Government saves £450m in IT costs as part of £3.75bn savings

The government claims to have saved almost £450m in IT expenditure since coming to power in May 2010, helping to generate overall savings of £3.75bn as it looks to cut the budget deficit.

The IT savings came from cutting £150m from its 2010/11 budget for major IT projects, and by halting or curtailing spending of £300m for more standard ICT expenditure across government.

Cabinet Office minister Francis Maude said the figures prove that the government's stance since taking office had been rewarded.

"We promised to drive out inefficiency and unjustifiable costs in central government. It is these savings, which have been achieved in just 10 months, that have allowed departments to protect essential front line services and jobs," he said.

"Following an independent audit, I can confirm today that these measures have saved central government departments £3.75bn."

Maude explained that this sum is equivalent to the salaries of 200,000 junior nurses, or 150,000 secondary school teachers, and promised that the government will continue to cut costs and make the public sector more sustainable.

Edward Hamilton, a public sector IT analyst with Analysys Mason, told V3 that while the figures showed the Cabinet Office was moving in the right direction, it was unclear where exactly the savings were being made and if it would last.

"A lot of these savings are most likely just delayed contracts being cancelled or renegotiations of contracts at a lower rates, but suppliers will then remove some of the services from the original contract," he said.

"This means in the long run they will still cost the government a lot of money. IT companies are far better versed at getting the best for contract for themselves than the government is, they know how to get their money."

Hamilton also noted that many of the true innovations being used to drive savings were coming from a local level, such as a shared network among Westminster, Fulham and Chelsea councils, rather than from central government departments.

The Public Affairs Committee criticised the government last week for its IT procurement strategy, arguing that Downing Street is at the mercy of a cartel of large IT firms and often pays far too much for equipment when compared to the private sector.

The Committee also recommended a greater use of SMEs for IT contracts, which the government has said it wants to encourage.