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MPs criticise NAO's efficiency scrutiny

Smoke and mirrors

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Members of Parliament's Public Accounts Committee have shown a reluctance to accept a report on the progress of Whitehall's efficiency campaign.

The National Audit Office's (NAO) acceptance of Efficiency Review calculations came under fire from MPs at a meeting of the Public Accounts Committee yesterday.

Halfway into the three year efficiency programme, government departments have reported £13.3bn in annual efficiency savings, 62 per cent of the £21.5bn target.

An NAO report on the Efficiency Review in February 2006 treated official figures as "provisional". In its report this month the watchdog found that, although many reported efficiency gains may still be inaccurate, they were sufficiently robust to be accepted. But the broad methods for calculating gains render the figures unreliable, according to members of the all party committee.

"This is a confidence trick," said committee member Austin Mitchell MP, who went on to the describe the measurements as a "smoke and mirrors" effect.

Alan Williams MP said: "I am staggered by the laxity that this report shows." Williams was appalled that the spending review methodology takes such a broad view. "We are not talking small sums – we are talking billions," he added.

For example, in the Ministry of Defence's reported efficiency savings of £37m on its Fast Jets project, some 20 per cent of this amount was due to earlier decommissioning of fighter jets.

In evidence to the committee, John Oughton, chief executive of the Office of Government Commerce (OGC), pointed out that the scale of the Efficiency Review is unprecedented, so it is not surprising there are variations in reporting methods and calculations. A single method of calculation across all departments would not be feasible, he said.

Oughton told the MPs that although measurement needs to be improved, the figures demonstrate that great efficiencies are being made.

The review is creating a shift in attitude and culture across Whitehall, according to Oughton. "I suggest that all departments are on a journey which they were not on before the Gershon review," he said.

Changes to the role of the OGC will see it take on a more interventionist role in Whitehall.

Oughton said the agency, which supports the government's target of £21.5bn efficiency gains a year by 2007-08, has already developed closer relationships with departments. It holds monthly scrutiny meetings with permanent secretaries.

"I am confident we have got a finger on their pulse and a foot on their neck," he said.

Looking forward to the Treasury's next Spending Review, Oughton expected it to be "challenging", with a push for savings of at least three per cent. This was Oughton's last appearance before the committee. He is due to stand down at the end of March, after three years in post. Peter Fanning, currently deputy chief executive of the OGC, will serve as acting chief executive until a new appointment is made.

This article was originally published at Kablenet.

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