National Audit Office report casts doubt on government claims of £13.3bn efficiency savings

Government claims that it has made £13.3bn in efficiency savings carry a “significant risk of inaccuracy”, the public spending watchdog has warned.

A National Audit Office (NAO) report cast doubt that the reported gains were “genuine and sustainable”.

The 2004 Gershon Review of public spending set a target of £21.5bn of efficiency savings. It suggested savings could be made by improving procurement practices and use of modern technology, cutting bureaucracy and moving staff away from back-office functions onto the frontline.

The NAO report acknowledged there was “clear evidence of positive change across the public sector”, such as the £1.2bn saved annually by the Department of Health in procuring medicines.

On the measurement of efficiencies, the NAO’s assessment shows that:

  • 26% (£3.5bn) of the £13.3bn reported efficiency savings fairly represent efficiencies made;
  • 51% (£6.7bn) represent efficiency but carry some measurement issues and uncertainties; and,
  • 23% (£3.1bn) may represent efficiency gains but the measures used either do not yet demonstrate efficiency or the reported gains may be substantially incorrect.

Head of the NAO, Sir John Bourn, said: “When I last reported on the efficiency programme nearly a year ago, I concluded that reported efficiency gains should all be treated as provisional.

“Since then, progress has been made in improving the robustness of how gains are measured. But many reported efficiency gains still carry a significant risk of inaccuracy.

“In this spending period, there is more to do to show that all reported gains are both genuine and sustainable.”

The chief secretary to the Treasury, Stephen Timms, said: “These savings are robust, and with efficiency gains now of around £15bn, we continue to show substantial progress towards our target.”

Mark Serwotka, general secretary of the Public and Commercial Services Union (PCS), said: “The government may pat itself on the back about its progress with the Gershon agenda, but the evidence of PCS members suggests that job cuts are leading to delays in areas such as benefits and jobseeking. 

“We are not against doing things more efficiently, but as our members showed on the 31 January, we won’t stand by and see services suffer due to crude job cuts.”

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