Osborne cuts scheme ‘took the easiest options’

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GEORGE Osborne’s austerity programme of public spending cuts was marred by a short-termist approach and a lack of joined-up thinking across government, an influential Westminster watchdog said yesterday.

Faced with the need to find £200 billion in cuts over four years in the 2010 Spending Review, the Treasury took the axe to those budgets that were easiest to cut, even though they might undermine the government’s stated priority of encouraging growth, the House of Commons public accounts committee found.

In a report yesterday, the cross-party committee described some spending cuts as “ill thought-through” and said there was “no evidence of clear thinking” about how savings in one Whitehall ministry could impose knock-on costs for other departments.

The report cited the decision to slash spending on capital projects from £60bn to £38bn in real terms, some of which was later reversed as the Chancellor struggled to inject life into a moribund economy.

And the MPs said that staff numbers at the UK Border Agency were cut “too quickly”, causing a backlog of immigration case work which resulted in some of the employees having to be rehired.

The Chancellor was constrained by political decisions to protect the budgets for the NHS, schools and overseas aid, which left departments accounting for just 40 per cent of the government’s day-to-day spending – including local government and justice – bearing the brunt of the cuts, the report found.

The committee also raised concerns that the Treasury did not have enough information to make “meaningful comparisons” between different candidates for the chop.

The government’s budgetary system encourages departments to focus on their own interests, rather than working together to lower overall government costs, found the report.

It highlighted proposals for higher rents to save money under the Affordable Homes Programme, which could mean an increase in the government’s bill for housing benefit.

The committee’s Labour chairwoman, Margaret Hodge, said: “The government does not fully understand the impact of the spending cuts it is making. It is focusing on short-term priorities rather than the longer-term view.

“The 2010 Spending Review concentrated on what could be cut quickly, rather than an assessment of the likely impact of the cuts.”

Ms Hodge said the Treasury needed to “up its game” to ensure proper scrutiny of departments’ plans.

“Too often, departments concentrate on their own self-interest, protecting their turf rather than ensuring joined up thinking across government,” she said.

“There is no evidence of clear thinking on how one decision to save money in one budget area might lead to an increase in expenditure elsewhere.

A Treasury source said: “The committee have chosen headlines over hard facts.

“Even the National Audit Office, whose report was the basis for this, said ‘government budgeting compares well with budgetary practice’.”