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Action to tackle poor value for money and unfunded spending commitments

News Release issued by the COI News Distribution Service on 17 June 2010

Today, the Chief Secretary to the Treasury, Danny Alexander, announced which projects re-submitted to the Treasury will be suspended and cancelled as part of a review of all spending decisions taken since 01 January. Projects have been cancelled where they were not affordable, did not represent good value for money, or where they did not reflect the Government's priorities.

The Chief Secretary also announced today an urgent review of inherited spending commitments for 2010-11, where funding was reliant on underspending through the End Year Flexibility (EYF) system, or additional funding from the Reserve. It was unrealistic to expect underspending would have occurred on a scale necessary to fund all these commitments - consequently, at least £1bn of commitments will have to be cancelled. The review will exclude commitments for military operations and the financial package agreed with the Northern Ireland Executive to support the devolution of policing and justice powers.

Spending re-approvals since 01 January

217 projects were re-submitted to the Chief Secretary for re-approval, totalling £34bn. Projects have been cancelled where they have not demonstrated value for money, and suspended where more detailed work is needed as part of the Spending Review process. The Chief Secretary agreed with departments:

- 12 programmes will not go ahead that would have cost nearly £2 billion over their lifetime.
- 12 programmes will be suspended that would have cost £8.5 billion over their lifetime.

Further details, including a list of projects that have been cancelled or suspended, are set out below.

Departmental reviews of spending decisions that did not require Treasury approval will be completed and announced by Departments by the end of June.

Commitments reliant on underspend - End Year Flexibility and the Reserve

The Government has inherited approximately £9bn worth of spending commitments for 2010-11 that were not fully funded. These commitments planned to rely on underspending across Government for their funding as part of the End Year Flexibility system and additional funding from the Reserve. As there was no reason to suppose that underspending on a scale necessary to cover all commitments would occur, and there is insufficient contingency in the Reserve to cover the remainder, it is expected that the Government will have to cancel at least £1bn of commitments where there is no money to pay for them.

The Government will therefore review in detail all existing EYF and Reserve deals, with the exception of commitments for military operations and the financial package agreed with the Northern Ireland Executive to support the devolution of policing and justice powers. The Chief Secretary has begun discussions with Departments, and details of the action taken will be set out at the Budget.

Chief Secretary to the Treasury, Danny Alexander said:

"We are determined to tackle the unprecedented budget deficit and bad financial management we have seen over the past decade, but are equally determined to do this in a way that is fair and responsible.

"As a result of the poor decisions made by the previous Government, I have taken the decision to cancel certain projects that do not represent good value for money, and suspend others pending full consideration in the Spending Review.

We have also found another spending blackhole in the previous Government's plans - projects had been approved with no money in place to pay for them. I am determined to deal with this problem head-on and ensure we never see this kind of irresponsible financial planning in Government again"

PN 13-10 To view the list of projects that have been cancelled or suspended, please follow the link below; http://nds.coi.gov.uk/ImageLibrary/detail.aspx?MediaDetailsID=2031

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