George Osborne's austerity programme of public spending cuts was marred by a short-termist approach and a lack of joined-up thinking across government, an influential Westminster watchdog has said.
Faced with the need to find £200 billion in cuts over four years in the 2010 Spending Review, the Treasury took the axe to those budgets that were easiest to cut, even though they might undermine the Government's stated priority of encouraging growth, found the House of Commons Public Accounts Committee (PAC).
In a new report, the cross-party committee described some spending cuts as "ill thought-through" and said there was "no evidence of clear thinking" about how savings in one Whitehall ministry could impose knock-on costs for other departments.
The report cited the decision to slash spending on capital projects from £60 billion to £38 billion in real terms, some of which was later reversed as the Chancellor struggled to inject life into a moribund economy. And the MPs said that staff numbers at the UK Border Agency were cut "too quickly", causing a backlog of immigration case work which resulted in some of the employees having to be rehired.
The Chancellor was constrained by political decisions to protect the budgets for the NHS, schools and overseas aid, which left departments accounting for just 40% of the Government's day-to-day spending - including local government and justice - bearing the brunt of the cuts, the report found.
The committee also raised concerns that the Treasury did not have enough information to make "meaningful comparisons" between different candidates for the chop. And a high staff turnover undermined the Treasury's ability to scrutinise departmental budgets, with some 44 out of 52 staff in the areas covered by the report leaving within 20 months of the Spending Review.
The Government's budgetary system encourages departments to focus on their own interests, rather than working together to lower overall government costs, found the report. It highlighted proposals for higher rents to save money under the Affordable Homes Programme, which could mean an increase in the Government's bill for housing benefit.
The committee's Labour chairwoman Margaret Hodge said: "The Government does not fully understand the impact of the spending cuts it is making. It is focusing on short-term priorities rather than the longer-term view. The 2010 Spending Review concentrated on what could be cut quickly, rather than an assessment of the likely impact of the cuts."
A Treasury source said: "The PAC have chosen headlines over hard facts. The Government's departmental spending plans have come in exactly on forecast since 2010. Even the National Audit Office, whose report was the basis for this, said 'Government budgeting compares well with budgetary practice'.
"Long-term planning is at the heart of the Government's capital plans which set out a long-term infrastructure pipeline worth a total of £310 billion, and includes major projects which will be delivered over the next few decades."
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