Sustainable spend

Chancellor Gordon Brown says new guidelines will ensure that �125 billion invested by the government each year is spent "well and in a sustainable way". In his pre-budget report statement to the House of Commons, Brown said the first step would be the pilot of school designs that "achieve a level of excellence in carbon reduction".

Brown did not expand on the sustainability guidelines but a Treasury spokesman said the OGC would publish them shortly. He added that they would detail how to make government spending cheaper while ensuring value and environmental responsibility.

The report says the government is on target for £3 billion of procurement savings by the end of the 2004 Spending Review period, with £2.6 billion of savings made in 2005-06. This was partly achieved by the Department of Health securing a £300 million reduction in the cost of reimbursing pharmacists for medication. Departments and local councils reported £13.3 billion in efficiency gains by the end of September, which is over halfway towards the target of £21 billion by 2007-08. Also in the report, travel buyers will be hit by an increase in fuel duty of 1.25 pence per litre and a rise in air passenger duty from £5 to £10 for over 75 per cent of flights.

There will be a 20 pence per litre discount, however, on biodiesel and other innovative fuels as they develop. Brown also allocated an additional £84 million for intelligence and counterterrorism. The report says that the chancellor has reached agreement with secretaries of state for net efficiency savings in their overall budgets of 3 per cent each year to 2011 and annual cuts of 5 per cent in their administration budgets.