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The chair of the public accounts committee has said she has "little confidence" in the Treasury's ability to manage efficiency programmes.
Margaret Hodge spoke out at a committee hearing this afternoon with Sir Nicholas MacPherson, the permanent secretary at the Treasury.
She accused the Treasury of not even getting the basics right. The committee was considering a NAO report on progress with value for money savings and lessons for cost reduction programmes.
It examines the design of the VFM programme, which was a requirement of the 2007 comprehensive spending review.
The NAO said some progress had been made but highlighted weaknesses in the programme.
Hodge said the Treasury has failed to deliver the programme and failed to monitor progress across Whitehall in a coherent way.
Given that departments face cuts of up to 25 per cent in October's spending review, she was sceptical that the Treasury would properly manage the reductions in spending.
MacPherson admitted it will be the most demanding spending review for "80 or 90 years". He said the 2007 efficiency programme was more robust than previous schemes.
Hodge said it had no lasting legacy and little impact on the way departments operate.
MacPherson said spending was still increasing at that time and it was complicated to calculate a baseline. In the next review spending will be falling, making it easier to judge efficiency.
Austin Mitchell (Lab, Great Grimsby) asked how the figure of £35bn in savings was calculated.
MacPherson said that efficiency reviews by the last government showed it should be possible to drive a three per cent efficiency saving per year across the government.
Mitchell said the Treasury let departments fiddle the figures. The permanent secretary said the Treasury either sets up an in-house team to micro-manage the programme, which leads to the department feeling it does not own the process.
Instead it chose to set the parameters and let departments get on with it.
Richard Bacon (Con, South Norfolk) said the system was too lax.
He pointed out that the NAO reported that 38 per cent of the cuts made were sustainable, 18 per cent were "rubbish" ie: not value for money, and 44 per cent were "uncertain".
Matthew Hancock (Con, West Suffolk) said the Treasury was wrong to put any weight on the £35bn figure.
Jackie Doyle-Price (Con, Thurrock) asked why some departments, such as Defra, did much better than others such as DCLG.
MacPherson said DCLG had a lag in reporting as it dealt with local councils.
Jo Johnson (Con, Orpington) said if only 38 per cent of the cuts were judged by the NAO to be sustainable, the Treasury must have lost track of the process.
MacPherson said he is not proud of the 18 per cent that were identified as not value for money, but there had been "rough and ready" assumptions made.
A new joint Treasury/cabinet office efficiency and reform group will hold departments to account and be a "source of expertise".
He said it is difficult to measure the government's output in a way that improves performance.
The new government is committed to transparency as a driver of efficiency rather than top-down targets, he told the committee.
There must be a structure that rewards people for doing the right thing, an incentive regime.
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