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Last Updated: Thursday, 18 March, 2004, 19:01 GMT
Where's the waste?

By Evan Davis
BBC News economics editor

The Chancellor's comments on efficiency were perhaps the highlight of the budget.

Yet the ambitious target to save money by getting the public sector to improve year by year now means there's suddenly 20bn of funny money in the government's books.

It's different from the real money, the cash now allocated for schools or hospitals.

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No, the funny money is just what we hope services can improve by, with little way to tell in three years time whether they actually have improved by that or not.

The 20bn saving doesn't go into a pot - even if people talk about it as though it does.


But the really curious feature of the budget debate this year, is that everybody wants to talk about the funny twenty billion as though it is real.

That way we can all argue about how to spend it.

Does it get ploughed back into services - or does it keep taxes down?

We are, if you like, short of real cash at the moment. So we're arguing over imaginary cash.

Real reform?

Now this isn't as facile a debate as it sounds - because there is genuine room for argument about how to turn imaginary cash into real money.

But what is clear, is that twenty billion pounds of savings can't be found from just sacking civil servants or paper-pushers - there aren't enough of them for us to save that much.

No: it has to come from improvements in the way services are delivered.

Real public sector reform, in other words.

And if the improvements don't come - the funny money stays funny. Don't spend it all at once.


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