The public accounts committee has raised concerns over the Department for Work and Pensions plan to cut running costs by £2.7bn by March 2015.
The Spending Review Settlement requires the DWP to reduce running costs by £1.45bn to £6.2bn in 2011-2012 and by £2.7bn to £5.5bn by March 2015.
The DWP has outlined a series of measures it will take to reduce costs which include rationalisation of corporate services such as finance, legal services and human resources as well as 8,000 staff cuts through Jobcentre Plus.
The Public Accounts Committee said in its report “Reducing Costs in the Department For Work and Pensions” the DWP has been slow to determine how it will operate in the future and sustain efficiency after staff cuts.
The report says: “The department should develop and apply a methodology for measuring the impact of running cost reductions on benefits and pensions expenditure. The Department and the Treasury should clarify how any variances in the cost of benefits and pensions would be funded.”
As a result, the committee has asked the department to develop a “clear, fully-costed model of how it expects to operate in the future.”
Further concerns have been raised over the lack of transparency in the DWP plans for spending and cost reductions and has been asked by the committee to publish baseline costs and regular updates on progress in securing cost reductions each year.