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‘Short-term’ spending cuts criticised by PAC

The Government has been too focused on quick cuts to spending, rather than considering the impact they might have, the Public Accounts Committee (PAC) has warned. This could undermine the objectives of promoting economic growth and higher employment, according to PAC’s report.

The report raises concerns about the Treasury’s capacity to effectively challenge departments and the way the Government continues to take some decisions which will not ensure value for money.

There is also a lack of joined-up thinking across Government, with no incentives for departments to collaborate on cross-government issues. Decisions on whether to spend or cut need to be informed by rational analysis, PAC stated.

Chair of the committee, Margaret Hodge MP, said: “The Government does not fully understand the impact of the spending cuts it is making. It is focusing on short-term priorities rather than the longer term view. The 2010 spending review concentrated on what could be cut quickly, rather than an assessment of the likely impact of the cuts.

“Departments often lack information on costs, or accurate benchmarks. This means the Treasury struggles to assess the cost effectiveness of proposed spending and make meaningful comparisons.  

“Too often, departments concentrate on their own self-interest, protecting their turf rather than ensuring joined-up thinking across government. There is no evidence of clear thinking on how one decision to save money in one budget area might lead to an increase in expenditure elsewhere.”

She added that high staff turnover and a lack of commercial skills at the Treasury were undermining its ability to scrutinise departmental budgets effectively. Some departments were “game playing”, the PAC found, by deliberately holding back information from the Treasury for their own advantage.

A Treasury spokesperson said: “Long-term planning is at the heart of the Government's capital plans which set out a long-term infrastructure pipeline worth a total of £310bn, and includes major projects which will be delivered over the next few decades.”

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(Treasury image copyright Peter M, some rights reserved)


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