Comprehensive Spending Review

Margaret Hodge Excerpts

Thursday 28th October 2010 Commons Chamber

[Margaret Hodge (Barking) (Lab)]

Given the shortness of time, I will focus on my observations as Chair of the Public Accounts Committee, but I cannot let the moment pass without reflecting on constituency interests, particularly in relation to housing benefit. I share the views of my right hon. Friend the Member for Lewisham, Deptford (Joan Ruddock). The housing benefit policy will simply not even meet the Government’s intent. It will not cut housing rents in the private sector in London. If the Government wish to do that, I say to them: do not punish the tenants, cut the rent. The policy will not cut public spending, but it will increase homelessness in London and that will have its impact. It will not help people get into jobs. The very people who will be frozen out of London are those who come in to clean the House of Commons at 4 in the morning and who cannot come in from places such as Dover. We will have more people coming into Barking as a result of these reforms. The policy will inflame community relations in constituencies such as mine, which will simply provide more food for the extreme right, which will exploit such issues to vicious political ends.

I want to talk about issues that I have observed in the few months that I have been Chair of the Public Accounts Committee. Whatever the political intent, I am worried that the capacity of the Government machine to respond, to manage the process and to realise the intended savings is highly questionable. If the Government fail to deliver the vicious savings that they have planned, I fear that they will return for a series of further easy but highly damaging cuts to achieve the £81 billion target. Those cuts might include further slashing the benefit bill, on which the most vulnerable depend, or introducing charges into the NHS so that it ceases to be a service that is free at the point of need.

The record of the civil service in securing efficiency savings and value for money savings is poor. We recently reviewed the performance of Departments in delivering the value for money savings required in the 2007 comprehensive spending review. After two years only a third of the savings had been achieved, and of those reported only a third were sustainable value for money savings. The great tanker of Government was unable to deliver a budget imperative. I note that the Government expect to deliver a further £6 billion from savings in back-office costs, but I am sceptical about whether that will be achieved.

There is also a presumption that closures, mergers and job cuts achieve immediate savings, but in the real world these changes involve massive upfront costs. The Government’s promise that in abolishing the Audit Commission they would save £50 million started to unravel before the ink was even dry on the letter to the chairman of the Audit Commission announcing its abolition. We saw in yesterday’s papers that Barnet, Britain’s first “Easy Council”, was embarking on a programme of savings and was planning to save £3 million in the first year, yet not only is it not going to save that amount, but it is going to spend more on the programme of savings than it will save in the year itself.

Departments operate in silos and appear to have limited understanding of the extent to which cuts in one area impact on the budget of another. Let me give just one example. Her Majesty’s Revenue and Customs has planned to get tougher on fraud and theft, which we all welcome, and it expects to collect a further £7 billion in taxes, but the law officers are taking a 24% cut in their budget, so the Crown Prosecution Service is far less likely to be able to prosecute complex tax cases. If the Government do not consider the effects of the cuts on a whole-system basis, I have absolutely no doubt that my Committee will see Departments passing the buck among themselves for this failure.

If the Government are driven by ideology and do not intend to pursue their policies pragmatically, we will fail to deliver value for money and we will waste public money, forcing cuts elsewhere. In this respect, I offer the example of the pathways to work programme. We demonstrated in our report that private providers perform far less well in delivering jobs and cost more, and that Jobcentre Plus is much more effective, yet the Government, driven by ideology, are determined to privatise that programme.

My Committee will keep a close eye on whether the Government meet their own objectives and do actually deliver on fairness and efficiency in the cuts they make.