Chancellor George Osborne is to commission an independent audit of the Government’s books after finding examples of “crazy” spending decisions in Labour’s last year in power, Prime Minister David Cameron has announced.
The audit, to be conducted by the new Office of Budget Responsibility, will be launched on Monday and will look at every aspect of Government expenditure.
Mr Cameron made clear that it will trigger a significant clampdown on civil service bonuses, which he expected to be reduced by two-thirds, saving £15 million a year.
Mr Osborne will also announce that the new coalition government is to make a start on tackling the UK’s £163 billion budget deficit, with Chief Secretary to the Treasury David Laws due to meet Cabinet colleagues this week to agree £6 billion in cuts to this year’s spending.
The Chancellor will also announce that the Treasury will re-examine all spending approvals since January 1 to ensure they are consistent with the Government’s priorities and good value for money.
The Office for Budget Responsibility will have responsibility for providing an independent assessment of the public finances and the economy for the emergency Budget in June.
For the first time, economic forecasts will be taken out of the Chancellor’s hands, and he will be required to accept the OBR’s forecasts when compiling his Budget and Pre-Budget Report.
A Treasury spokesman said that the independence of the OBR’s judgments would ensure that policy was made on an unbiased view of future prospects, in the hope of improving confidence in the fiscal forecasts.