the release of surplus land for housing.
A series of recommendations
will be developed for Budget 2009 that will incentivise more efficient public sector
management of property assets.
Managing Director of TPPlaw, Mark Johnson, commented: “Efficiency savings in public
services will continue to be a Government priority as depressed macro-economic conditions
prevail throughout 2009 and into 2010. This is likely to lead to more outsourcing
of non-core functions, particularly around the optimum use of property assets and
re-organisation of back-office functions, often pooling the functions of several
authorities to achieve economies of scale.”
Public Value Programme
The Pre-Budget Report announced that the Public Value Programme
(PVP) has identified key reforms that will deliver savings and efficiency improvements
in 2010-11 and in the next Spending Review period.
One key reform will be improvements to NHS estate utilisation which will reduce
the need for new hospital space by up to £3 billion, and save up to £100 million
per annum of estate costs over the next spending period.
In addition new models
for providing primary care estate will be introduced by enabling PCTs to extend
LIFT public-private partnerships to the management of their entire estate.
The Ministry of Justice will increase its use of competition to improve efficiency
and effectiveness in the National Offender Management Service (NOMS). This will
mean that all new build prisons are to be built and managed by the private sector
over the next three years and five commercially let contracts will be competed by
2010-11 to new NOMS specification standards with bids invited from the public, private
and third sectors. High cost or under performing prisons will be identified against
the new NOMS standard specifications and failure to improve will lead to services
being contracted out without a public sector bid.
The PVP will continue to focus on areas where there is scope for additional value
for money and one area that will see further investigation is PCTs. The Pre-Budget
Report expects that as PCTs enhance their commissioning skills towards world class
standards they will be able
to make value for money improvements across the £70
billion of commissioned health services. Budget 2009 will set out the projected
value for money impact of World Class Commissioning. Budget 2009 will also report
on the scope to increase efficiency in the hospital sector by the tariff prices
paid by PCTs and progress on extending pricing to new areas of the health service.
Mark Johnson also suggested that “Strategic procurement will be a key tool in achieving
efficiency gains – we may see this result in greater use of frameworks, like Express
LIFT or the PfS National Contractors Framework, to reduce procurement times and
transaction costs.”
New value for money target
As a result of the announcements on the OEP and PVP in
the Pre-Budget Report the Government announced that that the existing cross-Government
value for money target for 2010-11 will increase from £30 billion to £35 billion.
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For More Information Contact:
Mark Johnson
TPP Law Limited
53 Great Suffolk Street
London SE1 ODB
t 020 7620 0888
f 020 7620 0778
e info@tpplaw.co.uk
Email:
Mark
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