28 March 2008
The government has dismissed calls from backbench MPs to ensure that the efficiency savings targets set out in the Comprehensive Spending Review do not lead to cuts in services.
It has rejected the Treasury select committee's claims that public and parliamentary confidence in the 2008-11 efficiency programme must be boosted because of what the MPs said were 'unresolved issues' over the impact of the 2005-2008 Gershon targets on services.
Giving its response to the committee's December 2007 report on the CSR and the pre-Budget report, the government said on March 25 that it did not accept the MPs' analysis.
The response states: 'The government does not accept that there are unresolved issues concerning the effects of the current efficiency programme on service delivery.'
It cites a National Audit Office report from February 2007, which had not found any 'conclusive evidence' of damage to services.
The response continues: 'The government has articulated clearly its public service priorities in the form of the revised Public Service Agreements and supporting Departmental Strategic Objectives. Departments will be held to account for delivery against these ambitions.'
Nor did the government accept the committee's recommendation that the Treasury's fiscal 'golden rule' should be rewritten to relate more to the financial years ahead. The same call has been made by independent economics experts, such as the Institute for Fiscal Studies think-tank.
But the government argued that its golden rule and its sustainable investment rule underpinned a forward-looking fiscal policy, which made extensive use of projections to inform decisions.
'The fiscal rules provide a clear measure of success that plays a vital role in ensuring the credibility and accountability of the fiscal framework,' the response says.
MPs and ministers also disagreed over the impact the turmoil in the financial markets will have on the public finances.
The committee's report says the Treasury's assumptions on the economy's rate of growth had 'not been adequately explained'. But the government said its forecasts had already taken 'uncertain economic prospects' into account.
PFmar2008
