The UK public sector could save £12 billion a year in running costs without calling a halt to the capital projects programme, according to the leading asset management consultancy firm Currie & Brown.
The calculation applies across the range of public spending projects at central and local government level, including health, education and also the PFI/PPP programme.
The £12bn saving accounts for 20 per cent of total spending on capital projects, including running costs, and it is in those ongoing costs that Currie & Brown is realising savings of that order for public sector clients.
Currie & Brown’s comments coincide with the Government’s imminent Comprehensive Spending Review, and the increasing debate about how major projects, including schools, hospitals and other public buildings can be delivered in future.
“The public sector should begin to take a whole-life asset management view of projects,” commented Andrew Loudon, chief operating officer of Currie & Brown UK. “There are many positive lessons to be learned from the last 10 or 15 years, and this is the principal one. In our experience as asset managers providing cost and project management services to the public sector at every level, and right across the UK, the whole-life approach is the one that delivers real efficiency and real savings.”
He said that his firm had identified that substantial benefits can be gained by improving procurement management skills across the public sector, and he supported the idea that major services could be effectively out-sourced to the private sector. He believes that private and public sector players should work in partnership to deal constructively with the inevitability of having to drive down costs and achieve large-scale efficiency savings over the next five years.
Currie & Brown argues that the temptation to simply reduce the number and scale of capital projects, as a means of appearing to achieve “cuts”, should be resisted by government in favour of the “whole life” approach.
“The Treasury can achieve massive savings by using this approach. There is plenty of evidence to indicate that by implementing a “whole life’ approach together with other strategies, for example the development of a low-carbon portfolio of efficient working buildings in key sectors, they can deliver very significant reductions in continuing expenditure,” added Andrew Loudon.
“We believe the UK is on the brink of moving towards an integrated out-sourced approach to public service provision, including buildings and infrastructure management.”