Spending watchdogs have questioned the ability of the Whitehall unit responsible for reducing procurement costs to deliver sustainable long-term savings.

A National Audit Office report issued today approves the Cabinet Office's Efficiency and Reform Group (ERG) reported £5.5bn figure for savings made across government departments in 2011/12, but advises that some reductions are more sustainable than others.

In seeking to deliver overall £20bn efficiencies over the spending review period, the ERG helped reduce civil service staff costs by £1.5bn, slashed spending on consultants and temporary staff by £1.8bn and oversaw £800 cuts to capital projects in 2011/12, the auditors noted.

The scale of the efficiencies is more than 70 times the annual £72m costs incurred by the unit.  However, the level of savings from renegotiating contracts with major suppliers to government was lower than the previous year and the watchdog said some of this year's savings are also unlikely to be matched.

Additionally, the NAO said it isn't clear how the unit intends to drive reforms needed to secure the £20bn savings figure by 2014/15.  The ERG and other Whitehall departments were advised to have a more sophisticated understanding of the risks to public services as overall spending limits are lowered and new ways of operating take effect.
 
Amyas Morse, head of the NAO said: As a relatively new organization, ERG has assessed the obstacles it faces and has begun to tackle them energetically.

‘However, it needs to get going on moving beyond the role of imposing central spending controls to placing more emphasis on changes aimed at promoting sustainable savings.'

Chair of the Public Accounts Committee, Margaret Hodge MP expressed the concern the ERG ‘has failed to provide assurances that key services won't be cut'.