Another Budget, another repeat of an earlier announcement. This time Alistair Darling has reannounced that government efficiency savings – that is, cutting waste in the public sector, which could mean anything from relocations to cheaper buildings to redundancies – would reach £35bn by 2010-11.
These savings have been one of the Government's big ideas since 2004, when an extremely well-paid civil servant called Sir Peter Gershon launched a review into public-sector spending. The original Gershon plan was to shave £30bn from the public purse. But page 126 of the Budget tells the reader that the Government claims it has been so successful that it now wants another £5bn off the books.
What is new is that the Government has now outlined where the additional savings will come from. For example, the Department of Health will make £2.3bn of additional savings in 2010-11. This will include £500m in reductions in the average length of stay in hospital, with further savings coming from such technical-sounding ideas as "collaborative procurement". (This can mean hiring the same company for several contracts at once, therefore not duplicating the costs of the tendering processes.)
What's more, the Government is so carried away with these savings that it plans to make £9bn a year more by 2013-14, though where these will come from is not entirely clear at the moment.
This might all sound fairly dull stuff, but these savings are turning into a strategic battleground. "Labour and the Tories seem to have this battle where one will say that the other is making cuts [to public services], while that party is proposing efficiency savings," says Alan Downey, the head of public services at big four accountancy KPMG. "The truth is that they are both saying the same thing – they're arguing over semantics. There is a large hole in public finances that has to be closed."
Mr Darling appeared to pull this trick in his speech last Wednesday. As soon as he mentioned the additional savings, he appeared to suggest that the Tories would be a government hell-bent on cutting spending: "Mr Deputy Speaker, some have argued that we should cut public services immediately, rather than invest and grow our way out of recession. That would be the wrong thing to do."
However, some question whether the Government has been as successful in reality as it claims in making these savings. In this Budget, the Treasury refers to having "identified" savings.
"Identifying savings is quite easy to do," says Rebecca George, a partner in the public services department at Deloitte. "While the Government has so far shown it has made some savings, it seems to me that it has been low-hanging fruit so far. The big question is whether the public sector will be culturally accepting of the next round of cuts."
Ms George says that the private sector has a proven track record of making major cuts to deliver savings in the type of tight time frame that Mr Darling is now seeking. However, within a large, established bureaucracy, the idea of a complete overhaul of systems and property location is likely to be resisted by many career civil servants.Reuse content