MPs' 'grave concerns' over efficiency savings

MPs today expressed "grave concerns" about the ability of Whitehall departments to deliver efficiency savings without cutting frontline services.

The influential cross-party Public Accounts Committee (PAC) questioned whether, given their poor performance in the past, departments were "ready" for the scale of the challenge ahead.

Of £35 billion of "value for money" savings demanded by the former Labour government in 2007, only £15 billion had been reported by March this year, it said.

In addition, the National Audit Office found that only 38% of the efficiencies reported by departments had been genuinely sustainable efficiency savings.

In a report today the PAC said: "The inability of departments to improve value for money in a time of increasing budgets casts doubts on government's ability to reduce costs now while minimising the impact on front-line services."

The committee raised particular concern over the Treasury's hands-off role in the delivery of efficiency savings.

"We are concerned at the implication from Treasury that it will simply reduce departments' budgets and then walk away from responsibility for the delivery of the level of savings required across government," it said.

It added: "The current financial environment is fundamentally different from the position when the (Value for Money) Programme was launched in 2007, with substantial cash reductions required over the next four years by most departments.

"The scale of savings needed will require much more radical action, but 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."

Cabinet Office Minister Francis Maude said the Government would "leave no stone unturned" in its bid to cut waste and inefficiency and that progress was already under way.

"We said that our priority would be to take the cost out of the centre of Government so we could protect the front line and, in just a few months, that is exactly what we have done," he said.

"Already, actions led by the Efficiency and Reform Group have resulted in hundreds of millions of pounds of demonstrable efficiency savings - and this is just the beginning.

"These are savings we invite the PAC to hold us to account for.

"As we move forward with our ambitious efficiency programme, we expect to build significantly on the £402 million already saved following a review of the Government's largest projects, the £18 million already saved in rent alone by vacating empty buildings and the estimated £800 million we expect to save just this year from renegotiating contracts with some of the Government's largest suppliers."

Chancellor George Osborne will this morning defend his recent spending review, including cuts of £81 billion over four years, when he appears before MPs on the Treasury Select Committee.