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Testing Efficiency

The Government’s strategy for improving value for money (VFM) across the public sector has evolved over the last two Spending Reviews:

  • the first phase was put in place during in the Spending Review 2004 period, which set a target of £20 billion in annual efficiency savings by 2007-08 to drive through recommendations made by Sir Peter Gershon, and
  • the second phase, under the Comprehensive Spending Review 2007 (CSR07), includes a more demanding £35 billion target for annual VFM savings by 2010-11. This is about 3% of departments’ planned expenditure each year.

A third phase comprises:

  • the Operational Efficiency Programme looking at cross-cutting issues such as collaborative procurement and IT.
  • the Public Value Programme which looks at value for money issues in individual spending areas such as road building and NHS commissioning, and

This phase will mainly impact during the next spending review period. Further information on these programmes can be found on the HM Treasury website

 

Our previous work on efficiency savings

The Treasury reported that annual savings totalling £26.5 billion were achieved through the ‘Gershon’ efficiency programme (2004 Spending Review: final report on the efficiency programme). The National Audit Office examined the Gershon programme on two occasions:

 

Our work on CSR07 VFM savings Programme

During CSR07 the National Audit Office is carrying out detailed reviews of some 12 departments. These departments are responsible for delivering 98 per cent of the £35 billion target. Our reports, which will be published and laid before Parliament, will look at:

  • the department's governance arrangements, and
  • a sample of the savings reported in the department’s annual reports or autumn performance report.

The first two reports were published in December 2009:

The National Audit Office has produced additional guidance for departments on the management of their VFM programmes and reporting savings.

We also report to Parliament on departments' financial management and on Departments’ systems for measuring performance against their Public Service Agreement targets (PSAs).