Cross-Government Cost Cutting

Baroness Penn Excerpts

Tuesday 6th December 2022 Lords Chamber

[Lord Bird]

To ask His Majesty’s Government what estimate they have made, if any, of the savings that might be realised by their cross-government cost-cutting exercise.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

My Lords, the Government announced the efficiency and savings review in the Autumn Statement to keep spending focused on government priorities and to help departments manage the inflationary and other pressures on their budgets; all savings will be reinvested in departments’ budgets. We need to be ambitious as a Government in finding ways of working more efficiently and focusing spending on where it delivers the greatest value for the taxpayer. The Government will report on progress in the spring.

[Lord Bird (CB)]

Does the Treasury also measure the costs of cost-cutting, because that is the important thing, is it not? It is all well and good to cut something, but if the damage is greater than the savings, surely it is not wise government to do that.

[Baroness Penn (Con)]

I put it to the noble Lord that there is a cost to not having efficiency and value for money in our services. That means we can deliver less for people for the money that we are putting into them. We want to see it the other way around, and that is the aim of this review.

[Lord Wallace of Saltaire (LD)]

Does the Treasury consider capacity when enforcing efficiency cuts on other departments? Later this afternoon we shall discuss the National Security Bill, which has several clauses imposing a new foreign influence registration scheme, which will lead to a great surge in new submissions to the Home Office, which I suspect it does not currently have the capacity to cope with, so it will need to recruit additional civil servants. The Retained EU Law (Revocation and Reform) Bill will also impose new tasks as they are repatriated from tasks we used to share with our European allies. We know what happened when the Home Office cut police numbers and when the criminal justice system’s budget was cut: capacity decreased and the Government are now having to recruit additional police officers. Does the Treasury think about this or is it simply budget-cutting?

[Baroness Penn (Con)]

Can I reassure the noble Lord that these questions are considered in spending reviews? They are also considered as part of the process of collective agreement when new policy is made between the periods of spending reviews. The noble Lord mentioned the MoJ and the Home Office; they will grow by, respectively, 3.6% and 3.1% a year over this Parliament.

[Lord Howell of Guildford (Con)]

The noble Lord, Lord Bird, made a very sound and good point. Would the Minister recommend to her Treasury colleagues that the “10%/slash everything” approach to public expenditure used in recent times is not the best way of controlling and curbing the size of the public sector, of improving its efficiency or of cutting out waste? There are techniques that have been tried in the past, namely the policy programme budgeting system, learned from the original Bureau of the Budget in America 40 years ago, and which should be revisited. Such techniques are much more effective in delivering real, effective, cost cuts, which take into account all the side effects that can sometimes overwhelm the original attempt at economy.

[Baroness Penn (Con)]

My noble friend is right: we must ensure that when we undertake these exercises, we really are delivering efficiency and value for money gains, rather than short-term fixes for departments’ budgets that, in the long term, may create other problems. I can reassure him that no figure is attached to the current exercise; it is about working with departments to see where they can find efficiency savings to help them manage the pressures they are under.

[Lord Blunkett (Lab)]

My Lords, does the noble Baroness not agree that what she has just said underlines the total failure of the short-term and damaging fixing over the last 12 and a half years?

[Baroness Penn (Con)]

No, I would not agree with the noble Lord at all. Efficiency savings are something that Governments of all colours have striven to deliver, including in previous comprehensive spending reviews under the Labour Government. It is absolutely right that, when we look at departmental spending, we build in an assumption of improved efficiency and value for money, but also that, at this time of increased inflationary pressures, we put even more work into looking at where we can achieve efficiencies and release savings to be reinvested into those budgets.

[Lord Young of Cookham (Con)]

My noble friend said that the Government were ambitious in their search for cost-cutting savings. May I suggest that ambition be extended to the number of Ministers in the Government? In 1979 there were two Ministers in the Department of Transport; there are now five. In 1979 there were five Ministers in the DHSS. That department has since been split into two and there are six Ministers in each. Is this not an area worthy of some exploration?

