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U.K. government departments are facing growing pressure to find cost savings as they enter negotiations with the Treasury ahead of a review of post-pandemic spending later this year.
In a report published Wednesday, the National Audit Office set out ways that ministers can “achieve the same or better outcomes with fewer resources” as the country grapples with the vast debts accumulated during the pandemic.
The intervention by the U.K. spending watchdog underscores the scale of the challenge confronting Chancellor Rishi Sunak to restore order to the public finances. The budget deficit reached its highest since World War II in the last fiscal year, with the NAO estimating in May that the government expects to spend 372 billion pounds ($515 billion) in response to the crisis.
Sunak hopes to eliminate borrowing for day-to-day spending by the middle of the decade, with a combination of economic growth, tax rises on companies and departmental budget cuts. The pressure on some ministries may be intense, given that extra funds are likely to be needed for ongoing Covid-related costs such as re-vaccination and test-and-trace programs.
The NAO report is the first in a series about efficiency in government. Nine issues are outlined including optimism bias, when overly-upbeat outlooks can result in failure to deliver, cuts to the quality of services or the need for funding injections.
“Given the huge impact of Covid-19 on the public finances, it is inevitable that government is now focusing on efficiency,” said Gareth Davies, the head of the NAO. “As it prepares for the Spending Review, it will be important for government to apply the learning set out in this report drawn from its previous successes and failures in increasing efficiency.”
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