Summary
‘Progress with VFM Savings and Lessons for Cost Reduction Programmes: HM Treasury’ (HC 291) reports that the forecast made by government departments to save £35 billion between 2008-09 and 2010-11 is not viable.
The National Audit Office (NAO) concludes that HM Treasury's design addressed some weaknesses in earlier savings programmes, and departments have made some progress in their management of their programmes compared with previous spending periods.
Nevertheless, departments' planned programmes did not contain sufficient contingency and it is unlikely that departments will achieve the government-wide target of £35 billion of annual savings, which fully meet the Comprehensive Spending Review criteria, in 2010-11.
To date the NAO has reviewed reported savings amounting to some £2.8 billion from five major departments which are to deliver around 40% of the government-wide total.
Key statistics:
- 38% fairly represented sustainable savings (green);
- 44% may represent savings but with some uncertainty (amber); and
- 18% do not represent, or significantly overstate, savings (red).
Common problems include the use of unsuitable baselines for the calculation of savings, a lack of transparency over arms-length bodies' reporting processes, and difficulties in demonstrating links between savings and performance.
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