Cut middle managers not the front line says Pickles

DCLG ministerial team face Communities
and Local Government Select Committee

Communities Secretary Eric Pickles and his ministers continually asserted to the Communities and Local Government Select Committee on Tuesday that councils should not be contemplating cuts to front line services unless they have restructured their administration and services: sharing chief executives and senior teams and merging HR, planning and legal services departments.

Pickles explained that the reason he had front-loaded cuts on local government in the first year of the Comprehensive Spending Review period was to ensure that councils took a radical approach to making savings by restructuring rather than "salami-slicing" a little from every service.

When challenged over the scale of job cuts predicted by the LGA, Pickles said that it was hugely important that job cuts come from middle management. He praised the actions of Liverpool City Council where, he said, middle management posts had been reduced from 72 to 38. This, together with some salary cuts, saved £4.2m.

Pickles acknowledged that some parts of the country were seeing massive cuts imposed by councils in Supporting People services. He said "I completely deprecate that", but claimed that most local authorities are protecting Supporting People services. However "one of the consequences of localism is that you have to allow local communities to make decisions as to where that spending goes. I think that most sensible local authorities will come to the conclusion that every pound spent on Supporting People is probably going to save them five or six quid further down the line."

He went on "It would be a very brave local authority that cut Supporting People and protected the centre and continued to have very large middle management costs."

The Secretary of State said that new transparency rules requiring councils to publish details of their spending on line would improve accountability to local people.

However, when pressed about how easily local people would be able to access information about the Supporting People element of their local authority's allocation in order to hold them to account his answer was less than convincing - apparently it's on page 60 of a "big thick booklet" published by DCLG about the local government spending settlement.

Argos chief joins DCLG board

Sara Weller

The DCLG has appointed Argos chief executive Sara Weller to head up the team of non-executive board members at the DCLG. She joins Stephen Hay, Chief Operating Officer of NHS Foundation Trusts' regulator Monitor, who has been a non exec in the department since May 2009.

Weller's appointment is part of a Cabinet Office initiative intended to to make government operate in a more business-like manner.

Two further non execs will be appointed in the new year. The appointments carry an allowance of £15,000 a year (£20,000 for Weller as lead member).

Cabinet minister Francis Maude, who is responsible for a project to appoint 64 non execs to 16 departmental boards, said:

"We are doing everything we can to ensure that the centre of Government operates as efficiently as possible and information released today shows that new efficiency measures have already saved over £1 billion. Today’s names include business heavyweights with huge experience of financial management and improving operational performance and they will play a key role in helping departments rise to the challenge and deliver further savings.  Previously, we have paid millions of pounds to consultants for this kind of advice."

Andrew Clark, writing in Sunday's Observer, is sceptical about the initiative, questioning the wisdom of adding to the ranks of civil service leadership at a time when the rank and file is facing 400,000 job losses. He points out that "they'll only pop in for the occasional board meeting and certainly won't be giving up their day jobs."

DCLG decreasing data demands

The DCLG has now published a draft list of the data that it thinks central government departments will require from councils in the future, with effect from April 2011.

At present, only DCLG has listed the details of its draft requirements; other departments have listed the collections they require and will publish further details on the DCLG's Data burdens web page on 22 December.

The page includes a draft list of collections that have been stopped entirely. The DCLG lists:

• STATUS Tenant Satisfaction Survey
• Local authority VFM gains (NI 179) 
• Place Survey.

DCLG also hopes to provide details of data requests likely to be made by other public bodies outside central government.

The government is requesting feedback on the proposals until 4 February 2011; its aim is for the list to contain "everything that it is essential and nothing that is not essential". General comments can be emailed to burdens@communities.gsi.gov.uk, and there's a web-based form for detailed feedback.

The consultation on the single list is taking place in parallel with consultation by DCLG and other departments on the transparency sections of their business plans, including proposals for departmental indicators. Some of these indicators depend on local government data - DCLG is working closely with other departments and with the LG Group to ensure that these processes are joined up as far as possible.

Eric Pickles added a predictable spin to the announcement, saying:

"For too long central Government has kept council staff hunched over desks crunching numbers and clipboard carriers asking the public intrusive questions so they can send reams of pointless paperwork back to Whitehall bean-counters - those days are over.

