Chris Dillion argues that it’s impossible to just “cut waste” from goverment spending:
The idea that waste can be identified well by a top boss is deeply dubious. It ignores two central facts of economics: the importance of limited knowledge and of incentives. The true knowledge of where waste lies is fragmentary and dispersed across millions of public sector workers. A Chancellor cannot aggregate this knowledge. Nor can he rely upon civil service managers to do so; these do not have incentives to cut their own departments or jobs. The upshot is that, as I’ve said, top-down management is a terrible way to cut waste.
Therefore the idea that it was ever possible for the new ConDem government to immediately identify and target six billion pounds worth of unnecessary spendings without making political judgments was always absurd, yet treated seriously both in Westminister and the Westminister orientated media. As Dillon shows, the first announced cuts are nothing but political — and there’s nothing wrong with that. Obviously, you can disagree with the choices made, but that you can’t cut spending without making these choices should not be controversial.
But absurd or not, it remains easier to sell cuts as efficiency savings — who could object to that — than as explicit political choices. That’s something the Tories (and everybody else) learned from the far more ideological battles of the eighties.