The £15 billion cut in public spending

April 22, 2009 5:06 PM

Darling's budget projections are based on some wholly implausible assumptions about public spending.
 
Post the next election he forecasts that current spending growth will fall to 0.7% pa in real terms (2011-12 onwards). That's a virtual halving from the 1.2% pa he incorporated in November's Pre-Budget Report. Yet while real public spending restraint is always difficult, Darling claims to be making this cut painlessly.
 
How?
 
By having another round of the magic Gershon efficiency programme, that's how.
 
Gershon was launched in 2004 by Gordon Brown, with the aim of getting better value for money in Whitehall and across our public services. The government claims it has already "saved" £26.5bn pa.
 
Yet when the National Audit Office did a detailed study of these claims, it found that only one one-quarter of them were dependable - in other words, the rest merely comprised the usual Whitehall deckchair rearrangement, or cuts in service standards. There was no magic. Indeed, the NAO found that some of the Gershon "savings" had actually resulted in knock-on cost increases elsewhere. A classic example was the surge in emergency hospital readmissions caused by sick people being discharged early from hospital in a Gershon drive to make "more efficient" use of scarce beds.
 
Darling is now claiming he can save a further £15bn pa from more of the same (including £5bn he announced in the PBR). Yet the detail of how he will do this includes several of the measures we know to have failed already, such as another £500m pa from those self-same counterproductive early hospital discharges.
 
There is no doubt that the dire state of our public finances demands some substantial cuts in future spending, and an attempt to produce £15 billion of savings is a good start. However, £15 billion is the tip of the iceberg, and these savings are not guaranteed to actually materialise as promised.

Darling's budget projections are based on some wholly implausible assumptions about public spending.
 
Post the next election he forecasts that current spending growth will fall to 0.7% pa in real terms (2011-12 onwards). That's a virtual halving from the 1.2% pa he incorporated in November's Pre-Budget Report. Yet while real public spending restraint is always difficult, Darling claims to be making this cut painlessly.
 
How?
 
By having another round of the magic Gershon efficiency programme, that's how.
 
Gershon was launched in 2004 by Gordon Brown, with the aim of getting better value for money in Whitehall and across our public services. The government claims it has already "saved" £26.5bn pa.
 
Yet when the National Audit Office did a detailed study of these claims, it found that only one one-quarter of them were dependable - in other words, the rest merely comprised the usual Whitehall deckchair rearrangement, or cuts in service standards. There was no magic. Indeed, the NAO found that some of the Gershon "savings" had actually resulted in knock-on cost increases elsewhere. A classic example was the surge in emergency hospital readmissions caused by sick people being discharged early from hospital in a Gershon drive to make "more efficient" use of scarce beds.
 
Darling is now claiming he can save a further £15bn pa from more of the same (including £5bn he announced in the PBR). Yet the detail of how he will do this includes several of the measures we know to have failed already, such as another £500m pa from those self-same counterproductive early hospital discharges.
 
There is no doubt that the dire state of our public finances demands some substantial cuts in future spending, and an attempt to produce £15 billion of savings is a good start. However, £15 billion is the tip of the iceberg, and these savings are not guaranteed to actually materialise as promised.

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