"Instead of being bombarded by Whitehall, with no structure or understanding of the reporting burdens, I want to free councils from the revolving door of red tape. By creating a comprehensive list, of the least amount of data needed, we can let councils get back to their day jobs of eliminating waste and delivering frontline services.

"If the information is not on the agreed list, councils will not be obliged to provide it. We trust councils to get on with the job without big brother looming over their shoulder double checking every detail."

The DCLG press release explains that ministers believe that reducing red tape, which holds councils back, will free them to protect frontline services and focus spending on local priorities.

Civil servants help citizens battle bureaucracy

Decentralisation Minister Greg Clark has launched a new "Barrier Busting" website to help councils, community groups, local institutions and individuals get central government help if they feel that bureaucracy is stopping them from getting things done in their neighbourhood.

The press release announcing the new service promises:

"Everyone who submits a query, will be given an individual number to track the progress of their request and the contact details of a named person they can talk to from a dedicated team of "barrier busters" - senior civil servants in the Government who will help find ways to let local people take control."

Clark said:

"Local people often have brilliant ideas and are keen to get involved in making their neighbourhood a better place. Government rules and regulations should be there to support them - not stand in their way.

"The barrier busting service is there to find practical solutions and give local people's enthusiasm and commitment free rein. This is about turning government on its head."

The Government has also published an action plan which describes what it is already doing to lift barriers in response to requests made by councils and communities under the Sustainable Communities Act 2007. Many actions requested by local authorities are addressed in the Localism Bill or other plans already announced by the government. However, the majority of requests have been referred back to local authorities to implement or have been rejected.

Amongst the rejected ideas were suggestions for:

• compulsory carbon monoxide detectors in all new homes
• ability for local authorities to borrow against their assets
• permitting local authorities to set local Decent Homes standards on energy conservation, renewable energy, and flood prevention
• powers to increase council tax rates for empty homes and second homes

Clegg asked to rein in "Laurel and Hardy"

In a follow-up to his blog posting last week describing Eric Pickles and Grant Shapps as Laurel and Hardy of the DCLG, Liberal Democrat councillor and Vice Chair of the LGA Richard Kemp has released an email to his party leader Nick Clegg complaining about the attitude of the two ministers.

Kemp is angry because the ministers won't accept the impact that local government cuts will have on services.

"Whilst trying to have a serious discussion on these desperate issues we have too frequently been diverted by two Ministers - Pickles and Shapps - who behave more like Laurel and Hardy than members of Her Majesty's Government. They continually put forward the idea that all the savings at this massively high level can be made by increased efficiency, cuts in a small number of salaries, raiding reserves that are not needed etc etc. In fact almost every day we get from them a new gimmick.

"Their behaviour is a disgrace. Either they really do not know how serious the situation is that they have created by rushing to get brownie points by being the first to settle with the biggest front loading or they are deliberately trying to distract attention from the problems that they have created."

The BBC website carries the full text of the email, together with a response from Grant Shapps, who says:

"Maybe Mr Kemp is rattled by our new level of transparency meaning that all councils will have to publish expenditure over £500 online, exposing the inner workings of town halls to public scrutiny for the first time.

"This was a tough but fair settlement ensuring the most vulnerable communities were protected.

"If councils share back office services, join forces to procure, cut out the crazy non-jobs and root out the wild over-spends then they can protect frontline services."

In the latest posting on his blog, Kemp challenges Shapps to visit one of the councils hit by the maxim,um 8.9% cut faced by Kemp's own council, Liverpool.

He says he will apologise for the name-calling if, during the visit, Shapps can find ways of making real savings in the next financial year of of more than 3% (which Kemp says local councils have been making annually for the last 8 years).

But if not, he asks that Shapps supports a plea to the Treasury for more transitional funding for hard-hit councils.

Transparency on costs to be forced on HAs

Grant Shapps's ministerial statement on "affordable rents" last week included the cryptic statement "Ministers intend to make the payment of grant funding conditional on transparency".

Inside Housing is now reporting that the government plans to force housing associations to publish details of expenditure over £500 if they want to access development grant.

Gavin Smart, assistant director of research and futures at the National Housing Federation, told the magazine:

"The sector is interested in openness, accountability and transparency.

"But it is important that this adds value. I think it is questionable whether just publishing a tidal wave of information would add anything."

The HCA will publish the detailed grant funding requirements in early 2011. 

Route map to self-financing

Housing minister Grant Shapps made a ministerial statement yesterday setting out the basis on which the government intends to introduce self-financing to replace the existing subsidy system for council housing from April 2012. The changes will be implemented in the Localism Bill.

