Quangos in firing line as Chancellor promises £6bn savings this year

The Chancellor of the Exchequer today vowed to make “significant reductions” to the cost of quangos, amongst a range of measures to be implemented in the first weeks of the new coalition government.

Setting out his stall in his first speech in the role, George Osborne announced:

• Changes to the way Budgets are made, with the government giving up control over the economic and fiscal forecast. This would “remove the temptation to fiddle the figures”, the Chancellor said
• The creation of an Office for Budget Responsibility (OBR), which will be tasked with providing a “truly independent” assessment of the state of the country’s finances
• The creation of an independently audited national balance sheet
• Immediate action “to identify £6bn of wasteful spending this year”, although he promised to protect the most vulnerable in society and the quality of front line services
• The steps towards an emergency budget. This will take place on 22 June.

“That is the route to a stable, balanced economy that works for everyone,” the Chancellor said.

The OBR will be tasked with exposing the hidden liabilities and long-term pressures faced by the country, he added. “Looking at the cost of our ageing society, public service pensions, or the cost of outstanding PFI contracts, for example.”

The departments for health, defence and international departments will be expected to make savings but these will be reinvested in their frontline services. For other departments, the “great majority” of savings will go towards reducing the deficit.

Further details of these savings will be released next week. However, Liberal Democrat David Laws, the Chief Secretary to the Treasury said every new spending commitment and pilot project put forward by the last government since January would be reviewed with a view to finding additional savings.