The government’s accounting for Gershon efficiency savings has again been criticised by MPs, who say that savings are recorded without taking the costs of the reforms into account, and that departments were being encouraged to employ expensive consultants.

The Commons Treasury Committee said the main limitations of Gershon were inconsistencies and weaknesses in reporting by departments, insufficient clarity as to the extent savings must be net of costs, outstanding issues relating to measurement and verification, and a lack of measurable and externally verifiable evidence that reported savings were secured without a diminution in service quality.

It said it remained to be convinced of the value of explicit targets for reductions in civil service numbers, on top of the demand for 5% annual savings in administrative costs, warning that it ran the risk of distorting the efficiency programme by encouraging the replacement of civil servants by expensive consultants.

The accounting for cost reductions is changing, moving from the Office of Government Commerce to the Treasury, establishing the principle that future efficiency savings must be ‘cash-releasing’.

The committee called on the government ‘to clarify the reporting requirements relating to implementation costs, indicating whether standard accounting conventions will be used for identifying and distributing such costs.’