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PBR: Sir David Varney's efficency drive key to savings. By John Stokdyk

6th Dec 2006
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Former HMRC chairman Sir David Varney is spearheading an efficiency drive designed to save the government £26 billion a year by 2011.

Sir David has been busy since leaving the HMRC to become Gordon Brown's red-tape troubleshooter. His own pre-Budget report 'Service Transformation: a Better Service For Citizens and Businesses, a Better Deal for Taxpayers' is the second major policy document he has produced in the past three weeks.

His previous effort set out proposals to improve relationships between HMRC and large businesses and set a time-table for the department's new risk-based approach to compliance. Varney's thinking is obviously in tune with Brown's, who made a brief diversion during his speech to explain that the risk-based approach is being applied to regulation at all levels.

Sir David's latest report takes up the mantle laid down by Sir Peter Gershon in his 2004 review, which set in train claimed savings of £13.3 billion by September 2006. Sir David's proposals are the starting point for a new comprehensive spending review to take place during 2007, which the chancellor said in his PBR speech should release £26 billion a year for spending on front-line services by 2011.

As the chancellor explained in his speech, the economy drive will involve in a more relaxed approach to asset disposals following the publication of a government asset register in January, a target of 5% savings on admin in central government departments including HMRC, the Treasury, Department of Works and Pensions and the Cabinet office. In addition, the chancellor mentioned £400 million in savings expected from Sir David's proposals to streamline the running of government call centres.

As usual, internet technology is likely to feature prominently in the government's efficiency drive. As chapter 6 of the PBR put it: "Developing better use of government channels to encourage a shift of use from face to face services and contact centres towards e-channels".

With fewer call centre staff, more emphasis will be placed on catering for businesses and citizens online, with 24/7 websites. "Improving Government’s online services is one of Sir David Varney’s central recommendations, consequently, the government will look to substantially strengthen, and improve the cross-government DirectGov and Businesslink e-services programmes," the PBR report noted.

More ominously for civil libertarians, chapter five of the PBR said that the government would be taking forward proposals to develop a "cross-government identity management system" to reduce duplication of effort. This scheme - a national indentity card, perhaps? Will be based on a proof of concept project to share data between HMRC, DWP and 12 local authorities;

As part of its reforms, the government will also review its performance management framework to "continue driving outcome-focussed improvements" to ensure that public services are accountable and responsive to the needs and expectations of users.

Paul Howard, senior tax consultant, Chiltern plc, was not convinced that the chancellor's sums added up. "I fail to see how he's going to pay for all the worthy expenditure," Howard said. "It appears that it will be funded by growth, an efficiency drive and a clampdown on avoidance. I can't believe these are going to be enough."

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