Whitehall budget slashed

 

The Government has summoned more
than 30 of its biggest suppliers for talks as the most brutal Whitehall
spending review for decades nears its conclusion.

Francis Maude, the Cabinet Office
minister, will hold discussions on Friday with major defence, IT and other
equipment suppliers aimed at shaving billions of pounds from its annual
procurement bill.

Companies such as Balfour Beatty,
Carillion, Cisco Systems, Deloitte, Ernst & Young, KPMG, Slaughter &
May and Tata Consultancy Services will be at the meeting.

It follows a similar gathering in
July involving the likes of Accenture, BT, Microsoft and Vodafone which
prompted a note from analysts at Morgan Stanley saying that “suppliers
should expect contract renegotiation to have a negative impact on revenues and
margins”.

So far, a handful of companies have
confirmed that they have reached agreement with ministers on revised terms.

Logica, the IT service provider,
has said that it would keep all of its existing contracts, although it made no
disclosure about the revised terms.

In a statement, Mr Maude said:
“Although renegotiating contracts in this way had never been done by
Government before, it has proved to be a success for all sides involved,
particularly the taxpayer.

“Several Memoranda of
Understanding (MoUs) have already been signed and we expect more to be signed
over the coming weeks.

“When this first process is
complete it is likely to deliver savings running into hundreds of millions of
pounds.

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