Short-term cuts won’t produce lasting savings, watchdog warns

Only radical reform will make public services sustainable in the long term, Treasury is told

The Treasury has been criticised by Whitehall spending watchdogs for relying on short-term emergency cuts to reduce the deficit rather than long-term reforms that would produce permanent savings for taxpayers.

In a setback for George Osborne, the National Audit Office (NAO) warns that the “stark” challenge of balancing the nation's books will  continue after the deficit has been reduced because of the  pressures the rising elderly population will put on pensions, health and social care and the need to provide almost 250,000 primary school places by 2014-15. 

It suggests that radical reforms will be needed to make public services sustainable in the long run. It warns that the Government is not “well placed to meet the forthcoming challenge of continued fiscal consolidation alongside substantial demand pressures.”

According to the NAO,  more permanent value-for-money measures are needed rather than temporary savings introduced since 2010 such as a freeze on public sector pay, controls on buying equipment and bans on the use of temporary staff and outside consultants.  The model should be the big changes to pensions and university tuition fees, which will both yield permanent savings.

The criticism comes as the Chancellor seeks to find the £11.5bn of cuts for the 2015-16 financial year he will announce on June 26 in a government-wide spending review. He has threatened to haul ministers who refuse to find their share of the savings before a “Star Chamber” of Cabinet colleagues to justify their budgets.

Today's report suggests the process would have been less painful if finance officials across Whitehall had embarked on structural changes since the Coalition came to power. It warns that departments operate as separate “silos”, saying that services should be integrated and joint funding bids encouraged. 

“Only limited action” has been taken to expand community care to relieve pressure on hospitals, while  local authorities and NHS trusts “are facing significant difficulties in absorbing further cost reductions.”

The report says: “The Treasury needs to provide more effective central leadership, to support public bodies in providing services at permanently lower cost…We found that most departments had yet to develop  a clear picture of their future state or a detailed plan based on a strategic view across the business.”

The  NAO adds: “Improvements have been made in the Government's financial management in recent years. However, given the importance and urgency of the challenges presented by fiscal consolidation and public service reform…further improvements in strategic financial management will be required if the delivery of public services is to be sustained over the longer term.

”While government has succeeded in a number of areas in controlling spending, it still faces a significant challenge in redesigning and transforming public services so that they operate sustainably in the context of further reductions to departmental spending, alongside increased demand.“

Amyas Morse, the head of the NAO, said: ”Finance managers are now being taken more seriously and playing a more central role in the efforts to provide sustainable services at lower cost. However, the pace of change must be accelerated. Savings are being made but progress in restructuring how services are being delivered is lagging.“

A Treasury spokeswoman said: ”The Government's economic strategy to protect the economy and restore the public finances to a sustainable path has already reduced the deficit by a third. High quality financial management in government is key to meeting spending plans and delivering public services as efficiently and effectively as possible. The NAO notes the positive impact of Government action to increase accountability and build skills, and the Government will review what further improvements could be made as we conclude this spending round.“

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Electrical Design Engineer

competitive: Progressive Recruitment: My Wiltshire based client require an Ele...

JavaScript Developer

£45000 - £60000 per annum + 15% Bonus: Progressive Recruitment: My client, a l...

Lead Application Developer

£80000 - £90000 per annum + competitive: Progressive Recruitment: I am current...

Year 3 Welsh Teacher vacancy in Penarth

£110 - £120 per day + Travel Scheme and Free training: Randstad Education Card...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz