June 21, 2013 10:52 pm

Madrid reveals fresh cuts to public sector

The Spanish government hopes to save billions of euros every year by further trimming the public sector, under a plan that calls for closing and merging dozens of state-funded bodies and centralising the award of government contracts.

Soraya Sáenz de Santamaría, the deputy prime minister, told a news conference on Friday that the measures could save the central government as much as €6.5bn every year.

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The overall cost savings for the entire Spanish economy could reach more than €37bn by 2015, she added, but suggested this sum included the impact of earlier reforms made by the government.

“It seeks to strengthen fiscal discipline and transparency,” Ms Saenz de Santamaría said of the scheme, which also “seeks to change the culture of the administration to bring it closer to the citizen”.

It is far from clear, however, how quickly any savings will materialise, and how deep they will be: the government signed off on the non-binding report detailing possible measures on Friday, but they have yet to be translated into legislative proposals.

The government has also yet to convince the leaders of Spain’s 17 regional governments to sign up to its public sector reform agenda, which includes many measures that require approval by the regions.

The plan for public sector reform is the work of a special government committee headed by Ms Sáenz de Santamaría. It proposes the closure or merger of 57 government agencies and foundations, arguing that they often have overlapping competencies and goals. It also calls on government bodies to make more use of email and the internet instead of sending letters, a step that Madrid says would bring significant cost savings.

The plan also suggests ending the costly practice whereby numerous related government bodies award service contracts individually, instead of bundling them into bigger tenders to gain better deals from suppliers.

Anxious to avoid fresh political turbulence, both Ms Sáenz de Santamaría and Mariano Rajoy, the prime minister, have made clear this week that Spain’s public sector is far from bloated. Public expenditure accounted for 43.3 per cent of Spain’s gross domestic product last year, lower than the European average.

Madrid has also been keen to point out that about 375,000 public sector employees have lost their jobs since 2011, arguing that further drastic cuts will not be necessary.

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