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Budget 2009: Efficiency savings to help support tech investments

21st Apr 2009
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Cost efficiencies and a renewed green technology agenda find themselves hand-in-hand at this year’s budget. Jon Wilcox takes a look at Alistair Darling’s proposals.

Standing at the dispatch box, Alistair Darling said he believed the UK could replicate the success of North Sea oil in the coming years by switching its focus to renewable energy and low carbon sectors.

The vision to mould Britain into a world leader in green technology and low carbon industries has long been discussed by the Labour government. At his second budget, Darling confirmed multi-billion pound investments in such high-growth industries, funded by £15bn in government efficiency savings to be made by 2014, a portion of which will rely on new IT investments.

Monday saw the publication of the Operational Efficiencies Programme (OEP), which identified the multi-billion pound cost-efficiencies. The full budget report took on board the OEP in full and vowed: "All departments will be working to implement and deliver the additional value for money savings identified through the programme."

Split into five key reviews, the programme is the latest stage in the efficiency drive that the government claims has accumulated £26.5bn in savings since 2004. The OEP will extend cost-cutting measures to public sector back-office functions, IT, and procurement. In his speech to the Commons, the chancellor commented: “The efficiency savings we are making will help us direct more money to continue to support investment that everyone in our country depends on.”

One of the authors of the OEP, Dr Martin Read, a non-executive director for British Airways, identified up to £3.2bn of savings in IT systems, and an additional £4bn through improved efficiency in back office operations.

A proportion of savings from IT are expected to come through the collection of regular and accurate benchmarking statistics, together with the implementation of simplified and standardised IT systems across the public sector. The OEP’s recommendations are to give the responsibility of implementing improved standardisation for IT systems to government chief information officers and "collaborative boards" overseen by the Office of Government Commerce.

An additional £1.6bn of IT savings has also been identified by Martin Jay, who oversaw the OEP’s investigation into procurement savings. The OEP report acknowledged the IT efficiencies that have come from implementing recommendations made in the 2004 Gershon report.

Reinforcing his vision to develop the UK’s green technology credentials, the Chancellor unveiled a raft of new investment totalling £1bn for green collar jobs and low carbon industries. The renewed focus on green technology is part of the government’s ambition to cut the UK’s carbon emissions by 34% by 2020, and comes ahead of the Copenhagen Climate Change Summit in December.

Improvements in energy efficiency were cited by Darling as key to cutting carbon emissions, though the development and implementation of carbon capture and storage would also allow the use of fossil fuels as a major source of energy “for the foreseeable future.” New financial support for off-shore wind farms, worth £525m over the next two years, was also unveiled.

The Chancellor said the new funds would "lead to major projects getting the go-ahead quickly, providing enough electricity to meet the needs of up to 3m households".

Darling’s announcement of the government’s commitment came just days after the Business Secretary, Lord Mandelson, unveiled the policy statement, Building Britain’s Future – New Industry, New Jobs, at Loughborough University.

In addition to supporting green technology development with funds freed by the implementation of the OEP, the Chancellor announced over £400m of new funding for green manufacturing. The investment is expected “to drive the application of new technology and invest in small scale projects.”

Darling also confirmed that in addition to further funding into green technologies, savings made as a result of the OEP will be poured into public services at a rate of 0.7% a year from 2011-12.


Replies (1)

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By The Minion
29th Apr 2009 12:50

have i missed this
AD seems to be trying to get a low carbon economy, but i cant see any grants anywhere for solar panels etc etc.

Wouldnt it make more sense to aim the savings at the general public so there are longer term personal benefits?

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