13 Central government departments took effective action in 2010-11 to reduce costs and successfully managed within the reduced spending limits announced following the 2010 election. This resulted in a 2.3 per cent real‑terms reduction in spending within departments' control, compared with 2009-10. Some £3.75 billion or around half the reduction was in areas targeted by the Efficiency and Reform Group for cuts in back-office and avoidable costs.
14 Most departments need to cut spending much more -by a further 19 per cent over the four years to 2014‑15. Departments are less well placed to make the long‑term changes needed, partly because of gaps in their understanding of costs and risks. From our reviews to date, departments have not yet developed new lower-cost operating models. Departments cannot achieve long-term value for money until they identify and implement new ways of securing their objectives with a permanently lower cost base.