Government approach to efficiency yields savings, but is it sustainable?

Public SectorA new report from the UK’s National Audit Office (NAO)has praised the work of the Efficiency & Reform Group (ERG), part of the Cabinet Office in delivering over £5 billion of savings in central government but has challenged the ERG to make them sustainable over the longer term to meet the Government’s target of making annual savings of £20 billion by 2015. The NAO report welcomes the achievements of the ERG so far but expresses its concerns that many of the savings had been achieved with quick wins related to the renegotiation of existing contracts, staff cuts and the cancellation of marketing budgets, which had already begun to tail off.

According to its own criteria, the ERG is tasked with achieving savings by:

  • delivering savings by ensuring that government acts as a single customer for suppliers and service providers
  • supporting the delivery of government projects, on time, within budget and to a high standard
  • transforming public services, for example by using digital solutions, to improve user experience and make sustainable savings
  • supporting UK growth by allowing a wider range of UK businesses to bid for government contracts
  • reforming government management information and driving an evidence based approach to efficiency programmes

Now the NAO has called on the ERG to clarify how it intends to make sustainable savings over the longer term to achieve its aims related to the Government approach to efficiency. Amyas Morse, head of the NAO, said in a statement: “As a relatively new organisation, ERG has assessed the obstacles it faces and has begun to tackle them energetically. However, it needs to get going on moving beyond the role of imposing central spending controls to placing more emphasis on changes aimed at promoting sustainable savings.”

The ERG was originally announced as part of a Government shake up of public sector spending in 2010. The NAO report has noted its specific areas of concern as the ERG attempts to make more sustainable savings without compromising services. It believes the target to cut costs by £20 billion between 2014-2015 is ‘ambitious’, and that the ERG needs to work with government departments to assess whether threats to the delivery of services are ‘crystallising’ as the service continues to look for efficiencies.

The report goes on to say:  “ERG has yet to translate its ambition for saving £20 billion by 2014-15 into more detailed plans. ERG has made progress in developing strategies across its wide range of responsibilities, and is focusing on core activities likely to produce savings. However, until recently ERG’s focus has mainly been on the savings themselves, with less emphasis on delivery of the longer-term changes and improvement in efficiency necessary to make them sustainable.”