Treasury committee sceptical about proposed spending cuts
An influential committee of MPs has questioned the chancellor’s proposed £20 billion cut in public spending.
The Treasury select committee raised concerns about whether the saving was achievable without putting public services at risk.
The committee’s report states that “this programme involves a challenging target which leaves little room for manoeuvre” and questions whether or not the efficiency savings will cut public spending by the projected £20 billion.
The MPs remain sceptical as to whether the chancellor can produce reliable figures to show whether he has succeeded or failed to meet the target.
“If a department underachieves its target then the funds it has allocated to programmes will be squeezed, and if it over-achieves its target then the quality of those programmes will be put at risk,” the report states.
The Labour-dominated committee urged the Treasury to give more details of how the programme would work and how its effects could be audited.
Gordon Brown announced in this year’s Budget speech that he planned to increase spending on schools, while still achieving efficiency savings in Whitehall. He announced 40,000 civil service job losses as part of the efficiency drive, a move which has outraged unions.
The Commons committee warned that lower than expected tax receipts for the economic year 2003/04 could lead to problems in the future and called for greater transparency in Treasury tax forecasts.
However, the committee also concluded that Gordon Brown is on track to meet the requirements of his “golden rule” on government borrowing and welcomed the renewed energy of the UK economy.
The report congratulates the chancellor on his growth forecasts, which have proved accurate despite analysts’ gloomy expectations, and predicts that he remains on track to meet the golden rule for borrowing over the economic cycle.
The Treasury committee report on the 2004 Budget also pours scorn on controversial moves on the zero rate of corporation tax.
“We are puzzled that, unlike other commentators, the tax authorities and the Treasury did not anticipate the likely effect of introducing the zero rate,” the report says. “We are concerned about the possible compliance burdens of the proposals compared with abolishing the zero rate band.”
