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Brown to create government 'service companies' to push shared services

The government is planning to establish a number of "business service companies" to help it push its shared services projects forward.

It wants to work with service companies to save £4bn a year by 2013, by increasing efficiency in Whitehall's back office IT systems. The prime minister Gordon Brown said in his Digital Economy speech yesterday.

He said, "Our aim and intention is that these public business service companies will use modern digital platforms wherever possible, and aim to be leaders in green technology and working practices. And as they demonstrate progress there is no reason why these companies should not in time draw in private capital, giving rise to the possibility of substantial capital receipts."

The prototype for this approach already exists in the shared services centre for the Department for Work and Pensions, which supports 140,000 staff in three departments. It has plans to take on four more departments next year, Brown said.

"DWP also has plans to establish its shared services as a trading fund within the next 12 months, and will explore in parallel the scope for bringing further commercial expertise into its work."

The Confederation for British Industry (CBI) was wary about the plans, raising concerns that they would reduce competition for government contracts and make it difficult for commercial businesses to win them.

Susan Anderson, director for public services and skills at the CBI, said, "We are concerned that the government's intention to create state-owned 'business service companies' could backfire by preventing commercial companies from competing for contracts. It would be better to create a level playing field to encourage competition and efficiency."


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