Savings data 'unconvincing', says PAC

Many of the savings reported by departments as a contribution to achieving the £35bn value for money target set in 2007 Comprehensive Spending Review are "unconvincing", says Parliament's spending watchdog. In its report Progress with VFM savings and lessons for cost reduction programmes , published on 4 November 2010, the PAC says that where savings were made by departments, information systems were not always adequate to support them. It also had doubts about savings reported by departments because they did not have financial and performance data to back up their claims, and savings could not be reconciled to their financial outturn or their original spending settlement. "Two years into the three year programme to make £35bn of cash-releasing savings by 2010-11, savings of only £15bn were reported. And, of those reported savings, just 38% were definitely legitimate value for money savings," said Margaret Hodge, chairperson of the PAC. External experts would be better than the Treasury at advising departments about procurement and other issues, according to the report. It acknowledges, however, that this would apply not apply to IT, which is controlled by the Cabinet Office's Efficiency and Reform Group. Overall, the committee said it was concerned at the implication from the Treasury that it will simply reduce departments' budgets and then walk away from responsibility for the achieving the level of savings required across government. It said it believed the Treasury will need to take a very different approach to value for money improvement in the next spending period.