Thursday, 4 November 2010
The influential cross-party Public Accounts Committee (PAC) has cast doubt on the Government's capacity to deliver substantial efficiency savings over the next four years, with the publication of a major report.
The Committee noted that the £35 billion value for money target, which formed part of the 2007 Comprehensive Spending Review (CSR), asked public bodies to make sustainable efficiency savings by 2010-11. This target represented annual savings of 3 per cent for each department.
However, the Committee found that by March 2010 departments and local authorities had reported only £15 billion of savings - less than half of the required total.
In fact, despite the high profile of CSR 2007, key departments could not adequately measure which savings they had made, and the Treasury failed to create a sound framework for reliable reporting.
The report notes that the current fiscal environment is very different from that of 2007, and it goes on to say, '...the results from this programme left us with grave concerns as to whether departments are ready to implement effectively a programme of value for money savings.'
'There is a serious risk that departments will rely solely on cutting front-line services to reduce costs, without adequately exploring the potential to reduce costs through other value for money improvements.'
The Select Committee's report is based on an inquiry by the National Audit Office and evidence from the Treasury's permanent secretary. It found that some departments struggled to make any savings at all saying, 'Departments reported savings which did not stand up to external scrutiny, and there were no consequences for senior officials in those departments that failed to deliver savings.'
Paragraph 8 focuses on the CLG's poor performance saying, 'The slowest progress to date is from the Department for Communities and Local Government, which had only reported £40 million of savings at the half-way point, against a target of £987 million. The main reason for this appears to be a factor (see paragraph 3) outside the control of the department...' This 'factor' is cited as a 'downturn in the housing market.'
Chancellor George Osborne has already appeared before the Treasury Select Committee to defend his proposals calling them, "credible and deliverable," using this as an opportunity to announce the date of the next Budget as March 23, 2011.
The Guardian's article contains comments from Margaret Hodge MP, who chairs the Public Accounts Committee.
The Daily Telegraph
The Telegraph's piece quotes extensively from the PAC report, and includes comments by Cabinet Office Minister Francis Maude.
The Independent mentions the Treasury's apparently 'hands-off role in the delivery of efficiency savings.'