Budget: no drastic cuts to services - yet

The government's measures to reduce public spending include a clampdown on public sector pay and new shared services in central government. In his Budget speech today, the chancellor, Alistair Darling, said that immediate, drastic cuts to public spending would be "wrong and dangerous" - but that the next spending settlement from 2011 will be "the toughest for decades". The chancellor reaffirmed that he has left his forecast for public sector finances unchanged, but the Treasury has announced a number of measures to drive savings. In his budget speech, the chancellor focused on reducing public sector pay, confirming a 1% cap on basic public sector pay, a new code of practice on setting pay for senior civil servants, and a reduction of 20% by 2012-13 in the paybill for non-departmental public bodies. Departmental efficiency plans will be published today, as part of the plan to save £11bn through greater streamlining of central government. Individual departmental plans include: • Greater use of collaborative procurement in schools - estimated to save £650m - and in defence, with savings of £550m • £550m in savings from HM Revenue and Customs by closing 130 offices over the next two years and reducing IT costs by more than £100m • £40m in savings at the Department of Work and Pensions (DWP) through more flexible working arrangements and better use of its offices There will also be new shared service platforms in central government. The existing DWP shared service arrangement, which supplies services to three departments, will take on four new departments, while the Ministry of Justice will start a shared service centre for services such as HR and payroll. There will be a new team of experts on shared services in the Treasury, to set "new standards" for shared services. There will also be a 50% cut in spending on consultancies by central government departments and a cut of 25% in marketing and communications spending. New freedoms The government has also announced that local authorities will get greater power over £1.3bn of funding that is, at present, ringfenced, as part of its response to the 13 Total Place pilots. The full report on the pilots will be published tomorrow, but the government has today committed to giving local authorities "new freedoms" from central performance and financial controls. The best-performing local arfeas will be eligible for a "single offer", where they get further freedsom for better outcomes and additional savings. Some of the freedoms promised will be the ability to invest in preventive public services. In his budget, the chancellor also identified savings through reducing the number of civil servants based in London by a third, with 15,000 posts to be relocated in the next five years. Spending on IT programmes across government will be reduced by £500m by 2012-13, including savings of £130m at the Ministry of Defence, a "new approach" to the NHS national IT programme that will save £100m and £80m from reducing IT spending at the Home Office by 20%. Improving energy efficiency across the public sector will save £300m by 2012-13.