The Efficiency and Reform Group (the Group) was established within the Cabinet Office in May 2010 to lead efforts to cut government spending by £6 billion in 2010-11. Its long term aim is to improve value for money across government by strengthening the central coordination of measures to improve efficiency.
The Group's core objectives are closely aligned with our own role in seeking to improve value for money across government. We therefore welcome the creation of the Group. It has made a good start in its first year towards ensuring central government better coordinates its activities.
The imperative to make savings in the short term has involved the Group imposing new controls on departments, such as moratoria on certain expenditure. This approach has depended on the support of ministers and informal relationships with the Treasury, but sustained efficiency improvements will need a much deeper change to both the culture and institutional structure of government. In the longer term, we expect to see a clear plan for what the Group intends to achieve and how it will get there. The Group also needs to clear up confusion over who is accountable for what in terms of improving value for money, especially in defining its responsibilities and those of the Treasury and individual departments.
Since our hearing, the Group has reported to us that its actions have resulted in efficiency savings of £3.75 billion across departments in 2010-11. The Group's clear reporting of these savings demonstrates a welcome improvement on previous efficiency initiatives, where we were dismayed by the poor quality of reporting by departments. It is important for the credibility of the Group that it continues to describe any future spending reductions accurately and explain any impact on services.
The scale of the challenge to deliver efficiencies is huge: the Government intends that half of the £81 billion reduction in spending planned over the next three years should come from efficiencies rather than through cuts to services or delays to important projects. Many of the efficiencies must be achieved in areas where the Group currently has a limited influence, or by local bodies, where it has none. We look to the Group to set out how it will operate to ensure that its approach can be replicated across the wider public sector, while respecting the objective of devolving decision making authority to local bodies.
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Cabinet Office on the Group's progress during 2010-11 and its longer term plans to improve government efficiency.