MPs voice 'grave concerns' over spending cuts

Spending committee warns of 'serious risk' that government will have to cut frontline services to beat deficit



The public accounts committee says frontline services are at risk.
Photograph: Martin Argles for the Guardian



MPs on a powerful spending committee today warn that there is a "serious risk" that the government will struggle to find efficiencies and end up slashing frontline services to beat the deficit.

There are now "grave concerns" about the government's ability to reduce public spending by £81bn by 2014-15, after a review of the last cost-cutting programme was found to have stalled and many of the savings did not actually transpire, the public accounts committee (PAC) warns today.

Even relatively modest savings of 3% over the spending review period from 2007 – made as budgets were rising overall – have not transpired.

Two years into the three-year budgets, only £15bn of the £35bn target had been met and only 38% of those savings were considered "legitimate".

The MPs warn that the coalition's plans to reduce spending by £81bn by 2014 – an average cut of 20% for each department – could be unrealistic as only £1 in every £7 of savings promised had been delivered.

Margaret Hodge MP, chair of the public accounts committee, said: "Departments were in general unable to make real value-for-money savings of 3% a year following the 2007 comprehensive spending review – and that was at a time of increasing budgets.

"Now that much more radical cost-cutting measures are required across government, my committee is gravely concerned about the ability of government to make efficiency improvements on the scale needed. There is a serious risk that, to reduce costs, departments will rely solely on cutting frontline services."

Hodge told the BBC Today programme that some departments were accused of "double counting". The then Department for Children, Schools and Families, for example, had no evidence to back up its claim to have saved money on IT procurement.

"What it demonstrated to us is the problem the present government will face if the machinery of government, this big tanker, doesn't have a focus on the efficiency savings," she said. "Clearly what is at risk is that the frontline services will be cut with profound effects for communities."

The committee's report, based on an inquiry by the National Audit Office and evidence from the permanent secretary at the Treasury, finds that some departments struggled to make hardly any saving at all. The Communities and Local Government (CLG) department had reported only £40m of savings at the half-way point, against a target of £987m.

The report says: "Departments reported savings which did not stand up to external scrutiny, and there were no consequences for senior officials in those departments that failed to deliver savings."

The report says that CLG had particular problems – the bulk of its budget is devolved to local authorities – but that senior civil servants should be held responsible when savings are not made, and the Treasury should be more hands-on in its monitoring. It says that there was will from the Labour government to make real savings but that the civil service struggled to deliver meaningful efficiencies and that Labour's reliance on targets distracted officials from considering more profound reforms.

"We are concerned at the implication from Treasury that it will simply reduce departments' budgets and then walk away from responsibility for the delivery of the level of savings required across government," it says. "Bearing in mind the disappointing performance of this programme, we believe the Treasury will need to take a very different approach to value-for-money improvement in the next spending period."

Savings were not considered "legitimate" because departments could not account for the saved money in their budgets each year.

Labour conducted two rounds of efficiencies, the first after a review by Sir Peter Gershon in 2004 and the second setting 3% reductions a year, achieved by improving the value for money of departments' programmes, by 2010-11.

Francis Maude, the Cabinet Office minister, said: "We said that our priority would be to take the cost out of the centre of government we could protect the frontline and, in just a few months, that is exactly what we have done. Already, actions led by the efficiency and reform group have resulted in hundreds of millions of pounds of demonstrable efficiency savings – and this is just the beginning. These are savings we invite the PAC to hold us to account for.

"As we move forward with our ambitious efficiency programme, we expect to build significantly on the £402m already saved following a review of the government's largest projects, the £18m already saved in rent alone by vacating empty buildings and the estimated £800m we expect to save this year from renegotiating contracts with some of the government's largest suppliers.

"These are just some of the examples of savings already made, but the hunt for more will continue. As I have said before, this government will leave no stone unturned in its search to cut waste and inefficiency in Whitehall."

