CBI says government left shortchanged

The government spends £150bn on goods and services every year but must get better value for the public money it spends, and should use its purchasing power as a driving force for innovation, CBI director general Richard Lambert said.

Lambert aded: "The government's annual procurement budget, a massive £150bn, is almost nine times more than UK companies currently spend on research and development. If just a portion of this was targeted at nurturing and acquiring innovative products and services it could deliver dramatic returns.”

In the latest CBI report 'Improving Delivery: Realising Best Practice in Procurement and Contract Management' Lambert called for smarter purchasing within the public sector and for the creation of a new strategic body to ensure the government fosters innovation through its suppliers.

The CBI strongly advocates further private sector involvement in delivering public services to improve quality and value for money. But it says public procurement is not yet sufficiently professionalised and is excessively risk averse.

The CBI also said that better use needs to be made of the existing Technology Strategy Board, which should be remodelled into a body similar to the US defence agency DARPA.

Lambert added: "In the face of globalisation, developing and then delivering innovative new products and services is the key to a successful UK economy. Yet there is very little public investment in technology development. Despite the DTI's substantial science budget, a major gap exists in public support between early stage research funding and final purchasing by the public sector.