Billions in IT spending cuts likely in 2009 Treasury budget

A senior adviser to the Treasury has revealed that the 2009 budget will include plans for "significant" savings in the £30bn the public sector spends each year on IT and back-office administration.

A senior adviser to the Treasury has revealed that the 2009 budget will include plans for "significant" savings in the £30bn the public sector spends each year on IT and back-office administration.

The savings could offset some of the public money being spent on support for struggling banks.

Martin Read, former Chief Executive of Logica and now an adviser to the Treasury, gave a hint at a conference last week of what is in Alistair Darling's budget this Spring, in IT and back-office savings.

He is lead of the back-office and IT strand of the Treasury's Operational Efficiency Programme, which aims to identify new savings of billions of pounds.

He was speaking at the Government IT 09 conference at the Queen Elizabeth Hall in Westminster.

He said that a review has identified "significant" savings from the estimated annual spend of £16bn on IT and £18bn on back-office administration.

"We will be reporting in the budget in 2009 and you will see what the numbers are involved and also recommendations on how they [the savings] will be achieved," said Read.

He said that the review team has a "high level of confidence that significant savings are achievable". He did not reveal any savings figure. "I cannot tell you what it is but do wait for the budget and you will find out more."

UK taxpayers are paying more for IT and the back office than European counterparts and may not be getting better value for the extra spend, he said.

"The bottom line is that the UK is spending a lot more money per capita than our European counterparts," he said.

The savings will be made through standardisation and simplification. "It is good in one way to have devolution across the public sector, but there is a cost penalty if the devolution is left completely to its own devices. That cost penalty is a lack of standardisation, simplification and sharing back-office operations and IT."

Read's talk suggested there could be large new contracts for shared services. But he also made it clear there would be no rip-out-and-replace policy. He said, "It is about standardisation and simplification of IT systems."

He added, "There is a lot of good stuff out there, but I am convinced we could do a lot of things better."

Read is a non-executive director of British Airways and has been on the boards of Asda and Boots.

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