Government ‘wasting more than £10 billion a year’, warns spending watchdog chief

More than £10 billion of taxpayers’ money is being wasted by the public sector every year, the head of Britain’s spending watchdog will warn.

On Tuesday, Gareth Davies, the boss of the National Audit Office, will blame poor management, benefits fraud and “antiquated” computer systems in a speech to MPs.

He will warn that “parts of our national infrastructure are crumbling” but insist the Government “can achieve more with what it already spends”.

In an address to Parliament, he will say the winner of the next election faces a “challenging fiscal picture” and must get more value out of the public sector.

Mr Davies will tell MPs there are “tens of billions of pounds a year” that can be saved but will also warn ministers that just cutting budgets is not the answer.

He will say up to £8 billion could be recouped by improving how the Government awards contracts, whilst £5.5 billion is being lost to benefits fraud and error.

‘New approach’ needed to national infrastructure

“Government of whatever complexion faces a tough challenge in the years ahead,” he will say in his annual address to MPs.

“Demographic changes mean demand for many services will continue to rise. Parts of our national infrastructure are crumbling.

“Out-of-date IT slows the modernisation of many public services, interferes with efficient government and increases the risks of successful cyber-attacks.

“Higher inflation has increased costs, particularly for large infrastructure projects. The public sector is finding it harder to retain staff.

“These factors and others have combined to leave public services with a productivity problem.”

Mr Davies will point the finger at wasteful “mega projects” like HS2 which lack “sufficiently robust and realistic assessments of affordability at the outset”.

He will say “a new approach” is needed to national infrastructure, transferring responsibility from individual Whitehall departments to a cross-government body.

The NAO head will also warn that skimping on the maintenance of public buildings like schools, hospitals and prisons has proved a “false economy”.

‘Inexcusably wasteful’ public sector

He will add that there are “enormous efficiency gains” to be made across the public sector by replacing “antiquated IT systems” with modern computers.

But he will warn “the challenge is vast,” pointing out that the Ministry of Defence is still relying on “kit dating back to the Cold War” to manage its inventory.

Mr Davies will tell ministers that they can only make such large savings if Downing Street “makes improving its own productivity a high priority”.

He will add: “It is relatively easy to cut spending. It requires skilled leaders and managers to deliver genuine efficiencies that release resources for government priorities.”

The remarks were welcomed by the Taxpayers’ Alliance, which said that it was time to crack down on the “inexcusably wasteful” public sector.

Darwin Friend, its research director, said: “Billions of pounds of taxpayers’ money and large swathes of state resources are squandered unnecessarily.

“If there is to be any hope of remedying poor public services and soaring expenditure, ministers must embrace productivity-boosting solutions across government.”

Jeremy Hunt, the Chancellor, has been alarmed by Office for National Statistics which show public sector productivity has only grown by 0.2pc per year since 1997.

He has ordered a review into boosting the output of taxpayer-funded bodies, including cracking down on form-filling and diversity manager roles.