Table of contents
1. Current and previous efficiency and savings reviews
In the autumn statement 2022, delivered on 17 November 2022, the government announced a new efficiency and savings review. This follows on from a previous efficiency and savings review—which ran alongside the 2021 spending review—which achieved savings of “5% against day-to-day central departmental budgets in 2024–25” according to the government.
The government stated that the latest review would “target increased efficiency, reprioritise spending away from lower-value programmes, and review the effectiveness of public bodies”, and help departments to “drive up professional standards, accelerate progress on innovation and automation, and further reduce waste and duplication”. By reinvesting savings in priority areas, the government suggested that the review will also help departments manage budgetary pressures arising from higher inflation.
The government has said that it will report on the progress of the review in spring 2023.
2. Reaction
The review was welcomed by some think tanks. The director of the politically independent Reform think tank, Charlotte Pickles, approved of the drive to achieve value for money. Policy Exchange analyst Connor MacDonald also suggested that the raising of efficiency represented one of the few “positive noises” emerging from the autumn statement.
The general secretary of senior civil servants’ union the FDA, Dave Penman, was more critical of the review, arguing that “musings about efficiency and the launch of an ill-defined efficiency and savings review will mean little to civil servants working across government, who already place efficiency at the heart of their work”.
3. Debating the efficacy of efficiency savings
The extent to which the government will be able to achieve effective and enduring efficiency savings was debated in the House of Lords.
On 6 December 2022 Lord Bird (Crossbench) asked the government “what estimate they have made, if any, of the savings that might be realised by their cross-government cost-cutting exercise”.
Parliamentary Secretary to the Treasury Baroness Penn stated that “no figure is attached to the current exercise” and reiterated the government’s intention for the review to ensure spending remained focused on government priorities and “help departments manage the inflationary and other pressures on their budgets”.
Several members suggested that savings made through the review might be counterproductive. Lord Bird said the spending cuts would not be wise if “the damage is greater than the savings”. This point was supported by Lord Howell of Guildford (Conservative) who argued that “real, effective, cost cuts” require a full assessment of “side effects that can sometimes overwhelm the original attempt at economy”.
Baroness Penn agreed with the aim of targeting genuine efficiency gains rather than “short-term fixes for departments’ budgets that, in the long term, may create other problems”.
The same question was subject to a short debate in the House of Lords on 21 December 2022. Lord Bird reiterated his view that “unintended consequences” of spending reductions might undermine their efficacy and lead to greater public spending costs in the long run:
When money is taken out the system because of austerity, as was demonstrated between 2010 and 2016, the problem bleeds into other areas […] austerity is too expensive. It is too expensive not to repair a few tiles in the roof but to let the roof fall down.
Lord Greenhalgh (Conservative) defended the principle of attempting to control costs as “common sense”. Similarly, Lord Wallace of Saltaire (Liberal Democrat) argued that it was always important for public enterprises to regularly check their costs and prioritise spending, but that the prioritisation of tax cuts, regardless of the consequences for public spending and public services, was “irrational and ideological”.
Several members argued that previous attempts to constrain costs were leading to deteriorating public service outcomes. Baroness Brinton (Liberal Democrat) suggested that the lack of NHS workforce planning had led to staffing levels consistently below “safe and appropriate” levels and a large reliance on agency staff whose “breathtaking” cost was far in excess of what it would cost to train an appropriate number of medical staff.
Baroness Bennett of Manor Castle (Green) suggested that the Department for Environment, Food and Rural Affairs (DEFRA) was, along with other government departments, “hopelessly overstrained and underresourced”. Furthermore, understaffing at DEFRA was expected to get worse rather than better, despite the failure of the department to take the action required to meet existing environmental commitments, such as those relating to air, soil and water quality.
More generally, Lord Rees of Ludlow (Crossbench) suggested that the imperative for public institutions to “pinch and scrape to make savings” was leading to reduced efficiency, with “decaying infrastructure, outdated IT [and] falls in staffing and staff morale” causing outcomes to fall “below those of other advanced countries”.
The minister of state at the Cabinet Office, Baroness Neville-Rolfe, closed the debate by suggesting that the government faced “a constant struggle both to improve the economy and to make things more efficient”. She affirmed that the efficiency and savings review was “not about reducing budgets and there are no savings targets”, but that departments needed to “accelerate efforts to tackle waste and work more efficiently and creatively, focusing spending where it delivers the greatest value for the taxpayer”.
Cover image by ijeab on Freepik. This article was updated on 10 February 2023.