Mr Brown has faced up to the need for more efficient public services. But can he deliver?

Gordon Brown delivered his comprehensive spending review with all the panache we have come to expect after seven years of his chancellorship.

Gordon Brown delivered his comprehensive spending review with all the panache we have come to expect after seven years of his chancellorship. It was, of course, a highly political statement, designed to defuse any opposition attacks in the run-up to the next election success. Its credibility, however, hangs by a very slender thread: a promise that he is capable of making the public sector efficient.

The simple truth is that the impressive spending increases for almost all government departments announced yesterday will only be affordable if the public sector manages to cut costs. And cut them quite significantly. If it fails, the Chancellor will have no choice but to raise taxes or borrow - either of which would be massively damaging to the ambitions of both Mr Brown and his party.

Much rests on Sir Peter Gershon's report into public sector efficiency, which the Chancellor unveiled yesterday. Acting on Sir Peter's proposals, the Chancellor promises to cut 84,150 Civil Service jobs and relocate 16,000 public sector workers out of London. Combined with a clampdown on absenteeism, Mr Brown expects to make savings of £21.5bn a year by 2008. These are hefty savings for a government that has shown little appetite for efficiency as it loosened the public purse strings; one only has to think of the Dome, the Scottish Parliament building, countless botched computer projects, to say nothing of the expansion in bureaucracy across government. And, it should be noted, it is the Chancellor who appears most resistant in the Cabinet to introducing competition into the public sector, although this is a proven motor of efficiency.

There is much in Mr Brown's spending review to commend. He reaffirmed the Government's commitment to investing in the health service, public housing and education - although the need for reform here remains pressing. We also welcome the ambitious proposals to increase Britain's international aid budget.

Of course, every Gordon Brown financial statement is infused with political, as well as economic, calculations, and this was no exception. With an election looming, the battle lines between Labour and the Tories are becoming more defined, and the Chancellor showed his characteristic awareness of this. As a result, the Conservatives' financial policies look decidedly ropey.

Oliver Letwin, the Shadow Chancellor, showed his hand far too early when he announced in February his intention to campaign hard on public sector waste. It enabled the Chancellor to leak an early version of the Gershon report, and indicate the Government was more advanced in dealing with the matter than the Tories. It was also foolish of the Opposition to start bickering over their hasty proposal to cut the defence budget if they came to power. It enabled Mr Brown to make great play yesterday of his generosity to the armed forces, and his determination to protect national security. Mr Letwin becomes the latest in an increasingly long line of shadow chancellors to be outwitted by Mr Brown.

Mr Brown's benevolence towards the police, the armed forces and the security services served up another purpose. He rarely misses an opportunity to emphasise his prime ministerial qualification, and yesterday was no exception. Such grandstanding is a little tiresome, and would be ridiculous coming from any other member of the Cabinet, but Mr Brown gets away with it because of his highly successful stewardship of the economy, which has delivered higher spending on public services. The Chancellor's claim to the throne will always be compelling because he has provided the bedrock on which Labour's achievements in the last seven years have largely been built.

But those achievements, as the Chancellor implicitly admitted yesterday, have come at a price. Our public services are wasting money unacceptably, and Mr Brown has done little, up until now, to unleash reform. His priority should be to focus on putting right what he allowed to go unchallenged for so long. For the time being, at least.