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PBR 2008: Darling seeks more savings in government efficiency drive

25th Nov 2008
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Among all the recession-fighting tax giveaways and political badminton of the 2008 Pre-Budget Report, the chancellor claimed to have reaped savings of £26.5bn in a five-year goverment efficiency drive since 2004. And he wants to see £10bn more by 2011. John Stokdyk reports.

In his House of Commons speech, chancellor Alistair Darling claimed the government had exceeded the target set by Sir Peter Gershon in his 2004 efficiency report by £5bn.

In addition to the £26.5bn in annual efficiency gains against Gershon's target of of £21.5bn, a Treasury assessment of the five-year efficiency drive noted net workforce reductions of 86,700 against a target of 70,600 and the relocation of 17,118 posts away from London, against a target of 20,000 by 2010.

"Building on this, at last year's comprehensive spending review, we committed to improve value for money, targeting a total of £30bn by 2010/11, without putting public services at risk," Darling said. "Having carefully considered the extent and the limits of efficiency savings, today I can announce the government will now find an additional £5bn of efficiencies in 2010/11 for a total saving of £35bn over three years."

Gershon had warned back in 2004 that there was a point where front line public services would be affected, but the chancellor vowed not to go beyond it. The extra savings could be made by improving back office operations, better procurement and property and asset sales. All of these savings had been identified by independent reviews, the chancellor said.

"As businesses and families across the country carefully watch what they spend, it is only right that the Government works even harder to make savings," he added.

Individual departments' spending allocations for 2010-11 and savings targets from further operational efficiency reviews will be set out in next spring's full Budget 2009.

A mass of documentation on the 2004 spending review is available from the Treasury website to back the savings calculations, but questions have been raised in the past by AccountingWEB, the National Audit Office and the House of Commons Public Accounts Committee about different aspects of the governments claimed savings.

The PAC, for example, raised doubts earlier this year about the availability of evidence to support Sir David Varney's estimate that £400m could be saved through electronic service delivery. And uncoordinated growth in government websites extended the problem across all government departments.

HMRC has been one of the focal points for efficiency savings and electronic service delivery, yet the Treasury's PBR progress report on savings complicates the picture by folding HMRC into a consolidated "chancellor's departments" heading, where savings of £680m were reported against an original target of £550m. The same departments are also ahead of schedule on staff cuts, with 16,000 net post reductions so far against a target of 13,350. Across all government departments, the report says net reductions of 86,000 have been made against the original target of 70,600.

As might be expected, the Public and Civil Service union reacted badly to the new savings targets, warning that further job cuts and office closures would damage public services and be bad for the economy.

"Key public services, such as justice, welfare and tax are already struggling to cope against a backdrop of massive job cuts and office closures," said PCS general secretary Mark Serwotka. "The government should be looking at tackling the £21.5bn worth of uncollected tax and £25bn lost through tax evasion, by putting more resources into HMRC to claw back the billions in lost revenue, which could be ploughed into public services and stimulate the economy."


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