HISTORIC PRESS RELEASE : Saving time – Saving money Government charge card cuts costs for taxpayers [October 1997]

The press release issued by HM Treasury on 23 October 1997.

More than 60 million Pounds of taxpayers’ money could be saved every year using a new procurement card for Government Departments launched by Paymaster General Geoffrey Robinson today.

The first Government-wide charge card, arranged in partnership between the Treasury and Visa International and involving five major banks, will enable purchasers to order and pay for goods and services directly and without the need to raise an expensive series of orders and invoices, saving time and money.

Launching the Government Procurement Card (GPC), Geoffrey Robinson said:

“Buying essential small items has long been a cause of frustration and waste for Government.

“Because of the need to keep track of spending, these had to be ordered and paid for through a time consuming and expensive system of individual orders. This could cost 70 Pounds or more even though the goods involved might cost 100 Pounds or less – in one case identified by the National Audit Office only 98 pence!

“That is an unacceptable waste of public money when modern charge card technology offers a better deal, potentially more than halving the cost of buying low value items. When we consider that well over 100 million Pounds is spent merely on processing low value purchases, the potential savings – over 60 million Pounds – are obvious.

“Paying for goods on the spot with a Government Procurement Card will end much of that waste, as well as making sure that suppliers – often small businesses – get paid faster.

“Modernising the process will cut costs and improve cost tracking and control through a single monthly statement showing where and when every item was bought, just like the one private cardholders receive for their household purchases.

“This is another good example of Government learning from the private sector, where these ideas were developed, then working with business to deliver the goods more cheaply for the taxpayer and offering faster settlement for suppliers.”

Each Department and agency will vary its GPC arrangements to meet their own requirements, but each scheme will offer broadly the same elements. GPCs offer great flexibility . They can be coded to restrict purchases to certain types of suppliers or to nominated suppliers, or below a certain value. This gives effective, focussed control over the buying ability of individual purchasers, related to separate cost centres and purchasers.

As a GPC is a charge card, it is paid off in full each month by the purchasing department on receipt of a single, fully itemised statement. It is not a credit card designed to offer extended payment periods. The supplier of goods is paid directly by the bank, generally within four working days of the purchase, as for any High St retail purchase. It benefits suppliers as well as purchasers by avoiding the need to raise and send invoices and await payment under standard commercial terms.