UK Government Savings Figures – Some Questions, but Better than the Alternative?

The Cabinet Office announced the UK Government savings figures for 2014/15 last week, claiming that some £18.6 billion was saved in 2014/15. That is made up of savings from procurement, what we would call demand management, IT and other major projects, property rationalisation, fraud, error and debt recovery, staff reductions, pensions and a whole range of similar activities and efficiency measures.

We have written about this so many times before and I’m not sure there is much new to say. The procurement area contributes some £6.1 billion of the total - you can get into the detail in this "technical note".  It does say that these numbers are not official government statistics, but"management information evidenced", which is a nice way of putting it.

There are some immediate points to highlight and clarify. The benchmark against which the savings are measured is 2009/10, the highest spending year in UK government history, not the immediate previous year (which is the benchmark most private sector firms would use to measure savings).

So a cynic would say “of course there are savings against the year of greatest profligacy ever in the history of the country! How could you fail to make savings! the UK woudo be bankrupt if you had continued to spend at the 2010 levels"! Some savings also include measures against theoretical counter-factuals (what might have been spent); in other cases, we are really into “spend avoidance” – project cost saving against what departments might have done but didn’t. (We thought we might build a new road but we didn’t – there’s a £200 million “saving”).  That's a bit dodgy really.

In terms of the procurement savings, we can’t say if these are good measures and meaningful figures or not without getting into detailed category level analysis, which is not provided. Certainly, there has been real demand management savings - for instance, the last government did clamp down on areas such as consulting spend, although we believe that got relaxed a little as the election approached. And a lot of the work in most of these cost areas has been at least directionally good, we feel.

But I suspect the key point is that most people will think, “well, I may not really understand - or believe - all the numbers. But I suspect the coalition, and now the Tories, will manage spend more diligently than Labour would have done or would be doing now”.

We’d tend to agree with that sentiment, and as we’ve also said before, Labour showed precious little interest in public procurement from 2010-15 and now show little interest in anything except their own leadership fiasco. And in a sense, that comparative appearance of greater competence is what matters politically, not whether we think £16 billion is realistic or wildly over-stated.

And how do we think Jeremy Corbyn would do, given control of over £600 billion a year of government spend? There’s an interesting question ...

 

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