Doubts cast over Darling's promise to find £15bn of savings
Tuesday 21 April 2009
Alistair Darling's pledge to slim down Whitehall to help plug the gap in the public finances has been labelled as "smoke and mirrors" after economists and MPs warned the savings would be very hard to achieve and measure.
The Chancellor is expected to announce further Whitehall "efficiency savings" of £15bn from 2011 in his Budget tomorrow. The Treasury has said the cuts will be achieved by trimming down staff and will not affect front-line services.
But figures seen by The Independent reveal past cuts to Whitehall staff have prompted some departments to spend more on temporary and agency staff. Official statistics obtained by Conservative MP Grant Shapps reveal that the Government spent more than £235m on temporary and agency staff last year, more than 50 per cent more than the amount spent in 2007.
"This research reveals that the so-called 'efficiency savings' are no more than a smoke-and-mirrors approach to allow ministers to suggest they are plugging the black hole in public spending, while it does nothing of the sort," Mr Shapps said. "Any further claims by the Chancellor that further "efficiency savings" will be made should be taken with a big pinch of salt."
The Cabinet Office said the Government had "significantly overachieved" against existing efficiency targets for the years between 2004 and 2008, delivering £26.5bn of savings against a target of £21.5bn. A spokeswoman added: "Decisions about the use of temporary workers and agency staff is a matter for individual departments."
But those figures have already been criticised by a committee of MPs as being impossible to verify. The Commons Public Accounts Committee said that as much as £10bn of the claimed savings "did not stand up to scrutiny".
Economists warned yesterday that further "efficiency savings" would be very hard to measure. Russell Hobby, an associate director of the Hay Group management consultancy, said that the cuts often led to expenditure rising elsewhere and could have a devastating effect on morale, ultimately affecting the quality of public services.
"After the headlines about savings, they are often very hard to realise. The classic example is that with a reduced staff, spending on temporary and agency staff creeps up," he said. "Also, bringing in temporary staff in place of people who are skilled, experienced and believe in what you are doing will damage the quality of service."
The National Institute of Economic and Social Research also sounded a warning over the pledge. "Efficiency savings are something Sir Humphrey likes because they do not always lead to big cuts," said director Ray Barrell. "It shows a commitment to helping public finances, but far more will have to be done. Government spending will have to be scaled back in the medium term."
Labour backbencher Peter Kilfoyle warned that the cuts would be "very hard to sell" for the Chancellor. "The complexities of the plan are too much for most people, who will only see that we spent billions bailing out the banks and then made cuts to their services," he said.
Unions also attacked the Government over the Budget cuts. Mark Serwotka, general secretary of the Public and Commercial Services Union (PCS), said the Chancellor could not "cut his way out of recession".
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