Treasury attacked for approach to service cuts

The Centre for Social Justice (CSJ) said yesterday that the spending review process instituted by Chancellor George Osborne needs "drastic changes" if it is to deliver genuine value for money.

Mr Osborne's decision to ask departments to produce plans for how they would save 25 to 40 per cent from budgets could mean effective programmes being axed while more wasteful spending survives, warned the think tank in a report.

Departments may be tempted to "salami-slice" each existing project's budget, instead of dumping projects which do not work and supporting those which deliver social value.

Instead, the CSJ called on departments to start by defining the social outcomes they want to see, and then assess programmes in terms of how cost-effective they are in delivering on these priorities.

CSJ executive director Gavin Poole said: "Our fear is that cuts will be made the wrong way. Instead of assessing the true productivity of programmes and cutting those that are ineffective, we will see salami-slicing: equal cuts off all programmes, good and bad.

"We will see cuts based on political calculation from politicians and cuts based on administrative ease for civil servants.

"Ministers are effectively flying blind, under orders to cut programmes by up to 40 per cent but with confused guidance about their departments' objectives and how they should choose between spending options."

The CSJ report, which has been submitted to Mr Osborne, recommended that the Treasury adopt the approach of Washington state in the US, which set up an independent Institute for Public Policy to assess the cost-effectiveness of social spending.

This body prioritised spending on initiatives which were found to have delivered results, such as an early-intervention nurse-family partnership which generated $3 in savings for every $1 spent, said the report.