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Yvette Cooper launches the Operational Efficiency Programme

HM TREASURY News Release (72/08) issued by The Government News Network on 3 July 2008

Chief Secretary to the Treasury Yvette Cooper has today launched the Operational Efficiency Programme. The programme forms a key part of the Government's drive to achieve greater efficiency savings across public spending, with the potential to deliver billions of pounds of savings. The Operational Efficiency Programme will be wide-ranging, focussing initially on five strands examining cross-cutting areas of government spending and drawing on the best public and private sector experience. Each of the first four strands will be led by an experienced figure from the private sector who will provide expertise and fresh ideas, and who will challenge the Government on its plans to ensure that they are as ambitious as possible. The programme will deliver its recommendations by Budget 2009. The initial five workstrands are:

* back office and IT, to be led by Martin Read;

* collaborative procurement, to be led by Martin Jay;

* asset management and sales, to be led by Gerry Grimstone;

* property, to be led by Lord Carter of Coles; and

* local incentives and empowerment.

The fifth area will take forward work aimed at increasing efficiency by encouraging frontline professionals and the users of public services to bring forward their own ideas on how to cut waste. Cooper is announcing details of this work today, including moves to cut bureaucratic burdens on the frontline and to push initiatives which allow frontline workers to pitch their ideas to top management.

Launching the programme, Yvette Cooper said:

"The Gershon Review saved the Government £23bn and we are on course for £30bn more savings over the next three years. But we need to go further. The taxpayer has a right to expect value for money, and that means the public sector has a duty to seek ever greater efficiencies too."

The programme will build on the success of the Gershon Review, which achieved £23 billon of savings during the 2004 Spending Review period, and will identify further savings and efficiencies beyond the £30 billion already planned for the current spending review period. It will operate in parallel to the Public Value Programme, launched by Cooper in the Budget, which is examining major policy issues on value for money within individual spending areas, such as in road-building and healthcare commissioning.

Notes for Editors

1. The full Operation Efficiency Programme prospectus can be found here: http://www.hm-treasury.gov.uk/documents/public_spending_reporting/vfm/vfm_operational_efficiency.cfm

2. Detail of the four core workstrands:

Strand One - Back office and IT

* We have made major savings in support services through the Gershon programme, for example the Ministry of Defence has saved £45 million a year by rolling out a single personnel management system for all three armed services. However, we know that the best businesses are still ahead of us, and we want to challenge ourselves to raise our level of ambition in this area. Private sector experience suggests significant savings of 10-50 per cent may be possible, with an estimated £7 billon spent on finance and human resources functions alone in the public sector. This strand will look at how we can make progress towards achieving these savings, including a particular emphasis on how to get better value out of large IT projects. Strand Two - Collaborative procurement

* The public sector buys goods and services worth over £160 billion each year but only a small fraction of this is bought in a collaborative way, using the collective purchasing power of government. Collaborative procurement may not always be the best way to buy, but there is scope for reducing the complexity of current arrangements in areas such as energy and travel and increasing the scale of collaborative procurement across the wider public sector. This strand of the review will explore how we can make a step-change in this area.

Strand Three - Asset management and sales

* The third strand of the review will consider asset management. The public sector manages an enormous asset base worth well over £800 billon. This strand will look at the effectiveness of our existing policies, including the financial incentives around assets, whether different types of assets require different policy interventions and incentives, and the scope for further disposals.

Strand Four - Property

* The final strand of the review will consider how efficiently public sector organisations are using their property, particularly office space. Departments vary in how efficiently they use the space available to them and we feel there is scope to make improvements and achieve significant savings. The scope of this workstrand will include the wider public sector, going beyond the reach of OGC's High Performing Property initiative, which mainly covers the central government estate.

2. Measures to increase local engagement

The fifth area on local incentives and empowerment aims to open up more space for public sector professionals to innovate and improve value for money in their areas. It will look at areas such as:

* extending the statutory Power to Innovate, which gives schools more freedom to act on their own initiative, to other parts of the public sector;

* rolling out schemes such as the "Angels and Dragons" programme in HM Revenue and Customs, which has led to service improvements by giving frontline staff a direct line to top management for pitching innovative ideas, and direct support to implement them;

* replicating approaches like the NHS' "Productive Ward" programme, which enables nurses to spend less time on administration and more on direct patient care, in other parts of the public services; and

* adopting techniques which large businesses use to tap into ideas and expertise from the shop floor.

