Public sector 'must reduce costs'

The Treasury said the public sector must cut costs

The public sector must consider "more radical solutions" to ease its burden on the taxpayer, MPs have said.

The Treasury sub-committee's report on Government cost-saving programmes said efficiencies were "vital" in a recession with net borrowing forecast to hit £175 billion this year.

MPs heard evidence on options, including introducing a four-day week, job cuts, swingeing spending cuts and tax rises, during their inquiry.

"We were told that, if the public sector was to make the kind of efficiencies needed during the current financial crisis, then a different approach to that taken in the past would be required," the report said.

Sub-committee chairman Michael Fallon warned that public debt had now reached "gargantuan proportions".

He added: "In the face of ever more job losses in the private sector, the public sector must consider more radical solutions to reducing its burden on the taxpayer."

MPs expressed doubts over the accounting of the £26.5 billion in Whitehall savings made under Sir Peter Gershon's efficiency review after the National Audit Office "highlighted serious problems" in measuring savings.

"We believe it is important to check that efficiencies have actually been achieved," the report said.

MPs also said a £5 billion increase in cost-saving targets announced by Chancellor Alistair Darling during last year's Pre-Budget Report "did not inspire confidence" because it had been announced without consultation with departments.

"We recommend that the Government... considers a more business-led approach to cost cutting in the public sector than setting an arbitrary target and requiring the civil service to meet it," it said.