By Tash Shifrin
Chancellor Alistair Darling will set out new efficiency targets for government departments and will reveal the scale of a future public spending squeeze in next week’s Budget.
The April 22 Budget speech will include the Treasury’s latest economic projections and figures for the state of the public finances. All are expected to show a much worse picture than that presented in November’s Pre-Budget Report.
Darling will be quizzed by opposition politicians on what effects the range of measures announced in the PBR have had. The chancellor marked the implementation of new tax cuts and increased benefits on April 6 by saying the government was ‘determined to support families and businesses’.
He added: ‘The increases in child benefit, tax credits and pensions will provide extra help for millions of households across the country at a time when they need it most.’
But his message to the public sector is expected to be a tougher one. The Budget will set out how the £5bn of extra efficiency savings for 2010 announced in the PBR will be split between Whitehall departments.
Darling will also present the findings of his Operational Efficiency Programme, outlining where the efficiency drive will continue in the next Spending Review period.
The OEP report will cover savings to be made through improved back-office and IT functions, procurement and government property sales – and Sir Michael Bichard’s review of local public services.
The government’s plans for the privatisation or introduction of ‘alternative business models’ for government bodies, including the Royal Mint and the Met Office, will also be outlined in the OEP report. Details of the Treasury’s Public Value Programme will be released alongside the Budget, with the NHS a focus of potential savings.
The PBR also set out a £37bn reduction in planned spending growth from 2011, to restore the public finances after the recession. But rising levels of public borrowing and debt could force the chancellor to further squeeze public spending or push up taxes. The Institute for Fiscal Studies has warned that the gap could amount to an extra £39bn.
Whitehall departments will also find out how much unspent capital funding will be clawed back by the Treasury to fund loans to bail out stalled Private Finance Initiative schemes.
