U.K. Spending Watchdog Says Better Planning Needed for Austerity

Government departments need to plan better to minimize the impact of the austerity program being imposed by the Treasury, Britain’s spending watchdog said.

“Departments need to do better at planning their finances logically, understanding the relationship between costs and outcomes better and not going for the easy option which could most damage front-line services,” Margaret Hodge, the Labour lawmaker who heads Parliament’s Public Accounts Committee, said in a statement in London today.

Hodge praised departments’ 2.3 percent spending cut in the fiscal year that ended in March last year, while highlighting the difficulty of making a further reduction of 19 percent by 2015.

The National Audit Office, the government spending watchdog, said in February that ministries don’t fully understand the costs and risks involved and that “fundamental changes” will be required to achieve the cuts.

Chancellor of the Exchequer George Osborne is aiming to eliminate most of a budget deficit equal to 8 percent of gross domestic product by 2017. The unprecedented squeeze will see more than 700,000 government jobs axed. The opposition Labour Party say the cuts are responsible for pushing Britain back into recession.

To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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