Blair warning to ministers who fail to raise spending

Public services

Tony Blair has warned his senior ministers and officials to tackle chronic underspending and to think "radically" about how they can improve public services.

In a private lunchtime "summit" this week, the Prime Minister criticised the fact that Whitehall departments had failed to spend some £6.8bn allocated to them. The meeting, at the Royal Commonwealth Club in London, saw Gordon Brown, the Chancellor, David Blunkett, the Home Secretary, and Estelle Morris, the Secretary of State for Education, called in by Mr Blair to discuss the problem.

Senior civil servants, including Professor Michael Barber, a schools expert and head of Downing Street's new "delivery unit", were also present for what was described as a "brainstorming session".

Mr Blair echoed his warning that his party will "not be forgiven" if schools, hospitals and transport have not improved markedly by the next election. He singled out the need for better co-ordination between departments and the centre of Government and urged them to find ways of preventing any underspending.

Last year, Government departments underspent by more than 3 per cent of their collective budgets, with the biggest shortfalls in areas such as schools, hospitals and transport.

The Department for Education and Employment, which was split up after the election, underspent by £1.5bn, enough to pay for an extra 50,000 teachers, while the Department of Health underspent by £500m.

The Department of the Environment, Transport and the Regions failed to use almost £1bn of the cash set aside by the Treasury for improving transport infrastructure.

Despite recent evidence that spending was improving, the shortfall still worries Downing Street. According to the Institute for Fiscal Studies, there would have to be a 10 per cent rise in spending on public services this year for all the money already allocated to be used.

Mr Blair's official spokesman said the Commonwealth Club summit was an invaluable chance for the Prime Minister to gather his key ministers in an informal atmosphere. "This was an opportunity for the Prime Minister to meet ministers from key public service departments, along with senior officials, to discuss how we can collectively get the right structures in place for delivery," he said. "In terms of budgets, there are allocations set out. We are getting the extra investment in and we have every intention of making sure it is spent."

The summit was the latest example of Mr Blair's determination not to let the war in Afghanistan or the Northern Ireland peace process deflect him from the task of delivering improved public services. He has, in recent weeks, made a series of visits to Whitehall departments, touring the Department for Education and Skills last week and the Department of Health this Monday.

Downing Street is determined to tackle the problem of underspending in particular, believing that, in many cases, it is due to civil servants being unused to having such large sums at their disposal.

Although the Chancellor has recently warned ministers that the war and the threat of a global slowdown should make them vigilant about new spending, he is keen to see the sums he allocated in Comprehensive Spending Review actually spent.

In some cases, the problem has been that money was announced, often for political reasons, before officials had decided how it should be spent.