‘Grave concerns’ over spending cuts

The cross-party Public Accounts Committee (PAC) said it was unsure the Government was “ready” for the challenge ahead, after examining previous cost-saving attempts.

Of the £35bn of efficiency savings the Labour Government planned in 2007, only £15bn had been made by March this year. Of these, the National Audit Office found only 38 per cent of the efficiencies were sustainable long-term.

The committee 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 frontline services…

There is a serious risk that departments will rely solely on cutting frontline services to reduce costs. Public Accounts Committee

“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 frontline services to reduce costs, without adequately exploring the potential to reduce costs through other value-for-money improvements.”

The Government has outlined £81bn of spending cuts, which are shared out across the departments – from an 8 per cent cut to the defence budget to a 51 per cent cut for the Communities and Local Government Department. Some of these savings are expected to be made through efficiency measures, but many will come from cuts such as scrapping child benefit for higher rate taxpayers.

However, the PAC is concerned there could be more cuts to come if the efficiency saving programme fails to deliver the necessary savings.

How will savings be delivered?

It also raised concerns that the Treasury would cut budgets but then not follow up its actions.

“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.

However Cabinet Office Minister Francis Maude said the Government would protect frontline services.

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

We said that our priority would be to take the cost out of the centre of Government so we could protect the frontline and, in just a few months, that is exactly what we have done. Francis Maude, Cabinet Office Minister.

“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 is set to defend the spending review before MPs at the Treasury Select Committee this morning.