The Government will take further steps to reduce bureaucratic burdens on the frontline. The Government will:

* introduce new "gatekeeper" powers which will help manage the burden of inspection on local authorities;

* require all departments to publish by December 2008 detailed plans setting out which regular data requests they will cut as the first stage of the Government's commitment to reduce data burdens on the frontline by 30% by 2010;

* look at the case for giving the public sector frontline the same level of protection against over regulation as the new Regulators' Compliance Code is giving to the private sector; and

* take a robust view of the funding requirements for public sector regulators for the next spending review period, with the aim of capturing further savings.

3. Workstrand Advisors

Martin Read

* The back office / IT workstrand will be led by Martin Read. Martin is a non-executive director of British Airways and a senior adviser to Candover Partners. He was chief executive of international IT services company Logica from 1993 to 2007 and has served as a non-executive director of Boots (1999-2006) and ASDA (1996-1999). Prior to 1993, he was supervisory managing director of the GEC-Marconi Radar and Control Systems group of companies. Martin's other interests include being a director of homelessness charity Shelter, a trustee of the Council for Industry and Higher Education and a member of the Council of Southampton University.

* Martin said: "I am pleased to be involved in this programme and to be leading the work on back office and IT services. These services form a vital part of any modern organisation. The private sector has made significant strides forward in this area in recent years and my work will examine the scope for the public sector to benefit from this experience, in order to deliver further efficiencies over the coming period." Martin Jay

* Martin Jay was appointed a non-executive director of Invensys in January 2003 and became Chairman in July 2003. Mr Jay retired as Chairman of VT Group plc in July 2005, where he was also Chief Executive for 13 years. He previously held a range of leadership positions at GEC and was a member of the GEC Management Board. Mr Jay is the Chairman of the Tall Ships Youth Trust.

* Martin said: "I'm excited by this opportunity to help government deliver more savings from its £160 billion procurement bill. There's some good work already underway, but I will be challenging the government on the scale and ambition of its savings plans - particularly on collaborative procurement, where we should be able to drive some better deals by harnessing the collective buying power of the public sector."

Gerry Grimstone

* Gerry Grimstone is Chairman of Standard Life plc, after serving as a Standard Life director since July 2003. Gerry Grimstone held senior positions with the Department of Health and Social Security and HM Treasury until 1986. He then spent 13 years with Schroders in London, Hong Kong and New York prior to becoming Vice Chairman of Schroders' worldwide investment banking activities. In September 2007 he was appointed Financial Services India Champion by UKTI. Gerry is also Chairman of Candover Investments plc, a major European private equity firm, and was until recently a member of the Air Command Board and Chairman of the RAF Joint Audit Committee.

* Gerry said: "I'm looking forward to advising the Government on how to drive better value for money from its £800 billion asset base. I will be taking a hard look at the incentives around assets in the public sector, and at whether the Government should be more ambitious on disposals - with the aim of delivering a better deal for the taxpayer."

Lord Carter of Coles

* Patrick Carter is a Labour Peer who in addition to a career in business has advised the Government on a wide range of issues. He has Chaired a number of Government reviews including Commonwealth Games 2002, The English National Stadium (Wembley), National Athletics, Payroll Services, Criminal Records Bureau, Offender Management, Public Diplomacy, the Procurement of Legal Aid, Pathology and Prisons. In 1985, he founded Westminster Health Care which he built into a leading health care provider which he sold in 1999. He is a private investor and director of public and private companies in the fields of insurance, healthcare and information technology. He was Chair of Sport England from 2002 to 2006, was a member of the Home Office Board and a member of HM Treasury's Productivity Panel.

* Lord Carter said: "I welcome the opportunity to drive greater efficiencies from the Government's very large and varied property portfolio. I'm aware that some good work is already taking place in this area, but I intend to challenge government to raise its ambition across the full range of public sector property."

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