Peter Hoskin

The axeman cometh | 27 November 2009

The axeman cometh | 27 November 2009
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Philip Hammond, the man the Tories have tasked with overseeing spending cuts should they get into power next year, has just given a speech to Policy Exchange on reducing waste and improving efficiency. Much of it reheated existing arguments about, say, transparent public spending - which doesn't make those arguments any less valid.  But there are one or two other points worth mentioning here

First, the very fact that Hammond was making this speech.  Introducing him, George Osborne complained that the Labour government has made Hammond's potential role - Chief Secretary to the Treasury - a non- job, and that the Tories would restore it to being "one of the most important jobs I'm government". For the time being, this is all presentational stuff intended to send a message out to investors: that the Cameroons are taking the fiscal crisis seriously.

Second, I was struck by the ambitiousness of Hammond's efficiency rhetoric.  He kicked off by saying that there was still plenty of room to make savings along the lines of those set out in the Gershon Review.  But he soon added that, according to Tory calculations, up to £60 billion of public money could be wasted each year because of the government's failure to drive more efficient, private sector-style services.  Or as he put it: "half of out structural deficit; down to a failure to get value for money."  His claim was that this could effectively be cut without negatively impacting services.

But how? Well, there's the nub of it. Hammond didn't provide many details beyond stressing that the Tories are "philosophically" happier with reform, and are "ready to embrace change". In which case, the two most ear-catching announcements were that the Tories are establishing a shadow board to work on public sector productivity, and plan to set up a incentivising structure whereby public sector organisations get to keep any efficiency surpluses they make - rather than having them snatched back by the Treasury.

I suspect that we'll have to wait for a Tory government to understand how this works in practice.  In the meantime, it's all about reassuring us - and, crucially, potential investors - that the Tories understand the scale of the debt crisis, and have at least some ideas to match it.  Hammond was (only) partially successful in achieveing that today.