The basic methodology remains that consulted on by the previous government last March, based on a 30-year notional business plan for each landlord. A policy document will be published in the new year setting out the practical implementation of the reforms, but the minister listed some of the parameters that would apply.

These include extra funding of £116m a year for disabled adaptations (previously announced in the Comprehensive Spending Review). The Treasury will continue to claw back 75% of net receipts from Right to Buy sales, but there's a promise that loss of income from RTB sales will be built into the valuation that will determine the settlement.

Clause 142 of the Localism Bill contains a power for the Secretary of State to make further adjustments to the settlement beyond 2012 "if a future policy change has a significant material effect on their costs or income". The statement says this is designed to protect both councils and the Exchequer, but it will introduce uncertainty for councils going forward under the new system.

Shapps said:

We estimate that by putting councils firmly in control of council house finance they can unlock over £6 billion of efficiency savings which they will be able to plough into new investment.

Green Deal role for social landlords

The Energy Bill, introducing new measures to promote investment in energy efficiency, received its first reading in the House of Lords last week.

The "Green Deal" will enable private firms to offer consumers energy efficiency improvements to their homes, community spaces and businesses at no upfront cost, and recoup payments through a charge in instalments on the energy bill.

The government hopes millions of people will take up the green deal and that it will create 250,000 new jobs. It is due to start in 2012.

The Department for Energy and Climate Change (DECC) has published a summary of the Green Deal proposals.

Inside Housing reported that social landlords will be encouraged to become ‘Green Deal providers’, potentially providing a lucrative source of new revenue. Climate change minister Greg Barker is planning a meeting with social landlords and charitable bodies at the end of January to discuss their role in the Green Deal.

24dash quoted a DECC spokesperson saying:

"We're hoping to work with social landlords. Basically there are different roles they can take. They could become a Green Deal provider if they wanted - this could be seen as a real business opportunity for them or they might want to partner up with another company offering the Green Deal like an energy company. We're really working with them at the moment to help make their stock more energy efficient which actually is already energy efficient anyway. We're looking at how we can progress that through the Green Deal."

The second reading debate on the Energy Bill is scheduled for 22 December.

One Ombudsman for social housing complaints

In a sensible move to ensure consistency, the Localism Bill (clauses 153-155) is to end the system of two separate ombudsmen handling social housing complaints in England.

The Local Government Ombudsman will no longer be required to investigate local authority housing activities as they relate to the provision or management of social housing (and the management of dwellings owned by the registered provider of social housing and let on a long lease).

The DCLG says that a single Ombudsman specialising in complaints about social housing will ensure consistency, and provide a common route of redress for all social housing tenants.

The Bill introduces a new "democratic filter" - the Ombudsman will not be able to investigate until a written referral is made by an MP, local councillor or a designated tenant panel.

If there is an overlap with the responsibilities of the Local Government Ombudsman, they may carry out a joint investigation.

Cameron plans help for troubled families

David Cameron has said that the government plans to fund a pilot scheme designed to help transform the lives up to 500 of the most troubled families in up to 10 local authority areas.

Speaking to Relate last week about families and relationships, the Prime Minister said that the trials will be led by new "family champion" Emma Harrison, who is the chairman of welfare to work provider, A4E.

Describing a type of support that sounded very like the previous government's family intervention projects, he said that they would offer "focussed, personalised support – someone the family trusts coming into their home to help them improve their lives step-by-step, month-by-month". Funding available for innovative work with up to 500 troubled families in different local authorities.

Justifying the cost, Cameron said:

"Let’s not forget these families cost us a fortune – in benefits, social workers, police time and places in young offenders’ institutes and prisons. Indeed, some estimates suggest that just 46,000 families cost the taxpayer over £4 billion a year – that’s nearly £100,000 each.

Take action now and we could cut these costs, turn lives round and sort out our neighbourhoods’ worst problems."

Emma Harrison said:

"I have spent more than 20 years helping individuals and families in the most disadvantaged communities get work, regain ambition and improve both their lives and the lives of those around them.

"Now, under this programme, every family will have their own "Emma" able to use every existing resource to help them get going, face up to and sort out their problems, whether they be parenting challenges, poor health, debt, addiction, dependency or lack of motivation.  Most importantly, it will involve helping people into meaningful employment to help create happy, working families with a new sense of purpose and an active role in society."

