£1bn of Whitehall work privatised

The Government's Competing for Quality programme has produced annual savings of £400m over the past two years, David Hunt, Chancellor of the Duchy of Lancaster, said yesterday, writes Nicholas Timmins.

Since April 1992, more than £2bn of government activity has been reviewed with more than £1bn of it transferred to the private sector. The review has covered a huge variety of work, including information technology and computer services, vehicle fleet and buildings management, and has involved the work of 54,300 civil servants.

Figures published yesterday show a reduction of 26,900 civil service posts - 10,600 transferred to the private sector, 6,500 redeployed in the civil service, 2,100 gone by natural wastage and 3,300 made voluntarily or compulsorily redundant. The fate of a further 4,300 civil servants is still being decided.

The figures - showing average cost savings of 20 per cent - were "excellent news for taxpayers," Mr Hunt said, and "show what can be achieved when those of us who provide government services are really single-minded about providing the best value for money". More savings are to come with another £1bn of work - including quangos such as English Heritage and the National Rivers Authority - due for review this year.

Mr Hunt said the figures showed the benefits of "a genuine partnership between public servants and the private sector". But a breakdown reveals half the work - £1bn worth - was put out to the private sector without any competing in-house bid. Where in-house teams were allowed to tender for £643m of business, they won 73 per cent of the contracts, with the private sector taking about £180m worth of business.