Whitehall’s budget conflicts are creating a pipeline of unrealistic and unachievable projects and wasting taxpayers’ cash, the National Audit Office (NAO) has warned.
The NAO published its scathing assessment of how the budget has been set, just days before Rachel Reeves presents her first Budget, which includes detailed spending lines for government departments for next year.
The independent body, which is responsible for scrutinizing public spending, blames a “hostile” Whitehall culture for a spending review process that pits departments against each other and “does not support overall value for money”. blamed it on.
It added that this culture is “entrenched” and that spending decisions are often made “in a hurry” and the focus is on announcing big “good news” rather than delivering it to taxpayers. .
The report added that even after a project has been approved, ministers and civil servants are often “reluctant to accept bad news” when budgets balloon or projects are delayed.
The report says the government has failed to consider the “costs and benefits of government policies that contribute to achieving net zero”, despite ministers insisting the transition is critical to the economy. He cited the government’s promotion of net zero as one area.
It also warned that some senior civil servants, including permanent secretaries, were prioritizing “political drivers” over “public value” and that this would only “undermine transparency and, in turn, accountability”. did.
The Chancellor has vowed to take a longer-term approach to understanding spending and prioritizing value for money, but the NAO’s report highlights a largely adversarial approach to setting departmental budgets. It suggests that parts remain in what the NAO calls a “black box”. . Recent spending review negotiations suggest that the adversarial nature of negotiations continues under a Labor government.
Three ministers have written to Chancellor Keir Starmer complaining about the cuts they are being asked to make as budget negotiations stall.
“Governments tend to underestimate costs and overpromise outcomes,” the NAO said in its report. “Too often, too little emphasis is placed on testing the feasibility of new spending proposals and major programs and understanding the uncertainties.
“Our discussions with stakeholders point to the haste, intensity, and adversarial nature of the spending review discussions, which are based on private negotiations between departments and the Treasury Department. An aggressive approach may encourage authorities to use unrealistic costs and benefits to obtain approval, including overly ambitious annual plans for efficiency and failure to plan for inflation. ”
In an even more damning indictment, the NAO said business cases for new projects were often seen as “purely bureaucratic hurdles”, including for civil servants.
The report said high turnover among ministers and civil servants also meant that many people “couldn’t afford” to think long-term.
“Political factors may provide an incentive to announce new spending commitments quickly before evidence is available,” the NAO said.
“Completing the business case for new spending is sometimes seen as a purely bureaucratic hurdle, with data, risk and enablement experts tending to have too little voice in preparing spending proposals. Understood,” the report added. “Poor decisions that do not support overall cost-effectiveness.”
NAO chief Gareth Davies said the spending review would require a “cultural shift” in the government.
He said: “Limited resources amidst growing challenges and an ambitious mission mean that we need to make real decisions if we are to undertake the next spending review to set the government up for future success. It means change is needed.”
“Governments can use planning and spending frameworks to support a cultural shift that focuses on long-term value for money.”
Broaden your horizons with award-winning British journalism. Try The Telegraph for free for 3 months. Get unlimited access to award-winning websites, exclusive apps, savings and more.
