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NAO attacks UK.gov £13.3bn savings claim

Smoke and mirrors

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UK government claims of multi-billion pound savings achieved through an efficiency drive has come under fire from the National Audit Office.

The Government purports to have found £13.3bn savings from an annual public spend of about £120bn since the 'Gershon' efficiency drive began in 2004. It and has to save 'only' another £8.2bn by next March to have met its target.

This sounds impressive, and so thinks the Office of Government Commerce, which is responsible for finding the cuts.

"It speaks of confidence and credibility," an OGC spokesman told The Register.

But in a report published today, the NAO found the government's calculations decidedly murky and called for more transparency in how they are acccounted.

The NAO could be certain of barely a quarter (£3.5bn) of the savings claimed by the Government. Some £3.1bn of the claimed savings couldn't be trusted at all, while £6.7bn were tainted with "measurement issues and uncertainties".

For example, only four of ten central government departments had subtracted the cost of finding cost savings from the actual savings claimed. The Public and Commercial Services Union, which has fought job cuts across the public sector, noted that HM Revenue and Customs had found it could save £105 million with job cuts after it spent £106 million on consultants. The NAO urges government auditors and the like ought to challenge departments' claims more vehemently to avoid being fobbed off.

Its third recommendation revealed what departmental auditors might have told us if they were doing their jobs properly, which was that the government's reporting systems are so inadequate anyway, that it's hard to fathom what's really going on.

So why did the Government claim last November that it had made £13.3bn of Gershon efficiency savings, when the numbers were bogus?

What the Treasury called efficiency savings back in November was actually job cuts. These account for very little of the savings the government can account for, according to the NAO. Most of its savings (£5.5bn of them - while savings in excess of 10,000 job cuts were too low to note) came from reform of government procurement (which meant in practice consolidating contracts to get bulk pricing), while most of the efficiency projects examined by the NAO were already underway before Gershon got involved. Even the job cuts were massaged.

The NAO found that in the 2006 Budget barely half of the new efficiency gains was supported by any detail. These had to be verified in individual departmental accounts, which were just as murky.

One of the Gershon tenets was that efficiencies could be claimed only if services did not suffer, but the NAO found that quality measures could be lacking or unfavourable - though there had been improvement since last summer when the OGC gave departments better guidelines for doing their efficiency measurements.

The OGC hadn't done a bad job, considering, said the NAO. Shame for them then that the broader efficiency programme has just been subsumed by the Tresaury. The OGC is being paired down and left to deal with procurement. Perhaps they can advise the Treasury where to procure some honest accountants. ®

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