Government needs to accelerate the pace of change in the way it works to ensure spending cuts over the coming years lead to lasting reductions in the cost of public services, Whitehall's value-for-money watchdog has said.
The National Audit Office (NAO) warned tactics such as freezing staff pay and taking the axe to consultants' contracts will deliver only short-term savings, and argued that the Government must "go further" by redesigning public services so that they operate permanently at lower cost.
With departmental spending due to reduce from £428.8 billion in 2009/10 to £335.3 billion in 2017/18, at today's prices, the scale of challenge facing financial managers within government is "stark", said the NAO in a report. Local councils and NHS trusts which have previously been able to absorb cuts in funding from central government will face "increasing difficulties" in doing so in the years to come, as austerity lasts longer than originally planned.
While applauding "signs of improvement" to financial management practices in Whitehall over the past few years, the NAO said that the Government "remains a long way from ensuring that decision-making is routinely based on appropriate and robust information". "Departments often do not integrate financial management with their strategic and operational planning," said the watchdog. "An absence of planning prevents departments from achieving the best results by linking resources and outcomes."
Unit cost data is not systematically collected across Government, and even when a special effort was made to gather it for the 2010 spending review, the data provided was "limited and inconsistent".
Although more top Whitehall mandarins are now drawn from the finance profession, the senior civil service still lacks "some of the skills associated with effective financial management, such as commercial skills", said the report entitled Financial Management In Government. Progress made in recent years "does not mean that Government is well placed to meet the forthcoming challenge of continued fiscal consolidation alongside substantial demand pressures".
The NAO recommended that the Treasury ensure more effective leadership to incentivise finance professionals to confront the challenges they face. The Government's Finance Leadership Group should take responsibility for identifying challenges and addressing them quickly.
Auditor general Amyas Morse, head of the NAO, said: "Finance teams in departments and other public bodies have a vital role to play if the Government is to deliver the planned public service reform. Finance managers are now being taken more seriously and playing a more central role in the efforts to provide sustainable services at lower cost.
"However, the pace of change must be accelerated. Savings are being made but progress in restructuring how services are being delivered is lagging. If the challenge of reforming the delivery of public services is to be met, then the Treasury and Finance Leadership Group need to provide more effective impetus to strengthen financial management capability across government."
A Treasury spokesman said: "The Government's economic strategy to protect the economy and restore the public finances to a sustainable path has already reduced the deficit by a third. High-quality financial management in Government is key to meeting spending plans and delivering public services as efficiently and effectively as possible. The NAO notes the positive impact of Government action to increase accountability and build skills, and the Government will review what further improvements could be made as we conclude this spending round."
The richest self-made Brits
Speed up spending cuts - watchdog
The Monaco-based billionaire is said to be worth more than £4.2bn, with Topshop and Topman among the country's most successful brands. His first job, aged 12, was working for a shoe importer. He set up his first business at 15 with a £20,000 loan, on-selling imported jeans from the Far East to London-based retailers.
Branson's first successful business venture came in 1976 when he set up Student magazine aged just 16. In 1970, he founded a mail-order record retailer and within a year had opened his first shop on London's Oxford Street – Virgin Records. His fortune is estimated at £3.085 billion, according to the Sunday Times rich list.
The inventor gave his name to the household vacuum cleaner that would make him a fortune of £1.45 billion. James Dyson first reinvented the vacuum cleaner with the launch of his dual cyclone bagless 'G-Force' cleaner in 1983, followed more recently by the hand dryer and the fan. In 1997, Dyson was awarded the Prince Phillip Designers Prize, and elected a Fellow of The Royal Academy of Engineering in 2005.
Founder of Specsavers, Bristol-born Dame Mary Perkins is Britain's first female self-made billionaire, reportedly worth £1.15 billion. The 67-year-old and her husband Douglas, 68, founded the eye-care company in 1984 and they can now boast more than 900 stores across Britain. Perkins was made a Dame Commander of the Order of the British Empire in 2007 as recognition for her work.
Recently retired Beckham is the highest earner in British sport, according to the Sunday Times Sport Rich List. 'Brand Beckham' that has seen the 38-year-old amass a fortune of £165 million from endorsement deals and salary payments from his company, Footwork Productions, over the last decade. But Beckham is still some way off the richest sportsman in the world - golfer Tiger Woods, who is worth a staggering £570m.
Yorkshire Tory peer Lord Kirkham entered the billionaire league in 2010 when he sold his furniture company, DFS, for a reported £500m. In 41 years, Kirkham grew the brand, which started on the outskirts of Doncaster, to 79 stores, three factories and more than 2,600 staff. He received a Knighthood in 1995, a Peerage in 1999 and a CVO in 2005. He now owns a large share in Iceland supermarkets and is worth a reported £1.1billion.
The former Beatle takes the top spot in the Sunday Times Rich List of musical millionaires, sharing a £680 million fortune with his wife Nancy Shevell. McCartney has topped the list of wealthy musicians every year since it was formed 1989 when his fortune was estimated at £80 million.
The chairman of Carphone Warehouse and Talk Talk, Essex-born Dunstone, 46, started his retail empire selling mobile phones from his west London flat in 1989. His fortune rose by £396 million to £1 billion in a year, after the demerger of Carphone Warehouse and Talk Talk. Carphone Warehouse is Europe's largest independent mobile phone retailer and Dunstone was awarded a Knighthood in 2012 for services to the mobile communications industry.
Author of the hugely successful Harry Potter series, Joanne Kathleen Rowling, has a net worth of £560 million – making her the world's richest author. Rowling wrote the first Potter books on a manual typewriter while a single mother living on benefits. The manuscript for the first Harry Potter novel was rejected by 12 publishers and when finally accepted, Rowling received an advance of just £1,500. Harry Potter is the highest-grossing film series of all-time and the brand has been estimated to be worth as much as £10 billion.
East-ender Lord Sugar, best known for his no-nonsense judging on BBC1s The Apprentice, started his career at 16, selling car aerials and electrical goods out of a van he had bought with savings of £50. In 1968 at the age of 21, Sugar started home electronics company, Amstrad (short for Alan Michael Sugar Trading). By the age of 40 he was worth about £600m. Sir Alan sold Amstrad in 2007, and is now worth a reported £770m, with much of his wealth coming from his extensive property empire.