Public Bodies & Nationalised Industries
Cost Reduction in Central Government: Summary of Progress: Cabinet Office and HM Treasury
HC 1788, Report by the Comptroller and Auditor General, Session 2010-12
- National Audit Office (NAO)
- TSO (The Stationery Office)
'Cost Reduction in Central Government: Summary of Progress: Cabinet Office and HM Treasury (HC 1788)' concludes that departments took effective action in 2010-11 cutting spending in real terms by 2.3% or £7.9 billion compared with 2009-10. The analysis of departments' accounts supports the Efficiency and Reform Group's estimate that Government spending moratoria and efficiency initiatives, including cuts to back-office and avoidable costs, contributed around half of the figure, some £3.75 billion.
However, the report warns that departments are less well-placed to make the long-term changes needed to achieve the further 19% over the four years to 2014-15 as required by the spending review. This is partly because of gaps in their understanding of costs and risks, making it more difficult to identify how to deliver activities and services at a permanently lower cost. Fundamental changes will be needed to achieve sustainable reductions on the scale required.
It is unclear how far spending reductions represent year-on-year changes in efficiency, or whether front-line services are affected; and the departments' forward plans examined by the NAO are not based on a strategic view. Departments' financial data on basic spending patterns is sufficient to manage budgets in-year, but information about the consequences of changes in spending is less good.
Longer term reform is a Cabinet Office priority and departments will need to look beyond short-term cost cutting measures and make major operational change. Cost reduction plans also need to build in contingency measures to cover unexpected risks.
|Format||Paperback||Published||02 Feb 2012|
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