The savings come from job cuts and greater efficiency, including a recommendation to cut at least 80,000 civil service jobs.

In what's been described as "the most significant restructuring of public services for a generation," the rest of the 21 billion will have to come from overall efficiency gains such as improving the procurement system, and streamlining areas such as information technology and human resources. That's why the sceptics are, well, sceptical.

Gavin was joined by Sir Peter Gershon, in his first broadcast interview since his report was published.

Watch the interview

GAVIN ESLER:
Sir Peter, you have set the Government a huge target, �21 billion in savings. Can they do it, and if so, how?

SIR PETER GERSHON:
I believe they can do it. I think one of the things that's very different from the efficiency review that I just completed from previous reviews is there's been a very substantial amount of analysis and pre-planning done before we get to any announcements. In the past they've often been characterised by quite arbitrary a position of top-town down targets. We have been through a long process over nearly a year, detailed analysis and reaching agreement with departments based on proposals that they've put forward, and now they're in a phase of doing detailed planning about how these cuts are going to be achieved.

ESLER:
But you can see why people are sceptical.

GERSHON:
Oh, yes.

ESLER:
We have heard it before. We've heard about cuts and waste and bureaucracy. If it was that easy, it would have been done, so why will it work this time because the departments are attached to these targets for themselves?

GERSHON:
Well, first let me say, I mean, I am in probably a unique position, having worked 30 years in the private sector and then having worked for the last four years in the public sector, I think I've got some experience about what works inside the system, what private sector techniques you can actually bring in, which ones are likely to work, and one of the things that I've learnt is that getting agreement and buy-in up front is very important to making things happen in the Civil Service. I spent most of the last four years helping the Government deliver against a target of a billion pounds in public procurement savings over three years up to March '03 and against that target, working with departments, we achieved �1.6 billion. So I think there is an evidence base now, an experience base, on which we can build, and that's been a characteristic of a lot of the work that we've done over the last 12 months, getting very robust foundations, much more robust than has been the case in previous efficiency exercises.

ESLER:
You have also talked about a culture change in Whitehall. What would that mean?

GERSHON:
Understand that there is already a very big culture change going on in Whitehall at the moment as a result of the Government's reform and delivery agenda. We're seeing big changes in professionalisation of some key functions in Whitehall. That will be extended by one of the Government's acceptance of my recommendations related to professionalising the finance function so that every department will have finance directors at the board level. They will have a key role to play in driving forward the efficiency agenda as happens in any big private sector organisation.

ESLER:
But this isn't a big private sector organisation. It's got its own market which works internally or doesn't. Would you bet your house that they can do this - that they can save �21 billion?

GERSHON:
I believe they can, yes.

ESLER:
But perhaps not bet the house on it?

GERSHON:
I'd be prepared to bet quite a lot of money they'd do it because the Government needs the money and it's committed the savings effectively and the spending review results announced last week. The pressure on the system to deliver is much greater than it has been in the past because the money has already been allocated to reinvest in front line services, which was the purposes of the review.

ESLER:
When you talk about that, we all want happy doctors and happy nurses and happy teachers and so on, but front line services don't exist in a vacuum, they exist because there's the bureaucracy behind them. How do you cut the back room services and keep the front line without damaging the front line?

GERSHON:
Let me give you an example. Today, if you owe the state money, you are given a free choice of how you settle with the state. A lot of people still send a cheque in an envelope. We employ large numbers of people inside the Civil Service who open envelopes, take cheques out and bank them. If you could encourage more people to use modern payment methods, through the banking systems, giving a switch card number, then big numbers of people, who were doing this traditional task can be freed up, without any damage to front line services.

ESLER:
Thanks very much.

This transcript was produced from the teletext subtitles that are generated live for Newsnight. It has been checked against the programme as broadcast, however Newsnight can accept no responsibility for any factual inaccuracies. We will be happy to correct serious errors.