Budget: Funding for anti-fraud AI and DWP service modernisation in public sector productivity drive

Chancellor announces drive to save £1.8bn by 2029 ahead of this week's Spring Budget
Jeremy Hunt ahead of last year's budget. Photo: PA Images/Alamy Stock Photo

Artificial intelligence-driven fraud detection and the acceleration of a programme to modernise services delivered by the Department for Work and Pensions will be among a series of initiatives to cut £1.8bn in public spending by 2029, the chancellor has said.

The public sector productivity drive – announced by the Treasury over the weekend, ahead of this week’s Budget – is intended to funnel more money to frontline services by cutting administrative costs and using technology effectively.

The plans includes a £34m investment to expand the use of AI to detect fraud across government, which the Treasury said will save £100m over the five-year time frame.

A further £17m will go to speeding up DWP’s existing programme to modernise its services and move away from paper-based communications.

Other funding commitments in the announcement include a £170m package to cut down on administration in the justice system through new software, digitisation and better data, which the Treasury would save up to 55,000 hours of administrative time a year; £105m for 15 new special free schools; and £165m for more child social-care places to cut local-authority overspending on children’s care, which last year ran to £670m.

The Treasury has committed £800m to the public sector-wide drive, which follows on from Hunt's launch of what he called "the most ambitious public sector productivity review ever undertaken by a government" last summer.

As well as the £1.8bn in savings it hopes to deliver through the programme, the Treasury announcement pointed to stats from the Office for Budget Responsibility suggesting that increasing public sector productivity by 5% would be equivalent to £20bn extra in funding.

In its announcement, the Treasury said Hunt was "promoting public sector productivity as an alternative to accepting an ever-increasing bill for public services as the government sticks to its plan to move on from the high spending and high tax approach that was necessary to get the UK through the shocks of Covid and Russia’s invasion of Ukraine".

"A new focus is needed on the long-term decisions required to strengthen the economy and give people the opportunity to build a wealthier, more secure life for themselves and their family," it added.

Civil service jobs in firing line

Trailling the announcement in an interview with the Telegraph this weekend, also reiterated his goal to cut civil service headcount to its “pre-Covid baseline” as part of his drive to cut down on spending.

“I think overall, there are definitely areas where we are employing more people than we should,” he said in the interview.

In the Autumn Statement in November, Hunt said he would be instructing government departments to produce plans to reduce the size of the civil service to pre-pandemic levels by the end of the next Spending Review period – a cut of around 66,000 jobs.

“You had a huge expansion of civil service during the pandemic that was justified. It was an exceptional situation, but we’re not in a pandemic now. And still we’ve ended up with a civil service that is significantly bigger than it was,” he told the Telegraph.

The World Health Organization has yet to declare an end to the Covid pandemic, with one of its top officials saying as recently as last month that the world is “still in a pandemic”. However, the WHO called an end to the Covid public health emergency in May, by which time the UK government had ramped down the vast majority of its work related to the virus.

Among other things, the chancellor took aim at equality, diversity and inclusion initiatives, some of which he said he finds “very hard to defend”.

“I’m a big believer in smashing glass ceilings, but the people who smash glass ceilings, or who can make sure the glass ceilings are smashed, are the people who run companies and who run organisations. It’s not something you should subcontract to a kind of a unit of people who are paid a lot of money,” he said.

The comments echo those he made last October, when he said: “Smashing glass ceilings is everyone’s job, not a box to be ticked by hiring a diversity manager.”

At the time, he was announcing a “value for money audit” of EDI spending in the civil service.

The results of the audit have yet to be announced, despite a policy document published alongside the Autumn Statement saying it was “coming to conclusion”.

The document said ministers were considering introducing a “presumption against external EDI spending",  as well as efforts to “streamline” EDI training and HR processes “with a view to getting value for the taxpayer”. 

And in January, Cabinet Office minister John Glen said impartiality guidance could be changed to make it clear that any work “on identity and inclusion issues” should not be a “vehicle for taking an agenda into the workplace”.

He also said ministers were considering introducing a rule that civil service diversity network meetings can only be held outside of working hours as part of a crackdown on “political activism”.

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