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£25bn cost-cutting queried by MPs

Government claims of £25bn in public-sector cost cutting have been questioned by MPs on the Treasury sub-committee.

They have been reporting on the savings claimed under Sir Peter Gershon’s efficiency review, over which the National Audit Office has highlighted “serious problems”.

And they say that: “it is important to check that efficiencies have actually been achieved,” and that “the public sector must consider more radical solutions to reducing its burden on the taxpayer.”

These include major construction projects such as motorway widening and Crossrail, and even the 2012 Olympics.

The MPs stress that efficiencies are “vital” in a recession, with net borrowing forecast to hit £175bn this year - described by chairman Michael Fallon as of “gargantuan proportions”.

They also report that a £5bn increase in cost-savings announced by Chancellor Alistair Darling “does not inspire confidence” because it has been announced without consultation with Whitehall departments.

The sub-committee has considered a number of options, including job cuts, a four-day week, deep spending cuts and tax rises.

They conclude: “We were told that, if the public sector was to make the kind of efficiencies needed during the current financial crisis, then a different approach to that taken in the past would be required.”

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