Team Rishi Deny that ‘Efficiency Savings’ are “Not Credible”

Last night Team Rishi set out his plan for mass additional cost of living support in the winter, without many details. Slamming Liz Truss’s tax cut plan as one that “won’t touch the sides” for most people in need of support, Rishi says he will be “prepared to act”. 

“I’m very clear about what is required to help people, and as soon as we know how much bills will go up by, I will act.

And it’s important for people to know how this extra support will be paid for. In order to keep any one-off borrowing to an absolute minimum I will first seek efficiency savings across Whitehall to provide direct support for families to help with the unprecedented situation we face.”

On the promise of paying for much of his future fiscal support through efficiency savings, his team said that, as Chancellor, Rishi instructed all departments to find efficiency savings to help fund additional spending to support Ukraine.

As Chancellor, Rishi did indeed scrape together cash from departmental efficiency savings. Every department – including devolved administrations – was asked to identify 1.5% of capital departmental expenditure limit (CDEL) underspends. The process, which according to a Treasury source, did work well, raised £1 billion for arms for Ukraine a few weeks ago. However, said source raised three major concerns about the plan:

  1. Given HMT has just performed this exercise, it lacks credibility to say there’s still “free” money sitting around in departments waiting to be repurposed
  2. Departments only managed to cobble together £1 billion from this recent exercise, which is a good amount for arms for Ukraine, however will equally not touch the sides of the cost of living crisis facing Brits this winter. The total package cost so far already amounting to £37 billion…
  3. On a purely inter-governmental relations level, some think repeating this process indefinitely across Whitehall, Scotland, Wales and Northern Ireland cannot be done without seriously fracturing relationships.

In response, Team Rishi say the OBR typically assumes that every year 8% of total government capital plans will typically go unspent and they’re merely saying that in a cost of living crisis that money should be put to immediate use support families, rather than simply returning to the Exchequer. Rishi says he wants his plan to involve as little “one-off borrowing” as possible. Clearly his opponents believe efficiency savings are not the answer to that objective…

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mdi-account-multiple-outline Rishi Sunak
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