How Big an “Ask” Are the Tories Efficiency Plans?

Today David Cameron has been saying all day that the Tories efficiency savings amount to asking the government to save ‘£1 in every £100 that it spends’ and this is obviously ‘do-able’.

On one level this is true, but only:

IF you include the £6bn efficiency savings that are supposed to cover the cost of not increase NIC;

IF you include all government spending, i.e. about £700bn;

IF you’re a bit loose with your maths; and finally

IF you discount the damage this £6bn will do.

But everyone of these “Ifs” is being more than a little economic with the actualite.

First, the Tories are promising not £6bn but £27bn of savings. They are ‘banking’ the £15bn the government is already committed to for this financial year (2010-11) and adding another £12 (not £6) billion – so it’s £27bn, not £6bn.

Second, only about half of what the government spends goes on public services. The other half or so goes on repaying debt, paying debt interest, contributions to the EU, and paying out benefits. You can’t make efficiencies in these areas, apart from in their administration, which is trivial. So spending on public services is about £350bn.

Taken together, that means the Tories planned efficiency savings for  2010-11 is more like £8 for every £100 of ‘government spending’, not £1 – as our American cousins would say, do the math Dave.

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