Efficiency savings won’t stop tax rises or spending cuts

Flip Chart Fairy Tales

When I posted my 2015 Dilemma diagram just before Christmas, a few people responded by asking, ‘what about efficiency savings’? If we can simply make the public sector more efficient, we can maintain services, keep taxes low-ish and still reduce the deficit, or so the story goes.

The 2015 spending/taxation/borrowing dilemma

Screen Shot 2013-12-19 at 07.42.16

There is little argument about the need for greater efficiency in the public sector. It was to emphasise this point that I started banging on about the UK’s tough spending choices in the first place. For at least the next ten years, even as the economy recovers, the public sector will be under pressure to reduce its costs. Real-terms budget cuts and the drive for greater efficiency will be the defining feature of many public servants’ careers. There are some in the public sector who think the current squeeze is temporary. You still hear people say ‘when this is…

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