EXCL: Efficiency review finds higher savings target ‘not realistic’ as inflation bites

Alex Chisholm says he is “confident” departments will meet 5% target, despite inflation pressures and demands from new government
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By Tevye Markson

06 Jun 2023

The government will not ask departments to add to the 5% savings targets set out in the 2021 Spending Review as inflation and new demands have already made this goal more difficult to achieve.

The efficiency and savings review ordered by the chancellor in November to drive efficiencies amid soaring inflation has now “effectively concluded”, civil service chief operating officer Alex Chisholm has said.

The review – run by chief Treasury secretary John Glen and Cabinet Office minister Jeremy Quin – aimed to support the prime minister's goal to “maximise efficiency within budgets”. It also looked at whether departments could go further than the goal they were set in SR21 to cut 5% from their day-to-day budgets by 2024-25 to be “reinvested into priority areas”. 

However, it has now found sticking to the SR21 demands is already a tough enough task for departments.

In an exclusive interview for CSW’s upcoming summer issue, Chisholm said inflation pressures and the need to create breathing room to implement ministers' new ideas has meant departments have already had to find more efficiencies to stick to the target. Adding to the 5% target would not, therefore, be “realistic” or “deliverable”.

“If we can cope with inflation pressures and do all the extra work that the new administration wants to do and deliver on all the savings that are already baked into SR21, that would be some doing. And that is basically what we think we can do,” Chisholm added.

Chisholm said he is “confident” departments will meet the 5% target, despite inflation pressures squeezing departments' budgets.

Work to improve efficiency in the last few years has included property sales worth £500m made in 2021-22, with an objective to replicate that annually; and a digital strategy promising £1bn of savings across government over the SR period, Chisholm said.

Government ‘still focusing on frontline roles’

The 5% savings target aims to “protect the vital frontline services that matter most to the public despite the impacts of higher inflation”, the Red Book for this year's Spring Budget said.

Cutting non-frontline roles to fund frontline jobs was another key pledge in SR21, which was delivered by then-chancellor Rishi Sunak – althought the Treasury was unable to define what it meant by "non-frontline" roles at the time.

Chisholm said this remains a big part of the government’s philosophy under Sunak’s premiership.

“I think if you look at the published data about where we're adding roles, [you'd see that] they are still very much frontline roles,” he said.

“The Ministry of Justice have added some roles, the Home Office have added some roles, whereas some other departments have been able to reduce their net numbers, including the Cabinet Office.

“So I think we are very much focused on the frontline still.”

“That's not to say that we don't value so-called back-office roles, because very often they are doing important management or professional activity, which is necessary,” Chisholm added.

“But the philosophy of SR21 was to try and put your marginal pound into frontline public services and relieving backlogs and that’s still the attitude of the government.”

Between September and December, the Home Office increased its headcount more than any other department, gaining 2,310 officials in just three months.

The Home Office has said this headcount expansion aims to “deliver on the public’s priorities, most notably around border security and addressing pressures within the asylum system”.

The MoJ also increased its workforce significantly, adding 780 officials in that period, and remains the government’s biggest department.

The Cabinet Office, meanwhile, reduced its headcount by 230 – the second-largest number after the Department for Work and Pensions, which has been making hundreds of staff redundant as part of a programme of office closures. Although DWP has said most redundancies will be back-office jobs, five jobcentres are also included in these closures.

The full interview with Alex Chisholm on pay, the Civil Service People Survey and more will be published in CSW's summer issue this month. Read what Chisholm had to say on machinery of government changes and reform here.

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