The implications of the government’s new Efficiency and Reform Group

After its election in 2010, the Conservative government identified as one of its key objectives the identification and minimisation of waste. The public sector makes up around 15 percent of the economy and spends £1 out of every £7; so even minor gains can result in large benefits for taxpayers.

Successive administrations have compounded the inefficiencies found in the purchase of goods and services in the government sector. The government established an Efficiency and Reform Group tasked with making the necessary changes in public service culture. The goal was to maintain the same level of front line service to the public, but at a reduced cost.

The group’s objectives have serious potential impact on suppliers to the government. For example in the technology sector, projects worth more than £1m were reviewed and put on hold and new structures were considered such as cloud technology and outsourcing.

The effect on small and medium enterprises (SME’s) was expected to be positive as government departments looked for a better deal from suppliers. In 2010, SME’s were receiving only 6 percent of total public sector spending yet made up 50 percent of the economy.

Francis Maude, who co-chairs the reform group, says a more level playing field for SME’s was essential to promote competition amongst suppliers. The objective was for SME’s to account for 25 percent of government spending by the end of the current parliamentary term.

The new environment would provide many gains to small business, especially amongst suppliers in the technology sector. Value added businesses, start-ups and niche sector players who could deliver customised solutions would be keenly awaiting opportunities to bid on government contracts. The reforms would enhance the work being promoted by the Business Innovation and Skills department.

The benefits to taxpayers from a more competitive marketplace are likely to be lower costs, more innovation and ultimately better public services. But some groups urge caution, stressing that a goal of efficiency is nothing new and that all stakeholders will need time to adjust to the new environment.