CENTRAL government departments are successfully finding efficiency savings – but they have not paid enough attention to the reorganisation needed to sustainably cut costs on a larger scale in coming years, the National Audit Office (NAO) warned in a report published today.
Spending fell by 2.3 per cent, or £7.9bn, in real terms in 2010-11, the NAO said, with efficiency savings and back-office cuts accounting for much of the success.
However, the planned real-terms cuts amount to a further 19 per cent by 2014-15 for the average department, and most “have yet to develop a clear picture of their future state, or a detailed plan.”
A more strategic view is needed from now on, the NAO said – departments need to properly consider how they can still deliver services on a much lower budget, for example.
They must also take into account the budgets which are outsourced and managed at arm’s length, sometimes accounting for over 50 per cent of total spending.
In particular, this is problematic when departments do not track the link between costs and outputs in external bodies, it said.
