Whitehall cuts save £5.5bn


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Indy Politics

The Government made savings of £5.5 billion from departmental expenditure over the last year.

Minister for the Cabinet Office Francis Maude said the coalition was "determined to go even further" in its aim to "cut the cost of Government".

The cash savings, he stressed, had been independently audited with "no smoke and mirrors", and were the equivalent this year of around £500 for each working household in Britain, the salaries of around 250,000 junior nurses or the cost of around 1.6 million primary school places.

The coalition set up the Efficiency and Reform Group (ERG) based in the Cabinet Office, on taking office 27 months ago, to make "efficiency savings" across Government.

Mr Maude said: "It seemed to us absolutely crucial, that as we drove the deficit reduction programme, the priority rather than cutting frontline programmes, should be to cut the cost of Government."

He added: "In the first year, a short year, until March 2011 we saved £3.75 billion. This last year to March 2012 we beat our own prediction and saved an astonishing £5.5 billion from departmental expenditure ... but we are determined to go even further."

Mr Maude said the savings drive was "broadly ideology free", adding: "This is just about running Government in a business-like way."

The Government, he argued was "determined to cut the fat from Whitehall", but insisted it was "not cutting into the bone", for example by operating better with major suppliers.

He said: "In terms of how do we know what effect there is on frontline services, you can't absolutely 100% know, but where we're making savings, in for example on suppliers, in general we are simply taking out money that is being spent unnecessarily and making sure it's spent better."

Mr Maude turned his fire on Labour, claiming money had been "squandered" under the previous government.

He said: "We have to, when we spend taxpayers' money always strive to find better ways and more efficient ways of providing public services.

"And the question you have to ask is why were these savings never made before, why was so much taxpayers' money squandered on things like unnecessary consultancy, wasteful marketing and advertising spend and under-used property?

"We've saved money on all of those things and much more."

The Conservative MP said that because the controls on spending were "working well", the Government had determined they would be a permanent feature across Government.

He said: "These controls depend on me exercising them, there's no reason why Ed Miliband when he was sitting in my chair shouldn't have done this, but he didn't, it does depend on there being a minister who cares about it and who's willing to get into the detail...I think it's very easy for an organisation like Government to default back into the comfort zone."

The £5.5 billion savings, he said, included £1 billion of savings achieved last year through the moratorium on consultancy spend and on extending existing consultancy contracts, adding that since 2010 consulting spend had been cut by more than 85%.

Meanwhile £390 million of savings had been made from freezing all marketing spend, except when operationally necessary, building on the £400 million saved in 2010/11.

The in-year cost of the Government's property estate, he added, was reduced by nearly £200 million by exiting unnecessary properties and by questioning lease breaks before extending them - more than double the £90 million savings achieved in 2010/11.

One example of expenditure included in Bristol where central Government was occupying 115 separate addresses, he said.

Around half a billion savings were made by utilising the Government's bulk buying power and pooling spend on goods and services used by different Government departments, on top of £360 million saved in 2010/11.

Reductions in the size of the civil service also continued with stronger controls on non-essential recruitment, contributing to a reduction in salary costs for 2011/12 of nearly £1.5 billion - an increase on £300 million savings made the previous year.

Mr Maude said retail tycoon Sir Philip Green's report was "very useful" in underlining the Government was "not getting the savings that your size as a customer would justify", with some parts of Government paying seven times as much for black toner cartridges as other parts.

The Government, he added, was "opening up the market much more" to SMEs and aimed to negotiate smaller, shorter ICT contracts with quicker procurement.

Mr Maude claimed the last government used consultants as a "comfort blanket", adding: "If there was anything difficult to be done, they would reach for consultants immediately, which is both very expensive , but also it actually undermines the position of mainstream civil servants."

The coalition, he added, was trying to reduce the dependence on consultants through trying to achieve a skills transfer from consultants used to civil servants, and knowing where existing skills were across Government.

Matthew Sinclair, chief executive of the TaxPayers' Alliance, said: "These latest figures are to be welcomed and are a further vindication for taxpayers who have known for a long time that there were billions of pounds of savings to be found in central government spending.

"It is vital that public sector bodies spending taxpayers' money do so as effectively and efficiently as possible, and the controls which Francis Maude has put in place were long overdue.

"Taxpayers will be grateful that the Efficiency and Reform Group has found these savings, but it is important now that its hard work is not squandered elsewhere in government.

"When the Department for Energy and Climate Change increases its headcount, for example - as it has done every quarter over the past year - that only serves to undo the good work being done elsewhere to clean away unnecessary fat in the arteries of Government."

Shadow Cabinet Office minister Jon Trickett said: "For all their talk of savings, this Tory-led Government's failures are costing this country dear.

"David Cameron and George Osborne have delivered a double-dip recession made in Downing Street, and they are already having to borrow £150 billion more than they planned over the Parliament - the cost of their failed economic plan.

"Far from protecting the front line, they are cutting thousands of police officers and have broken their promise to protect the NHS budget which has fallen two years in a row.

"Already, 4,500 nurses have been cut since David Cameron became Prime Minister. And yet at the same time the salary bill for Tory and Lib Dem spin doctors has risen by 25% in just one year - so much for cutting the cost of Government."