Council finance settlement - better than feared?

Secretary of State Eric Pickles this afternoon announced details of the local government finance settlement in England for 2011-13. Earlier the Localism and Decentralisation Bill that creates new freedoms and powers for councils received its first reading.

He said that the government has responded to concerns about front-loading cuts. He told MPs that the average council will face a cut of 4.4% in government grant in 2011-12, and that no council will face a reduction of more than 8.9% in government grant in 20011-12 or 2012-13.

Funding is provided for a freeze on council tax and the DCLG has established a transitional grant of £85m next year to protect councils from "unmanageable reductions" in their budgets in the first year. This additional money for local government over and above the formula grant settlement will reduce the spending available for the department's own programmes by a further 4 per cent.

Pickles said:

"Whilst resources are tight in the current financial climate, council freedoms are not. Councils now have unprecedented freedoms over how to prioritise their money."

Interviewed earlier in the day on Radio 4's Today programme , he said:

"I believe it is possible to cut significant sums out of local authorities by simply improving the way local authorities operate."

"They've simply got to wake up to the fact that it is no longer viable to have their own chief executives, their own legal departments their own education departments, their own planning departments - they've simply got to put this together and they've got to look for ways to see these services provided in partnership with local communities."

The full details of the local government settlement are on the DCLG website, together with a plain English guide to the settlement.

Localism and Decentralisation Bill

Having received the applied minds of half a dozen QCs, the Government's Localism and Decentralisation Bill has now been published and received its first reading without debate in the House of Commons this afternoon.

The DCLG has published documents that outline the contents of the Bill and the political motivation behind it.

Documents have been published alongside the announcement, including details for social housing reform.

The Bill itself will cover the following themes:

• decentralisation and strengthening local democracy
• Non-Domestic Rates
• community empowerment
• a radical re-boot of the planning system including neighbourhood planning
• changes to social housing policies
• devolving power to London boroughs.

The social housing element essentially reproduces the proposals put forward in the social housing review, published in October. It includes sections on:

• Social housing allocations reform - localised waiting lists
• Homelessness - acceptability of private rented sector
• Social housing tenure reform - use of fixed term tenancies
• Reform of council housing finance - scrapping HRA
• National Homeswap Scheme - for English mutual exchanges
• Reform of social housing regulation - shift from TSA to HCA
• Facilitating moves out of the social rented sector - moving incentives are not gifts for tenant 'shareholders'
• Home Information Packs (HIPs) - formal repeal of Part 5 of the Housing Act 2004

The essential guide to the Bill outlines the 'radical shift' in the balance of power that the legislation represents. The Bill aims to turn rhetoric into actions with plans to push power downwards and outwards to the lowest possible level.

The guide expands upon 'six essential actions' to create a new decentralised Britain:

• Lift the burden of bureaucracy
• Empower communities to do things their way
• Increase local control of public finance
• Diversify the supply of public services
• Open up government to public scrutiny
• Strengthen accountability to local people

Some interesting extracts from the guide:

"As well as spending data, we will require transparency from public sector bodies on contracts, salaries and staffing." Note the term 'public sector bodies'.

"Our approach, therefore, is to focus on outcome, not process, and to release such knowledge into the public domain as raw data – so that anyone can analyse and visualise the information, spot trends and make connections that would otherwise go unseen." This highlights the importance of linked data.

"As well as voting at the ballot box, service users should be able to vote with their feet – by choosing new providers if existing providers fail to provide an adequate service."

It will be interesting to how this affects social landlords.

Analysis from the sector....

The NHF briefing welcomes the housebuilding elements of the bill.

LG Group's briefing welcomes the dismantling of the HRA subsidy system but warns against DCLG controls on the buy-out figure, limits on borrowing and retention of RTB receipts.

The TCPA (Town and Country Planning Association) highlights the Bill's moves towards collaborative neighbourhood planning. Involving local people in the process of shaping the places they live and work is "an opportunity to be grasped".

HQN's briefing says that "Localism is a perfectly rational response to years of central control."

CHS's briefing questions where the capacity is going to come from to allow this localism.

Coalition risks backlash on spending cuts

Every year the British Social Attitudes survey asks around 3000 people what it's like to live in Britain and how they think Britain is run.

The 27th, and latest, report has just been published. It finds that, although there is high – and growing – concern about income inequality. But only 27% say the government should spend more on welfare benefits for the poor, even if this leads to higher taxes. This has decreased over the last two decades; in 1991 well over half (58%) said the government should spend more on welfare benefits.

Penny Young, chief executive of the National Centre for Social Research which produces the report says:

"Record levels of investment under Labour appear to have paid off in terms of public satisfaction – particularly on health, where satisfaction levels are now at all time high. The coalition will need to tread carefully to avoid a backlash against the potential impact of reform or failure to invest. In contrast, changing attitudes to welfare are in tune with the government, suggesting the public will back benefit reform."

Shapps statement on affordable rent

In a parliamentary statement on 9 December housing minister Grant Shapps announced further details of the new "affordable rent" model, which housing associations will be able to offer from April 2011.

"Affordable rents" will be up to 80% of the market rent of an equivalent property, and will be subject to regulation by the TSA (and later by the HCA). The rents will fall outside the rent restructuring policy but increases will be limited to RPI + 0.5% a year. Market rents of individual homes will be reassessed each time the home is relet or the tenancy is renewed.

Associations wishing to convert existing vacant social rented homes to "affordable rent" will have to reach an investment agreement with the HCA about how the additional rental income will be invested to provide new affordable housing.

Most new homes funded through the HCA's capital programme will be let on "affordable rents", although some may be offered for low cost home ownership.

Some aspects of the new model will require legislative changes which will be included in the forthcoming Localism Bill. But the government expects the first "affordable rent" tenancies to be created before the Bill is enacted, and the statement sets out its non-statutory expectations:

• Tenancies will be for a minimum fixed term of two years. 
• The landlord must offer advice and assistance to tenants where it decides to not to reissue an "affordable rent" tenancy at the end of the fixed term - this could include converting the tenancy to shared ownership.

The HCA will publish a full framework document in early 2011 setting out the detailed requirements on landlords wishing to offer "affordable rents".

Councils aim to leave HRA system a year early

Three councils are set become pathfinders for the reform of the Housing Revenue Account, following the introduction today of a private member's bill under the "ten minute rule".

Conservative MP Sarah Newton (Truro and Falmouth) introduced the Council Housing (Local Financing Pathfinders) Bill to enable Cornwall, Wandsworth and Stockport Councils to become pathfinders for the new self-financing scheme.

Proposals will be included in eagerly-awaited Localism Bill to replace the Housing Revenue Account (HRA) across England, handing local authorities the responsibility of handling their own finances, in exchange for taking a share of historic housing debt.

It is understood that ministers are "not unsupportive" of the provisions in Newton's Bill which would allow the three pathfinder councils to leave the subsidy system a year early. An analysis of the pitfalls and issues they encounter would help shape the technical aspects of the arrangements for other councils.

Newton explained to the House of Commons that:

"By working through the complex and very detailed processes that are required to transform local authorities in this way valuable lessons will be learned to minimise the risk of unforseen problems when the legislative deal is done with the whole sector and 160 plus authorities in 2012."

She observed that there is still work to be done to build consensus and momentum with some councils for the proposed reforms and suggested that:

"This Bill offers the minister the opportunity to work with the evangelists to help with the doubting Thomases."

The Bill received its first reading; the second reading will take place on 21 January 2011.

Savage cuts to Supporting People budgets

Inside Housing reports that Supporting People budgets are facing devastating cuts in parts of England.

The Supporting People settlement escaped the worst of the cuts in the Comprehensive Spending Review (CSR) - seeing a 12% cut in real terms over the four year CSR period. However, the funding will be paid to councils through formula grant from April 2011 and councils will be free to choose to spend the money on other services.

Evidence is emerging that many councils choosing to imposing much bigger cuts on their Supporting People services, with homelessness services amongst the worst hit.

Meanwhile, an independent review of the Supporting People programme in Wales has shown that housing related support saves the taxpayer millions of pounds in other areas such as health, social care and policing, with savings far outweighing the cost of the programme.

Dates emerge for Localism Bill

The Localism Bill, scheduled in DCLG's Business Plan for publication in November, is finally now expected to be published on 9 December, with a second reading debate on 15 December, according to articles on LocalGov.co.uk. It is expected to contain 200 clauses. The delays are rumoured to be due to controversy about elected mayors.

Nick Raynsford has criticised the proposals in the Bill. Writing for the MJ he predicts that the Localism Bill will prove to be unnecessarily complex and controversial.

