In the current economic circumstances businesses are facing up to real challenges of cutting costs in order to stay in business and emerge stronger from the downturn. The public sector needs to do likewise, looking for savings in addition to the routine savings departments are expected to make each year, so that the Government can continue to invest in excellent public services while maintaining sustainable public finances.
Good progress has been made in recent years on efficiency, with the Government having over- delivered against Sir Peter Gershon's 2004 Spending Review targets by 20 per cent, saving £26.5 billion. In the 2007 Comprehensive Spending Review (CSR) period the Government took this further by agreeing targets that will deliver £30 billion of value for money savings by the end of 2010-11, and a further £5 billion of savings in 2010-11 based on the interim conclusions of the Operational Efficiency Programme announced at the 2008 Pre-Budget Report.
Achieving value for money should always be a priority for government, and it is never a finished process. Challenging economic circumstances impact directly on the public finances, and mean that the current drive for efficiency will be important to supporting continued improvement and investment in frontline services. This new operating environment comes after more than a decade of record levels of investment in public services.
Some efficiency savings take time to deliver, requiring changes to contracts or major restructuring of services. That is why it is right to look ahead into the next spending review period as well as looking for short-term savings.