Ministers mistake cuts for ‘efficiency’, MPs warn

Funding boost for departmental capability and capacity might be needed to save money long term, PAC says
Existing NHS pressures created additional challenges for the pandemic response, PAC said. Photo: Stephen Furley/public domain

By Jim Dunton

06 Dec 2021

The Treasury and Cabinet Office need a better understanding of the civil service skills and capability required to deliver the plans set out in this year’s Spending Review if the programmes are to be a success,  MPs have cautioned.

In a cross-cutting report on government efficiency,  members of parliament’s Public Accounts Committee said it was time for a renewed focus on value for money after a year of unprecedented public spending and “a series of high profile and incredibly costly policy and procurement failures”. They cited the £37bn NHS Test and Trace programme as one “eye-wateringly expensive” failure.

The report said existing workforce pressures in the National Health Service created additional challenges for government’s pandemic response. Committee chair Dame Meg Hillier said the lesson of the coronavirus pandemic was that funding cuts did not necessarily result in more cost-effective services.

“Government cannot, and must not, rely on cutting capacity to or below the bare minimum necessary, as a proxy for efficiency,” she said. “That is not efficiency, it’s just under-resourcing, often with costs not actually ‘saved’ at all but shunted onto other parts of government or society.”

The PAC report said that the three-year funding plans set out by chancellor Rishi Sunak in October’s Spending Review were an opportunity for departments to take more of a medium-term view than a standard single-year settlement would allow. But it added that after a decade of previous efficiency drives, departments were going to have to be more creative in how they attempted to improve efficiency.

The report said skills shortages in the civil service could compromise departments’ ability to achieve efficiency savings. It said a lack of skills and leadership capability caused delays, inefficiencies, and increased costs in several previous government projects – and cited the collapsed InterCity West Coast franchise competition and the Common Agricultural Policy delivery programme as examples.

“Increasing the capability to conduct successful efficiency programmes may require government to ‘spend to save’, putting upfront investment in place to increase departmental capability and capacity,” the report said.

“There is also a risk that multiple efficiency programmes rely on the same pool of specialists within government functions, to the extent that the functions do not have the capacity to meet the demand.”

The report said increased government spending on consultants as a result of Brexit and the coronavirus pandemic may well have been less efficient than building capability within the civil service.

PAC members saluted plans set out in June’s Declaration on Government Reform for reduced spending on consultancy and the intention to build capability within government.

But they called on the Treasury and the Cabinet Office to “work with departments to understand the skills and capability required to deliver plans successfully, identifying any specialist and technical skills needed”.

They said the Cabinet Office should also ensure, through its workforce planning, that there are enough resources and skills available to teams to deliver efficiency programmes. MPs said the department should write to the committee in six months to give a progress update on implementing the key measures in the Declaration on Government Reform.

MPs also called on the Treasury and the Cabinet Office to set out what they have learnt from the Covid-19 pandemic about the relationship between perceived efficiency and dealing with unexpected events, and how this has been incorporated into the latest efficiency plans.

Hillier said that too often her committee had seen seen efficiency figures that were “either pie in the sky or a crude way of balancing the books, but not about more effective ways of spending taxpayers’ money”.

“This may sound like dry accounting but every pound spent more efficiently means a better deal for taxpayers,” she said.

“Make a plan, set outcome targets, measure delivery against them, use planned interventions when you miss them.

“This is not rocket science, this is management 101: we on PAC have been saying it for years and we’ll keep saying it until the government ‘gets efficiency done’.”

A government spokesperson said: “We will not apologise for supporting people, public services and businesses when they needed it most. What we are doing is working tirelessly to ensure value for tax payer money.

“Making sure departments deliver is the most important part of this year’s Spending Review. They have been set clear outcomes that they must deliver in return for the taxpayer money they receive, they will be held to the highest level of monitoring and scrutiny and have agreed to savings of 5% against day-to-day central departments budgets in 2024-25.”

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