[Baroness Penn (Con)]

I take my noble friend’s point. The scope of government and what it is attempting to deliver has changed somewhat over that time, but whether the growth in Ministers has matched that scale of delivery is another question.

[Baroness Uddin (Non-Afl)]

My Lords, I cannot help but wonder what the damaging impact of the lost billions spent on poorly chosen PPE orders is, but will the noble Baroness’s department ensure that services for women fleeing domestic violence are ring-fenced and protected, as we have promised to do in this very Chamber many times?

[Baroness Penn (Con)]

My Lords, I am sure the Home Office takes that into account. This Government have a strong record on protecting women who have had to flee violence; we brought forward the Domestic Abuse Act, among other things. Even when looking back to previous years, from 2010 onwards those budgets were protected.

[Baroness McIntosh of Pickering (Con)]

My Lords, would my noble friend look closely at the property portfolio? As of January this year, only 34% of government office property had been onboarded, as it is apparently called. There is obviously scope to add more to this. Will my noble friend look closely at NHS properties in particular? For example, in a city such as York, with all the different organisations that have owned various properties, I would be interested to know how many are occupied and used for NHS purposes at this time.

[Baroness Penn (Con)]

I reassure my noble friend that the Government continue their efforts to reduce the government estate, and progress is being made to hit the £500 million per annum asset disposal target. There are significant property sales under way, including the empty sites and outdated buildings around the Royal London Hospital, which will create a new home for life sciences in London: the Whitechapel Road life sciences cluster.

[Lord Hunt of Kings Heath (Lab)]

My Lords, one of the best examples of cross-government working is the vaccine task force headed by Dame Kate Bingham. The noble Baroness will know that Dame Kate very heavily criticised the Government last week for dismantling our vaccines capability and stopping all the initiatives she had put in train. Is that an example of cross-government cost-cutting?

[Baroness Penn (Con)]

The noble Lord will know that we have increased the budgets in the health service, but that does not reduce the need to look for efficiencies. I pay tribute to the work of Dame Kate Bingham in delivering the results from the vaccine task force. We are now living in a different world from the one in which she did her work. I am sure we will look to learn the lessons from her work and take it forward in the most appropriate way.

[Lord Butler of Brockwell (CB)]

My Lords, in following up the question from the noble Lord, Lord Young of Cookham, could the Minister also carry out an audit of the number of special advisers?

[Baroness Penn (Con)]

I do not believe that it is within my responsibilities to carry out an audit of special advisers, but I will take the noble Lord’s point back to the department. I should probably declare an interest as a former special adviser myself; I would not be best placed to undertake such work.

[Lord Berkeley (Lab)]

My Lords, perhaps I could be helpful to the Minister and give her some advice. If she wants to save £150 billion, she could cancel HS2.

[Baroness Penn (Con)]

I always welcome helpful advice. However, I am not sure that I can take it up in this case.

[Lord Tunnicliffe (Lab)]

My Lords, even though markets have stabilised somewhat in recent weeks, our borrowing costs are extraordinarily high. Debt payments are second only to spend on health and social care. Most straightforward efficiency savings have already been implemented, meaning that the Government may have to spend now to achieve savings later. What would that mean for the Chancellor’s fiscal rules, which have already been broken 11 times in 12 years?

[Baroness Penn (Con)]

My Lords, initiatives to spend to save were included in the different departments’ spending review bids and they are welcomed by the Treasury. Increased evaluation of policy and programmes allows us to divert resources to where they can make the most difference. Another example of spending to save in SR 2021 was putting more money into the Supporting Families programme. That was informed by a strong evaluation which showed that those targeted interventions up front for families experiencing hardship delivered savings in terms of the number of children entering care and the number of adults and juveniles entering the criminal justice system. It is really hard to deliver spend-to-save measures, but where they work, they can be a really effective tool for delivering better public services for less money.