Whitehall 'unlikely to meet target'
Published 20/07/2010 | 00:22
Whitehall departments are unlikely to be able to deliver £35 billion of value-for-money savings promised by the end of this financial year, a report by the National Audit Office (NAO) has found.
The savings, announced by former Chancellor Alistair Darling in his 2007 Comprehensive Spending Review, amount to around 3% of departmental spending a year and will be dwarfed by a programme of cuts averaging 25% over five years due to be set out by his successor George Osborne in October.
Auditor General Amyas Morse said departments will have to "think more radically" if they are to deliver the massive spending reductions required of them in the current financial situation.
By the halfway point of Mr Darling's three-year value-for-money programme, the Government reported some £10.8 billion of savings had been achieved. But Tuesday's NAO report raised questions over the claimed improvements.
After reviewing more than a quarter of the reported savings, the spending watchdog judged that just 38% represented definite sustainable savings, against 44% where there was uncertainty and 18% - rated "red" - which did not represent savings at all or significantly overstated the amount of money involved.
Red ratings were awarded where reported savings were not actually realised, were double-counted or did not take into account the cost of new contracts to replace scrapped ones.
In some cases - such as £307 million claimed by the Department for Transport for support to rail services - savings were overstated because current spending was compared to estimates from previous years which turned out to be too high, found the NAO report.
Only one of the 12 major departments required to deliver 98% of the 2010-11 target - the Department for Environment, Food and Rural Affairs - had reported savings of more than 50% of its target at the halfway point.
While departments had made "some progress" compared to previous spending periods, it was "unlikely" that they would meet the £35 billion target by April 2011, said the report.
Mr Morse said: "Public confidence in reported savings is undermined where they do not stand up to external scrutiny."