By Jason Theodorou

The government's 20 biggest suppliers, including custodial services, IT and construction services, will be asked to cut their prices as part of a drive to curb the government deficit. Frances Maude, the minister for the Cabinet Office, will meet with companies on Thursday to discuss cost savings.

Mr. Maude will tell companies including BT and Hewlett Packard that they must 'renegotiate' the terms of their business with the public sector, in the face of spending cuts and tax rises. Mr. Maude has claimed that professional service costs could be reduced by billions of pounds.

Mr. Maude said: 'We will say we want to have something off your margins; we will expect you to tell us how we can pay you less, sometimes for doing less'. One way in which companies may compensate for the loss in profits is to negotiate longer contracts with the Government.

The minister will meet with executives from Siemens, Cap Gemini and Telereal Trillium to negotiate a long-term plan for cost savings. The Government spends £210 billion on services every year, with much of this spent by local government, the NHS and schools.


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