Cuts ‘deliverable’, says Osborne

George Osborne says the cuts are needed to ensure economic stability for the UK

There is a “serious risk” government budget savings will rely solely on cutting front-line services, MPs say.

The Commons public accounts committee found only £15bn of a three-year £35bn savings programme outlined in 2007 had been achieved by 2009.

This left MPs “gravely concerned” about the possibility of making the larger reductions demanded in the recent Spending Review, its report added.

But the government said it was making “demonstrable efficiency savings”.

At last month’s Spending Review, Chancellor George Osborne outlined the details of £81bn of cuts to public expenditure over the next four years.

He argued they were necessary to reduce the deficit and stabilise the economy.

The public accounts committee’s report focuses on the 2007 Comprehensive Spending Review, which set Whitehall a £35bn “value-for-money” target, to be reached by 2010-11.

This ordered civil servants to make sustainable savings while maintaining the delivery of services deemed to be public “priorities”, it says.

But the report finds that, two years into the programme, only £15bn of reductions had been reported, of which just 38% were “definitely legitimate value-for-money savings”.

The committee argues that this raises concerns over the feasibility of Mr Osborne’s larger-scale plans.

Its report says: “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 front-line services to reduce costs, without adequately exploring the potential to reduce costs through other value-for-money improvements.”

Labour MP Margaret Hodge, who chairs the committee, said: “Departments were in general unable to make real value-for-money savings of 3% a year following the 2007 Comprehensive Spending Review – and that was at a time of increasing budgets.

“Now that much more radical cost-cutting measures are required across government, my committee is gravely concerned about the ability of government to make efficiency improvements on the scale needed.”

Cabinet Office minister Francis Maude said: “We said that our priority would be to take the cost out of the centre of government so we could protect the front line and, in just a few months. That is exactly what we have done.

“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.

Mr Maude added: “As we move forward with our ambitious efficiency programme, we expect to build significantly on the £402m already saved following a review of the government’s largest projects, the £18m already saved in rent alone by vacating empty buildings and the estimated £800m we expect to save just this year from renegotiating contracts with some of the government’s largest suppliers.”

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