An influential select committee of MPs has questioned whether the UK government’s new Office for Value for Money represents good value for money for taxpayers, calling it a “red herring”.
The cost-saving unit was set up by chancellor Rachel Reeves to ensure sensible spending decisions. But the Treasury select committee said on Monday that it lacked resources, had a short lifespan and ran a high risk of duplication.
Meg Hillier, committee chair, said its report had concluded the body was “an understaffed, poorly-defined organisation which has been set up with a vague remit and no clear plan to measure its effectiveness”.
“All of which leads me to feel this initiative may be something of a red herring,” she added, calling for greater transparency about how the office will assess its effectiveness and deliver on its remit.
The committee said it was sceptical over how the body would have “meaningful impact” since it only had 12 full-time members as of December and its chair David Goldstone only had a year-long contract.
It demanded to know how much the body would cost, including the use of external consultants, and how it would scrutinise departments’ investment proposals.
The Treasury said it was putting an end to taxpayer money being “squandered”.
“This office’s role is additional to existing parts of government and will draw on a range of expertise across disciplines to help route out waste, including a focus on where department spending may be overlapping,” it said.
“They also sit alongside our wider spending review which is, for the first time in 17 years, reviewing every line of government spending,” it added. The department did not say what the new unit would cost.
The unit’s small team of staff includes secondees from existing government agencies, such as the National Audit Office, the Government Commercial Function and the Evaluation Task Force in the Cabinet Office.
The report highlighted seven examples of organisations, teams and processes that had already been established to improve efficiency in public spending decisions.
“Those organisations are only a selection from the bodies working on value for money across Whitehall, which shows there is a clear risk of unnecessary duplication,” it said.
The NAO alone has an annual budget of £106mn and more than 960 staff, the report noted.
In July, Reeves announced plans for the new body and in her October Budget she said it would have a remit to “provide targeted interventions” through the spending review, to “root out waste and inefficiency”.
The government is under pressure to demonstrate greater control over public spending after days of rising gilt yields which have threatened to remove the chancellor’s “fiscal headroom” which could mean more cuts.
Goldstone told the committee he would be involved with “most if not all’ departments on their efficiency plans ahead of the spending review.
The unit’s stated remit includes scrutinising investment proposals to guarantee they offer value for money. But Johnanna Harston, a director at the OVfM, admitted that the unit would only look at “more than two or three” investment proposals.
