Commercial Value for Money programme (CVFM) details: FOI release

Information requested

1. Within the Commercial Value for Money programme, which ministers have said has delivered £7million of cashable and £600k of non-cashable savings, can you please provide a breakdown of each individual saving and why it was considered to not be value for money.

2. In a Written Question answer, Minister Ivan McKee states: "Our Single Scottish Estate, National Collaborative Procurement, Commercial Value for Money and Digital programmes are collectively securing cost avoidance and cash releasing savings, expected to reach up to £280 million over a twoyear period by the end of 2024-25, with further projected savings of nearly £300 million over the following two financial years to the end of 2026-27."

Can you please provide me a breakdown of how these figures have been calculated, what they apply to, and why they have been considered justified to cut?

Response

Answer 1: The Commercial Value for Money programme (CVFM) is a small team which was established to identify opportunities for the Scottish Government to maximise value for money with a focus on grants. The approach has delivered £7.6m of savings and a breakdown of the savings and the mechanism used to deliver these are provided below:

Category	Saving
Increasing competitive tension within grants	£501,000
Centralising and aggregation of spend through development and implementation of a newly established Grant Fund Manager Dynamic Purchasing System:	£327,000
Commercial scrutiny of external provider costs	£2,130,000
Benchmarking external provider costs	£1,100,000
Commercial analysis of external service delivery approaches:	£2,832,000
Consolidation of spend	£354,000
Reducing Funding through assessment of need analysis	£144,000
Identification of Retained Funds	£216,000
TOTAL	£7,604,000

Answer 2: 

Breakdown of projected savings (as at January 2025)

Programme	Estimated savings 2023-2025	Estimated savings 2025-2027
Collaborative Procurement	£240m	£260m
Commercial Value for Money Programme	£10m	£20m
Single Scottish Estate	£20.5m	£16m
Digital	£3.2m	TBC
Automation	£4.3m	£4.5m
TOTAL	£278m	£300.5m

The Scottish Government has a range of programmes that are saving money from corporate expenditure that we can use to improve services. Examples include our Single Scottish Estate, National Collaborative Procurement, Commercial Value for Money and Digital/ Automation programmes, which are securing significant cost avoidance and cash releasing savings, expected to reach up to £280m over a two year period by the end of 2024-25, with further projected savings of nearly £300 million over the following two financial years to the end of 2026-27.

These are projected savings figures and are subject to fluctuations depending on a number of elements including resourcing, technology, activity levels, markets and other factors. Savings are not always related to directly making cuts, they are achieved through a variety of approaches including increasing efficiency, offering services in different ways, assessing in-house versus outsourced options, or in the example of the collaborative frameworks described above achieving economies of scale, and avoiding cost which allows budget to be used elsewhere.

Collaborative procurement can help public bodies achieve better value for money, through consolidating volumes, driving efficiencies and social value and making better use of skills and resources. The Scottish Government establishes national collaborative procurement framework agreements on behalf of the whole Scottish public sector. Current financial benefits delivered annually are around £120 - £130m, made up of both cost avoidance and cash savings. This amounts to financial benefits of at least £240m over a two year period to the end of 2024-2025. Projections over the 2 year period to end 2026-2027 are £260m as the team starts to scale up collaborative agreements.

The Single Scottish Estate (SSE) will help us have a more efficient approach to public sector property management, optimising costs, enabling the delivery of excellent public services and providing staff with great places to work, recognising the shifts in working culture since the pandemic. An overall total of £36m of direct Single Scottish Estate benefits have been secured. SSE is projecting savings of £20.5m over the two year period to end 2024-2025. Further savings of £16m are estimated over the 2 year period to end 2026-2027.

The Commercial Value for Money programme (CVfM) is a small team providing commercial expertise and support across focused Scottish Government expenditure to maximise value for money through the delivery of monetary efficiencies and/or increased impactful policy outcomes. Over £7m savings have been delivered, contributing to projected savings of £10m over the two year period 2023-2025. Further savings of £20m are estimated over the 2 year period to end 2026-2027.

The Digital Programme is a key area of work delivering a new framework for digital service transformation, including the introduction of Scottish Government level control of digital investments through prioritisation; based on business need and contribution to digital public services.The programme is focused on building capacity and capability in-house to replace the need for external suppliers and contractors; and has already delivered to date, over £3.2m mix of cost reduction and cost avoidance savings through the digital recruitment service. Projected savings of over the 2 year period to end 2026-2027 will be dependent on the number of external supplier and contractor replacements.

To support efficient and effective government operations and advance AI enabled automation maturity across Scotland's public sector, the Intelligent Automation Centre of Excellence (IACoE) is evolving from a centralised model to supporting federation. This strategic shift is supported by the development of a National Collaborative Procurement Framework for Intelligent Automation, which supports the acceleration and scaling of faster, nimbler and cheaper AI enabled Automation technologies across our public services. Since it was established in 2021, the CoE has positioned Scotland as a global leader in AI-enabled automation, driving transformative changes in public service delivery with a citizen centred focus. Through this shared service, government and executive agencies have realised substantial benefits, including reduced delivery costs, enhanced compliance, increased operational capacity and significant cost savings.

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