Watchdog warning on spending cuts
Government plans for spending cuts are optimistic and the consequences for services are unclear, a key watchdog has warned.
The National Audit Office (NAO) said departments had successfully hit their targets by shaving £7.9 billion off outgoings last year. More than 21,000 full-time roles were scrapped, and administrative spending fell by £1.5 billion.
However, the NAO cautioned that departments could struggle to achieve the further 19% real-terms budget cut proposed for most of them by 2014-15.
"Short-term measures, though successful to date, will not be sufficient," the auditors said in a report. "Departments will need to have a clear vision of how they and their delivery partners will operate with a permanently lower cost base."
The NAO said most departments had "yet to develop a clear picture of their future state or a detailed plan based on a strategic view across the business".
While data on spending patterns was "sufficient to manage budgets in-year", "information about the consequences of changes in spending is less good".
"There are few examples of systems that link costs to performance," the report said. "Without improvements in impact measurement, departments will not be able to track or manage the impact of cost reduction on service provision.
"Not understanding the factors driving cost and the consequences of spending cuts makes it difficult for departments to forecast future spending."
A Government spokeswoman said: "The Government is on track to deliver necessary reductions in spending.
"Departments have already delivered over £6 billion of savings last year and are on course to live within their budgets again this year."