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"It is worrying, when the money has already been removed from their budgets, that a significant proportion of the savings claimed by the Department for Transport and the Home Office have question marks hanging over them.  A failure to deliver these savings may mean cuts having to be made elsewhere.

"Both the Department for Transport and the Home Office have had some success in reducing costs so far, but more generally all departments must now take a more rigorous approach towards ensuring large-scale, genuine savings are made."                       

The National Audit Office has today published independent reviews of value for money savings reported by the Department for Transport and the Home Office as part of their 2008-09 Annual Reports. 

The Department for Transport reported savings of £892 million, of which the NAO found that 43 per cent fairly represent realised cash savings, 22 per cent may represent realised cash savings but with some uncertainty, and 35 per cent may be overstated. At the Home Office, the NAO sampled £338 million of £544 million reported savings and found 59 per cent of these fairly represent realised cash savings, 24 per cent may represent realised cash savings but with some uncertainty, and the NAO has significant concerns over 17 per cent.

These independent reviews are two of a series of reports the NAO will be producing into savings reported by departments as part of the targets set by the 2007 Comprehensive Spending Review.  Overall, the Government has set a target to generate annually cash-releasing savings of £35 billion by 2010-11.

The savings programme is based on the principle that the planned savings have already been removed from departments' budgets.  Departments therefore have to deliver savings to release enough cash to meet their spending plans or reduce activity compared with the planned level. 

The NAO is satisfied that, in many cases, both departments are achieving long term savings. The main reasons for the NAO's concerns are:

• Eighty per cent of the Department for Transport’s reported savings relate to support for the rail industry.  The NAO considers the benchmarks against which these savings were measured should have been revised in the light of the most recent information, which would reduce the savings reported in 2008-09.
• The main reasons for the NAO's concerns with around 17 per cent of savings reported by the Home Office were that reported gains were one-off cash savings which will not permanently reduce the Department's expenditure, or were not new annual savings as the procurement actions had been taken in prior years.

Full report (PDF - 762KB)