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Watchdog warns over £10bn of Whitehall ‘savings’

By Richard Johnstone | 8 July 2013

The National Audit Office has said it is unable to verify £10bn of government savings claimed by the Cabinet Office in the 2012/13 financial year due to uncertainties in the data used by departments to monitor spending.

Whitehall sign Photo: Dreamstime
Photo: Dreamstime

An analysis by the NAO found the Cabinet Office’s Efficiency and Reform Group had achieved ‘significant savings for the taxpayer’, and had also improved the process of calculating Whitehall spending reductions.

However, although the ERG’s calculation of a £10bn saving was underpinned by sound methodologies, uncertainty in departmental data meant it was not possible to assess the accuracy of the total, auditors said. The group had improved the assurance programme for individual savings, but there was not yet enough information to provide an audit of the claimed spending reductions.

Auditor general Amyas Morse noted that the ERG had ‘worked to improve the calculation and assurance of saving categories and its own approach is now much stronger’.

He added: ‘While the ERG has undoubtedly achieved significant savings for the taxpayer, in future it could spell out more clearly the different types of savings that are included in its claims. Our report makes detailed recommendations which will help ERG to strengthen its assurance of savings claims in future.’

In particular, the report found that information in four of the 11 savings categories, including public sector pension cost reductions, was not of high enough quality. These areas also include procurement reforms in construction, IT schemes and other major projects.

The savings claimed for 2012/13 were ‘substantially’ greater than the £5.5bn claimed for 2011/12. Auditors said this reflected both new areas of cost reductions, including public sector pension reforms, and greater savings in other areas, such as efficient use of property.

A number of recommendations have been made to improve the quality of the information, which the NAO said could lead to formal audit assurance of savings in future if introduced.

Among the suggested changes, savings claimed by the ERG should be checked by the internal audit functions of each government department, which should also sign-off a detailed breakdown of reductions.

The ERG’s own assurance process should seek, when possible, to ensure savings are identified as they happen, to reduce the pressure for verification at the end of the financial year.

Responding to the report, a Cabinet Office spokesman said the government was 'taking radical decisions to strip out waste and make Whitehall leaner and more efficient so Britain can compete in the global race'.

He added: 'We know there’s still a long way to go to achieve our ambitious plans for savings over the next few years; but we’re pleased that the NAO recognises our hard work in new areas to substantially improve upon the £5.5bn savings for the taxpayer achieved in 2011/12 to make our unprecedented £10bn in 2012/13.'

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