Member Article

Maude determined to go further on Whitehall costs

The Government has claimed to have made “staggering savings” in running costs across Whitehall.

Minister for the Cabinet Office, Francis Maude has announced savings of £5.5bn, apparently driven by spending controls on IT contracts, property, marketing, temporary staff and consultancy.

Some of the biggest savings were made through widespread reduction of the Civil Service, owing to a £1.5bn reduction in salary costs.

The Government also shed “unnecessary properties”, resulting in savings to the tune of £200m.

An estimated £1bn was saved over the last year through a suspension on consultancy spending, and on existing consultancy contracts.

In making the announcement, Mr Maude said: “In 2010 we set up an Efficiency and Reform Group in the Cabinet Office to beef up government’s operational centre and to ensure that Whitehall operated in a more business-like fashion.

“It’s working well, but we are determined to go even further, because when it comes to spending other people’s money we must always strive to find more efficient and better ways of providing public services.”

Jon Trickett MP, Labour’s Shadow Cabinet Office Minister, responded to the claims, and said: “For all their talk of savings, this Tory-led Government’s failures are costing this country dear.

“David Cameron and George Osborne have delivered a double-dip recession made in Downing Street, and they are already having to borrow £150 billion more than they planned over the Parliament - the cost of their failed economic plan.

Simon Bedford, head of public sector practice at Deloitte North West, commented: “The efficiency figures show that, on the surface, the Government’s plan to reduce operating cost is working. The £5.5 billion worth of departmental efficiency savings between March 2011 and March 2012 is a significant achievement, and comes on top of the £3.75 billion saved between May 2010 and March 2011.

“We are still in the foothills of efficiency savings. Austerity is widely expected to last for the next decade as the private sector investment Government had hoped for has not yet materialised. The next Spending Review period is likely to be as tough as the current one.

“For the longer term objective of running Government more like a business, things are less clear. As a ‘business’ that employs over five million people and spends around £700 billion annually, Government could make a number of improvements. In strengthening its own cash management practices, for example, Deloitte estimates potential savings of up to £10.2 billion per year. More can also be done to reduce the £20.3 billion lost each year to fraud and error and reconciling the £35.8 billion currently owed to Government that is aged or written off debt.

“In the longer term, Government must confront the areas of public spending sensitive to demographic change. For every additional one million people over working age, a further £10 billion is added to welfare spending. With the population ageing at its current rate, these long-term liabilities must be addressed.”

This was posted in Bdaily's Members' News section by Tom Keighley .