Whitehall savings claims in doubt

17 December 2009
17 December 2009 | Jake Kanter

A “significant proportion” of savings claimed by two UK government departments are questionable, according to the National Audit Office (NAO).

A review by the public spending watchdog out yesterday assessed the value for money (VfM) savings reported by the Department for Transport (DfT) and the Home Office in their 2008-09 annual reports. Amyas Morse, head of the NAO, said “a significant proportion” of the savings claimed by the two departments had “question marks hanging over them”.

The NAO reported that of the £892 million cutbacks the DfT said it achieved, 22 per cent “may represent realised cash savings but with some uncertainty”, and 35 per cent “may be overstated”. Of the £134 million DfT savings where procurement made a contribution, £63 million were classified as “amber”, which means certain savings criteria were not fully met.

Among the criteria is whether they are cashable, properly calculated, sustainable, scored only once, if the savings are new to the period and if they have been realised.

A total of £71 million of the department’s savings were accredited as “green” for fully meeting standards.

The DfT said it has a strong record on delivering efficiency savings. It added: “All our savings estimates were based on the best information available at the time and in accordance with HMT (Treasury) guidance.”

The NAO also looked into £338 million of the £544 million savings claimed by the Home Office and found there were was “some uncertainty” over 24 per cent and “significant concerns” over a further 17 per cent.

Of the £54 million Home Office savings attributed to procurement, £36 million were classified as “red”, meaning they may be “significantly overstated”. Some £17 million was labelled amber, while just £1 million was given the green light.

Many of the savings were “one-offs”, the NAO said. “The department is unable to establish that the savings were cash releasing, for instance, that the contracts on which the individual savings were claimed had been delivered below budget.”

The Home Office said: “While we recognise the need for the NAO to scrutinise the VfM work in the department, we do not believe that the criteria used in the report fully reflects the good work we have done.

“Some of the savings were one-off cash savings in the prices of major contracts, but the rules only allow those savings to score if they are made again and again, in each successive year. These have been rated as 'red' even though they have saved millions of pounds.”

Morse at the NAO added: “Both the DfT and the Home Office have had some success in reducing costs so far, but more generally all departments must now take a more rigorous approach towards ensuring large-scale, genuine savings are made.”

The NAO will produce further reports on the savings claims of other Whitehall departments next year.
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