What Francis Maude's efficiency savings really amount to

The government claims to have found £3.75bn in uncontroversial 'efficiency savings'. But the numbers tell a different story
    • theguardian.com,
    • Jump to comments ()
Francis Maude
Francis Maude has claimed the government's efficiency savings have delivered a 'staggering reward'. Photograph: Suzanne Plunkett/Reuters

Francis Maude, the Cabinet Office secretary, claims the government has found £3.75bn in savings during the time it has been in office. This, he says, vindicates the Tories' pre-election claim that cuts to employers' national insurance contributions could be funded by efficiency savings. The largest such savings, the government says, were found by cutting consultancy spending, renegotiating contracts and reducing spending on marketing. This, says Maude, has delivered a "staggering" reward.

Decoding the news

Decoding the news


There are some problems with this picture. The total "austerity package" planned by the government amounts to some £126bn by 2015-16, of which 76% comes from spending cuts. Compared with the total cuts, the figure cited by Maude as "staggering" is trifling (according to figures from the IFS).

Efficiency savings = cuts to services?

The cuts cited as "efficiency savings" are, in fact, all too often cuts to jobs and services. So, for example, £300m was "saved" by shedding 17,000 civil service jobs. Half a million was cut by shedding temporary staff, £360m was cut from investment in IT and £150m was cut from spending on major projects. Far from representing a cost-free, uncontroversial saving, this figure represents cuts to public services. Even cuts to seemingly less important expenditures such as government advertising will result in hundreds of job losses. What the government appears to have done here is take a number of the least controversial cuts, defined almost arbitrarily, and brand them "efficiency savings" (figures here).


The question of what counts as an "efficiency saving" is an ideological one. Cuts to spending have consequences. The Tories maintain that fiscal consolidation will result in a stronger economy, and thus increase tax revenues in the long term. According to a recent IMF paper, however, a cut of "1% of GDP fiscal consolidation reduces real private consumption over the next two years by 0.75%, while real GDP declines by 0.62%". If government cuts reduce GDP growth and contribute to recessionary pressures, then the resulting loss of tax revenues would make talk of "savings" moot.

Savings: what are they good for?

Finally, there is the question of what such ostensible "savings" are supposed to achieve. Maude boasts that these cuts are "equivalent to the salaries of 200,000 junior nurses, or 150,000 secondary school teachers". In fact, both nurses and teachers are losing jobs under this government. This is not saving money to spend it better; it is part of a package of reducing public services for the long term.

Latest posts

Today's best video

Today in pictures

More from Decoding the news