Spending Review 2010: What does it mean for SITS?

The wait is finally over. The Chancellor has delivered Spending Review 2010, with the headline news that central government will have to deliver nearly £6b a year in savings by 2014-15 rather than the £3b previously announced.

The Spending Review, which lays out the government’s spending plans for the next four years, reveals that administration budgets across the whole of Whitehall and its Arms Length Bodies will be cut by 34% on average. Some departments, including BIS and DCMS, will have to slash admin costs by 40% or more. Reductions in spending on back office functions and the abolition of quangos will play an important part in delivering these savings. Central government will be smaller as a result with the public sector headcount expected to fall by 490k over four years (although it’s not clear whether this includes staff transferred to the private sector through outsourcing).

Contract renegotiations with suppliers, central procurement of commodities, stronger supplier management, reductions in spending on IT and consulting, cutting quangos and increased use of outsourcing and shared services all have a role to play in achieving these unprecedented savings.

As expected, central government comes off worst from the Review but local government is also in for some serious belt-tightening. On average, councils will see their central government funding cut by 26% but their budgets are expected to decrease by ‘just’ 14% once council tax receipts are taken into account. In contrast, health and schools are relatively well-protected but that doesn’t necessarily mean SITS spending is too.

For our considered analysis of the Spending Review, highlighting the areas of investment and opportunity for SITS suppliers, TMV Foundation Service subscribers can read more on UKHotViewsExtra.

Posted by Tola Sargeant at '08:20' - Tagged: publicsector