Select Committee on Treasury Minutes of Evidence

Supplementary memorandum submitted by Professor Colin Talbot, Nottingham Policy Centre, University of Nottingham (14 July 2004)

  Since my last note I have had time to look at some more details in the Gershon Review and SR2004. These reveal some interesting anomalies in the proposed "efficiency savings" at Departmental level which the Committee might wish to consider.

  "Gershon" gives figures[22]for the proposed efficiency targets in cash terms for each department in his report, adding up to the £21.4 billion which the Chancellor has adopted.

  The target for efficiency savings for each department is 2.5% per year for three years from 2004-05 to 2007-08—ie cumulatively approximately 7.5%. The total figure of £21.4 billion efficiency savings equates to an overall efficiency saving of around 7.4% of Departmental Expenditure Limits for 2007-08 (£290 billion excluding the devolved governments spending)[23]

  However the individual Departmental totals vary substantially from the 7.5% figure. They range from the Cabinet Office's 1.2% to DEFRA's 17.4% (see Figure 4). The Committee might wish to explore the rather large range in these figures with HMT officials and the Chancellor.

  An additional question also occurs which might perhaps explain the variances in these figures. Are some Government Departments already significantly more efficient (eg Cabinet Office) than others (eg DEFRA)? If so, on what basis is this known? These would seem to be the only plausible (or at any rate justifiable) reason why there are such huge variances and why a number of Departments (Cabinet Office, Law Officers, Trad & Industry, DFID, Transport and Health) seem to fall so substantially below what Gershon sets as a minimum level for each and every Department's savings:

    "The Efficiency Review team assessed departmental proposals against a number of criteria to determine whether they . . . delivered as a minimum 2.5% annual efficiency gains across the 2004 Spending Review period." (p22)

  Obviously some of them didn't.

Figure 4


Source: calculated from Gershon Review Table 4.1 p30 and SR 2004, Table A.4, p185.

22   Releasing Resources to the front line-Independent Review of Public Sector Efficiency, Sir Peter Gershon, July 2004, Table 4.1 p30. Back

23   Calculated from SR2004, Table A.4, p185. Back

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