In his article, quoted by Local.Gov.co.uk, he writes: "This has been a difficult and protracted process, and it would be rash to forecast any let up when the Bill begins its passage through Parliament. For legislation cobbled together in a hurry without the benefit of prior consultation and rigorous analysis of its aims and likely effects, is usually found to be defective and requiring detailed amendment."

Abolishing child poverty

Announced as the biggest transformation of anti-poverty programmes since the war The Foundation Years: Preventing Poor Children Becoming Poor Adults sets out for the government a new strategy for abolishing child poverty.

The report delivers the findings of the Independent Review on Poverty and Life Chances, commissioned by the Prime Minister from Labour MP Frank Field.

The report recommends that the government switches focus from Labour's anti-poverty measure, based on material income, to a set of life chance indicators.

And the report called for reform of the education system, introducing a new first pillar: the Foundation Years, covering the period from the womb to the age of five. During this period parents should be offered midwifery and maternity advice, a home visiting service and a wide network of voluntary support for families.

Voluntary bodies, schools, GP practices, and housing associations should be able to bid to run Sure Start centres.

Controversially, Field also recommended that the government consider annually whether to withhold above-inflation increases in child tax credits and instead plough the money into early years education.

David Cameron and Nick Clegg, in a joint letter to Frank Field, praised the report as "a vital moment in the history of our efforts to tackle poverty and disadvantage".

Responding to the Review, TUC General Secretary Brendan Barber said:

"...the report under states the importance of families' incomes. The biggest problem faced by poor people is still that they haven't got enough money and face debts that put intolerable strains on their finances."

According to the Child Poverty Action Group (CPAG) getting the balance right between policies that prevent child poverty, policies that reduce child poverty, and policies that ameliorate its symptoms is the most cost effective way of tackling child poverty.

Imran Hussain, Head of Policy for CPAG, said:

"There are some good ideas on early years in Frank Field's report, but we must avoid too narrow a focus and retain the broad strategy across income, disability, fair pay, childcare, housing and basic living costs that attracted cross party support during the passage of the Child Poverty Act."

Fair pay in the public sector

Economist Will Hutton today published his interim report on Fair Pay in the Public Sector, commissioned by the Prime Minister and the Chancellor.

His brief was to investigate pay scales across the public sector, and make recommendations on how to ensure that no public sector manager can earn more than twenty times the lowest paid person in the organisation.

The report says finds that pay dispersion in the UK has widened over the last decade, with the median pay for FTSE 100 chief executives 88 times UK median earnings and 202 times the national minimum wage in 2009. Although Hutton asserts that "the myth of the overpaid public servant is just that", he estimates that at least 20,000 public sector employees are in the top 1 per cent of earners, being paid over £117,523 a year.

He found that average salaries for public sector bosses were £200,000 for heads of universities, £150,000 for NHS Hospital Trust chief executives, £117,000 for local authority chiefs, £170,000 for four-star generals and £160,000 for permanent secretaries in government departments. Hutton rejects the idea that there is a problem with "fat cats" in the public sector, presenting evidence that public servant salaries are significantly lower than private sector organisations with similar turnovers.

The report concludes that organisations both public and private should "track and report on pay dispersion from year to year in a fully transparent way".

Hutton's final report, due early in 2011 will present detailed recommendations on the definition and implementation of a pay multiple and other elements of a fairness framework.

Estimates of public sector job cuts down

The independent Office for Budget Responsibility, in its latest update on the prospects for the UK economy, cut its forecast for public sector job losses over the next four years from 490,000 to 330,000.

Chancellor George Osborne told parliament:

"The bulk of this revision results from the action we have taken to cut welfare bills rather than cut public services."

However, Shadow Work and Pensions Secretary Douglas Alexander said in a speech to think tank Demos that ministers were "complacent" about employment returning to pre-recession levels. He said:

"Writing in the Observer last month, Will Hutton set out the scale of that challenge ‘the private sector [outside business and financial services] that generated a mere 300,000 jobs between 1993 and 1999 is now expected to generate more than 2 million between now and 2015'."

The OBR also raised its forecast for domestic economic growth this year to 1.8 percent from 1.2 percent.

But the quango also lowered its expectation for gross domestic product growth next year to 2.1 percent from 2.3 percent and for 2012 to 2.6 percent from 2.8 percent.