The Operational Efficiency Programme was designed to identify savings that could be made both during and beyond the 2007 CSR period, in addition to wider efficiency savings that departments are able to achieve in the normal way. Where savings can be delivered within the 2007 CSR period, these savings will contribute to departments' value for money targets as part of the Government's overall value for money target. As a result of the interim findings of the OEP, at the 2008 Pre-Budget Report the Government increased this target by an additional £5 billion to £35 billion.
Where appropriate, the advisors have quantified the level of savings that the Government could achieve if their recommendations were implemented. These estimated savings are at a high level and indicative, given limited management information and current market uncertainty, but include, by 2013-14:
• compared to 2007-08 spending of around £18 billion on back office operations (such as finance and HR) across the public sector, savings of around £4 billion a year;
• compared to 2007-08 spending of around £16 billion on IT, savings of £3.2 billion a year;
• compared to 2007-08 spending of £89 billion, savings of around £6.1 billion a year from an extended programme of collaborative procurement (plus £1.6 billion of collaborative procurement savings on IT which are included in the figure above); and
• compared to 2007-08 running costs of approximately £25 billion on the public sector's property estate, cost savings of up to £1.5 billion a year.
Some of these savings are already underway. It is estimated that nearly £6 billion per year of these savings can be delivered by 2010-11 towards the Government's target of £35 billion. Others will take time to deliver, for example as contracts need to be changed, back office operations need to be restructured, and surplus property is sold. It is estimated that additional savings of around £5 billion per year can be achieved in 2011-12, rising to around £9 billion per year by 2013-14.
Proceeds from property sales (excluding council housing), totalling in the region of £20 billion, should also be achievable over an initial 10-year period.
All organisations in the public sector - central government, local government and delivery bodies - stand to benefit by playing their part in taking forward the opportunities identified by the Operational Efficiency Programme.
While the recommendations in this report have been founded on an evidence base that includes the public sector throughout the United Kingdom, the devolved administrations are responsible for value for money in their own jurisdictions and are free to use the findings and recommendations of the Operational Efficiency Programme to inform their progress on efficiency.