Spending summit spells out contractor cost-crunch

Aaron Morby 12 years ago
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Cabinet Secretary Francis Maude will today throw down a cost-cutting gauntlet to the Government’s top 20 suppliers.

At a high level summit meeting In London, he is expected to warn that the cancellation of the Building Schools for the Future programme is a grim foretaste of what is to come.

Maude will say that  the Government’s main suppliers must share the pain and expect deep cuts to their existing contracts. The promise is a more plentiful supply of work in the future.

He believes the costs of dozens of construction and professional services contracts can be slashed by billions of pounds.

Ahead of today’s meeting he said: “I’ll be laying down a challenge to these suppliers to work fast to take out costs. The taxpayer simply can’t afford everything that may have been contracted to them.”

Carillion and Serco are understood to among the top level contractors attending the summit.

The summit will highlight the scale of spending cuts to hit capital spending, but some contractors will argue that greater outsourcing will deliver big savings.

Firms like Interserve, Carillion and Serco are banking on an out-sourcing drive to plug the expected hole from capital spending cuts.

Today Carillion issued a trading statement that said: “We continue to have a large pipeline of contract opportunities, as both public and private sector organisations seek to reduce costs by outsourcing facilities management and other non-core services.

“As we move through 2011 and into 2012 we expect to benefit from an acceleration in outsourcing by central and local government organisations as they come under increasing pressure to achieve the 25% reduction in spending.”

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