3.1 The 2010 Spending Review planned for reductions in departments' spending for 2011-12 to 2014-15 against a baseline of 2010-11 budgets adjusted for one-off items. Once commitments to protect health and overseas aid spending are taken into account, the Spending Review reduced other departments' spending limits by a total of 19 per cent in real terms over the period to 2014-15. This is in addition to the 2.3 per cent reduction in 2010-11. Departments will need a more structured approach than they adopted for 2010-11.
3.2 Our Short Guide to Structured Cost Reduction11 set out our expectation that reductions of this size would need to involve a major change programme in order to bring down costs sustainably. This Part summarises the evidence from a number of recent National Audit Office reviews on how well placed individual departments are to deliver such programmes. The reviews give a snapshot of developments in key areas within the departments, but do not cover all departments or all relevant issues, so we are not able to give a comprehensive cross-government assessment. The reviews we have used are:
On cost reduction in departments:
● Reducing costs in the Department for Work and Pensions
● Reducing costs in the Department for Transport
● Reducing costs in HM Revenue & Customs
● Spending reduction in the Foreign and Commonwealth Office
● Ministry of Defence: Managing change in the Defence workforce.
On financial management:
● Department for Culture, Media and Sport: Financial Management Department for International Development: Financial Management Report
● Ministry of Justice: Financial management Report 2011.
On overseeing front‑line bodies:
● Department for the Environment, Food and Rural Affairs: Managing Front-line delivery costs
● Department for Business, Innovation and Skills: reducing bureaucracy in further education in England
● Department for Education: Oversight of financial management in local authority maintained schools
● Department of Health: Delivering efficiency savings in the NHS.
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11 National Audit Office, Short Guide to Structured Cost Reduction, 2010.