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Civil service failed on savings targets ‘even during the good times’

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By Mark Smulian

4 November 2010

Whitehall departments have met less than half the efficiency savings targets set for them in 2007, the Public Accounts Committee has said.

The spending watchdog called for accounting officers to be held responsible for making savings with ‘clear consequences for senior civil servants who fail to deliver planned improvements in value for money for taxpayers’.

A report published on November 4 said that by March 2010 – two years into the three-year efficiency round – savings were only £15bn against the £35bn target.

Even the £15bn figure was in doubt, with the committee concluding ‘just 38% were definitely legitimate value-for-money savings’.

Committee chair Margaret Hodge 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, my committee is gravely concerned about the ability of government to make efficiency improvements on the scale needed.’

Hodge urged the Treasury to encourage departments to think widely about how to improve value for money, rather than seek to meet a simple numerical target.

The report also found that departments could not adequately measure savings and the Treasury had ‘failed to create a framework for reliable reporting’.

The worst performer was the Department for Communities and Local Government, whose plan for savings from its social housing budget was blown off course by the property crash, it found.

But the Public and Commercial Services union described the report as a ‘wasted opportunity’, because it failed to address the lack of collective pay bargaining in Whitehall.

General secretary Mark Serwotka said: ‘It’s ludicrous that so much time is spent negotiating with 250 separate employers when this could be done centrally.’

He added that there was ‘no fat left to trim’, saying the PAC finding that the 2007 efficiency targets were ‘not based on robust evidence’ could apply equally to the plans set out in the 2010 Comprehensive Spending Review.