Government cuts billions - but more needs to be done

Central government costs have been cut in real terms by 2.3% or £7.9 bn in 2010-11 compared with 2009-10, the National Audit Office has reported.

The watchdog says its finding supports the Cabinet Office Efficiency and Reform Group's estimate that the coalition's spending moratoria and efficiency initiatives, including cuts to back-office and avoidable costs, contributed around half of the figure, some £3.75 billion.

Back-office (administration) spending fell by £1.5bn, while capital spending in departments fell by £1.6bn, partly the result of spending being brought forward to 2009-10.

However, the report warns that departments are less well-placed to make the long-term changes needed to achieve the further 19% to 2014-15, as required by the spending review.

Amyas Morse, head of the National Audit Office, said: "Departments will need to cut their spending by much more over the next four years. This will not be possible without their recognizing that short-term measures are not enough and that fundamental changes are needed.

"Departments will achieve long-term value for money only if they identify and implement new ways of delivering their objectives, with a permanently lower cost base."

The report says it is unclear how far spending reductions represent year-on-year changes in efficiency, or whether front-line services are affected.

http://www.nao.org.uk/publications/1012/government_cost_reduction.aspx