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Page last updated at 17:32 GMT, Thursday, 8 April 2010 18:32 UK

Efficiency savings: Do the figures stack up?

Hugh Pym
By Hugh Pym
Chief economics correspondent, BBC News

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Throughout the election campaign the BBC's expert team of journalists is examining the key claims made by politicians and assessing what their policies and promises mean to you.

Welcome to Reality Check. Today I'm examining the parties' promises on efficiency savings and asking whether the figures stack up.

Labour says the Conservatives' economic plan is based on £12bn of "fantasy savings" this year which would put the recovery at risk.

The Tories say they would find the cuts in "government waste" without affecting frontline services. They say it would allow them to cancel Labour's planned 1% rise in National Insurance contributions.

It's a tough goal because the £12bn Tory savings would have to come on top of the existing £35bn government savings target that hasn't yet been fully achieved.

This raises some interesting and difficult questions. Where exactly would the savings be found? Could a Tory government really target waste alone and not hit frontline services? And could they really deliver this by next April?

Tory plans

The Conservatives insist that an extra £12bn could be saved in this financial year.

Hugh Pym looks at whether the political parties' figures add up

The details of how they'd do it are set out in a brief document drawn up by two of the government's former efficiency advisers, Sir Peter Gershon and Dr Martin Read. It calls for cuts in spending on information technology, curbs on recruitment and other cost-saving measures in the public sector.

In the first year, half of the Tory savings would be reallocated to frontline services like health. The other £6bn would be used to cut the public deficit.

The following year (2011/12), the ongoing £6bn worth of savings would make up for the revenue lost by the decision not to raise National Insurance.

Political controversy

The big argument here is over the claim that there are £12bn more efficiency savings to be found, on top of the £15bn already planned this year by the government

Freeze on new IT spending
Supplier cost reductions
Tighter control of recruitment
Reduction in discretionary spending
Reduction of public sector property costs

In 2007 the government committed itself to find savings of £35bn by 2010/11. According to the latest Treasury figures just £10.8bn of those savings had been achieved by last autumn.

Now Labour says it has reached £20bn and will find the remaining £15bn this year.

They say this is enough of a challenge for any government and that for the Tories to pencil in £12bn on top of that is simply not credible.

Prime Minister Gordon Brown accused the Conservatives of "deception" over the issue said the Tories' target of £27bn in one year equated to "half the education budget". Spending on Children, Schools and Families is set at £58.2bn this year.

Graph showing the savings and department spending

The chairman of insurance group Standard Life, Gerry Grimstone, who's an adviser to the Treasury on efficiency, has called the Tory calculations "incoherent". He says "it is just not credible to think that our savings can be almost doubled". Some independent academics have also questioned whether it can be done.

Prof Colin Talbot says the timescale for Tory efficiency savings is "unrealistic"

Part of the scepticism is because the Conservatives say these are "efficiency savings" not cuts. They insist that the money can be saved "without affecting frontline services".

But the distinction between savings and cuts is not always clear.

Tighter control of recruitment could result in vacant posts remaining unfilled. The public sector unions say that is likely to affect frontline services. And a freeze in new IT spending could affect the quality of public provision.

The Conservatives say that the public won't notice any difference because they'll be cutting "waste" and making government more efficient. But nobody denies that the targets are challenging.

Voters may be sceptical about the notion of efficiency and waste savings. They have heard a lot about them from ministers over the years and will hear a lot more on the subject before polling day.

A selection of your comments are below.

The bottom line is whether or not these efficiency savings can be met in reality. I'm sure whichever party is in power will find the statistics to back up the claim and if not then they'll change the means testing in order to bias the result as we've seen in past.
Alex, Hertfordshire

I don't know how either of the main parties can expect to be taken seriously if they claim that efficiency savings can make a big difference. If Labour promises big savings, then we are entitled to ask why they have not already made such savings in the past? Are they really content to waste vast amounts of money when times are good? As for the Conservatives, how do they explain that a year or so ago they ridiculed Labour for suggesting that big efficiency savings could be made? They look like opportunists. So far only the Lib Dems have had anything sensible to say about how to reduce the deficit.
Tim, Cambridge

Yes! Does anyone seriously believe that any government or council is run so efficiently that it cannot save money? £12bn is less than 1% of total GDP. If that can't be saved we need our heads testing. There must be way more to save than 1%.
Steve, Shrewsbury

As usual the Tories are targeting those in most need and vulnerable in society, the sick, the elderly, and children. Those that rely on front line public services rather than their friends, the rich, and the bankers and their obscene bonuses who are responsible for the economic crisis.
Charles, Whitley Bay

£6bn reduction out of the economy is a deflationary move as there is no pressure on inflation. The outcome will be a reduction in employment. Can they say how many jobs would be lost as a result of an extra 6bn? Assuming £25,000 a year for workers, this is 240,000 jobs!
Paul, Norfolk

Of course they can. I would bet that behind every central & local government dept are hundreds and thousands of people who do nothing but create worthless paperwork and massage statistics to keep themselves in a job. If these frontline services created some wealth for the country rather than keep taking from private business then we would be in a better place. It will take the private sector to create the wealth that will reduce this problem. Government depts will not create wealth. What they are good at is spending on nothing and justifying why and how.
Andrew, Horsham

After years of real increases in government spend there has to have been a build up of fat and inefficiency, but this isn't really the point. The government has got to cut spending. We are in a mess and the tax payer cannot go on paying ever more money into the government coffers. If "frontline" services have to be cut, so be it. We'll just have to learn to live with it.
Stewart, London

Having worked in Local Government I know efficiency cuts can be made there on every level. I also think huge savings can be made by downsizing government and halting ID cards. As we say to kids, "what you want and what you need" can be two very different things.
Joan, Helensburgh

Don't be silly - it's just an attempt to slash through all services whether "frontline" or not! Who defines "frontline"?
Tony, Glasgow

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