The cuts, announced by chancellor George Osborne in yesterday’s spending review, are expected to save £5.9bn a year by 2015 – contributing to plans to remove the deficit and start reducing public debt by 2015.

To support administrative savings, the review says central government functions will be “subject to a tough new efficiency regime” overseen by the Efficiency & Reform Group (ERG), which will introduce mandated central procurement for commodity purchases.

The review also announced plans for a system of national property controls across the central government estate. From 2012, buildings in central London and Bristol will be managed through new property vehicles in a pilot set up by the Government Property Unit.

The Treasury will develop a new system to collect departmental spending data, and a programme to “strengthen financial discipline across government, enhancing the role of departments’ senior finance professionals”. Further reforms will incentivise civil servants to make better use of resources.
The review also outlined plans to reform public service delivery, confirming a drive towards payment by results and outsourcing.

Local service providers will be given more flexibility over spending through ‘community budgets’, which will pool departmental budgets at the local level. The pooled budgets will initially be trialled in 16 schemes to support families with multiple problems, and the integrated approach to funding could be rolled out across the country by 2013-14.

More services will be delivered by default online or through digital telephony, and face-to-face services will be rationalised using post offices as local front offices for public services.

Responding to Osborne, shadow chancellor Alan Johnson said the public deficit must be reduced, but “today’s reckless gamble with people’s livelihoods runs the risk of stifling the fragile recovery”.