A nightmare vision if Britain if we don't fight the cuts

An interesting article from this weeks Socialist Worker

It’s 2015. We didn’t manage to stop the Tory cuts and they’ve left Britain devastated. This would be our future

It could have been stopped.

But here we are in 2015, in a future where Osborne and his Tory friends got their way and slashed public services down to almost nothing.

In London, at least 200,000 ordinary people have been expelled from the inner London boroughs.

At best, they are living in B&Bs on the outskirts of London.

They are allowed to come in to work in the coffee shops and the burger bars, but as night falls they have to start their long journey back to their run down estates on the city’s fringes.

Just to travel on a train to work each day now costs them a quarter of their income.

Few workers can afford to live in most of London because of market rents and housing benefit cuts.

But in order to work in the shiny shopping malls, you have to get to work on time. So some sleep on the street.

Thousands of homeless people congregate around the underpasses and tourist attractions.

Congregate

Up and down the country, the picture is the same. Block after block of empty apartments, failed monuments to the “boom”, lie unfinished, unloved and un-lived in.

Squatting in their once-plush foyers are the young, the poor and the incapacitated.

Five years ago, many of them thought they had a secure job, if not well paid, and even a pension. Now they have nothing.

For four million or more there is no job at all. Most of the colleges are closed—and the ones that are left are too expensive to get into.

It wasn’t just that the Tories cut housing benefit or that they cut incapacity benefit—it was that they restructured our society to fit their vision. Britain today is a place where the rich live behind gates while the poor live in the gutters.

The question is not whether or when the double dip hit the economy, because for most it just got worse.

What we saw was a process where everything was put at the whim of the private sector.

The typical town has little left. The residential care home is shut. The after school club is shut. The library is shut.

Instead we have “easyCouncils” and monster regional merged “supercouncils” with outsourced call centres, where non-union members on the minimum wage tell you your service is now unavailable for the category you are in.

Virtual

The old and infirm had nowhere to go. The councils turned themselves from providers of essential services into “virtual councils”, providing little more than business opportunities for private firms.

The promised “big society” didn’t happen—not least as the charities that were supposed to pick up the pieces instead of the welfare state had their funding cut in half.

In 2013, the Institute of Directors got their way.

Even though the court injunctions and the cowardice of the trade union leaders had stopped most calls for strikes, the anti-union laws were made more draconian.

So instead we watched the champagne-quaffing chauffeured City fat cats repeat the profiteering mistakes of the past.

Profits are high, bonuses are up, the spending review was a success, they said. And if it all goes too far, it’s the working class who will pay, again and again.

It could have been stopped. It has to be stopped.

Spending Review: Jobs go at Dennis fire engine factory

From the BBC Website: http://www.bbc.co.uk/news/uk-england-surrey-11608286

John Dennis says it has cut back from
making 150 fire engines a year to 100

Job losses at the UK's biggest fire engine manufacturer have been blamed on cuts in public sector budgets.

Surrey-based John Dennis Coachbuilders (JDC), said it was to make about 45 shop floor workers and office staff redundant at the end of November.

The Guildford company said it had been forced to scale back from making 150 fire engines a year to 100.

It said many local authorities had put new orders for fire engines on hold during uncertainty about spending cuts.

Wednesday's Spending Review by the government made clear that local authority budgets would have to be reduced by 25% over the next for years.

 

Alan McClafferty, managing director of JDC, said it was almost certain the budget for new fire engines would be affected.

"Making redundancies is not a decision we have taken lightly and we have held off from taking this action for as long as possible," he said.

"Over the last few months we have cut overtime and recruitment and looked into opportunities to diversify our product range.

"However, the reality is that our customer base is local authorities and the doubt over how much their budget may be cut has severely impacted JDC's business.

"It is not that we are losing lots of orders to our competitors, it is that new fire engines are not being ordered."

He said the redundancies would reduce the company's staff numbers by one third.

"We will support those affected as much as possible to help them to find new employment," he added.

"We will be offering training on CV writing and interview techniques as well as giving advice on pension, finance and career."

The spending review is announced and this is the response...