Page last updated at 09:17 GMT, Tuesday, 28 July 2009 10:17 UK

MPs urge 'radical' savings drive

Alistair Darling holds aloft the 2009 Budget
The Treasury's savings targets are demanding, MPs acknowledge

The government must find more "radical" ways to save money and better evaluate the savings made, a group of MPs says.

Efficiencies in the public sector are vital to bringing down the UK's "gargantuan" debt levels, the cross-party Treasury Sub-Committee argues.

It criticises ministers for setting an "arbitrary" £30bn savings target for the three years to 2011, saying the approach should be more business-like.

Ministers say they are on track to meet their efficiencies targets.

Prime Minister Gordon Brown says a big efficiency drive is needed to prioritise resources for frontline services at a time of real restraint in public spending but the Conservatives say levels of government waste are chronic and much tougher action is needed.

In a report, the committee welcomed government efforts to improve efficiency but highlighted a number of areas of concern.

'Confidence lacking'

In the 2008 pre-Budget report, the Treasury raised the efficiencies target for 2008/11 from £30bn to £35bn.

It did this after an interim report identified £6bn of additional potential savings in areas such as procurement, IT, back-office operations, use of property and asset sales.

The public sector must consider more radical solutions to reducing its burden on the taxpayer
Michael Fallon

But the committee said the Treasury did not consult with other departments before setting the figure, a decision it believes does not "inspire confidence" in the process.

The committee also criticises how past savings were measured.

The Gershon review set a target for £21.5bn in public sector savings between 2004 and 2008, which ministers said they exceeded by £5bn.

But the report says these savings were not independently checked by the National Audit Office, the government's spending watchdog, therefore potentially undermining public confidence in them.

Morale worries

All future savings must be fully audited and accounted for, it says.

"Now that the level of public debt has reached such gargantuan proportions, it is important that the government takes steps not only to improve efficiency in the public sector but also to account more clearly and accurately for the savings it is making," said the committee's chairman, Tory MP Michael Fallon.

"In the face of ever more job losses in the private sector, the public sector must consider more radical solutions to reducing its burden on the taxpayer."

But in the push for savings, ministers must be careful about the impact on staff in departments and agencies affected, the committee adds.

Uncertainty about job losses and fears of heavier workloads for remaining workers has damaged morale at Revenue and Customs, it suggests, and management must act to address concerns.

The Treasury says "significant progress" has been made towards meeting its savings target for the current period.

As part of this, it says it is well ahead of its goal to relocate 20,000 civil servants from London and the South-East of England to other parts of the country.

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