PUBLIC services have overstated the success of efficiency savings, the spending watchdog said today.

A review of local councils and other public bodies in 2005/06 and 2006/07 found "the overall level of declared efficiency savings was significantly overstated’’.

In a letter to the Assembly's Finance Committee, Auditor General Jeremy Colman said: "I identified a number of public bodies where it was not possible to validate any of their declared efficiency savings.’’ Services are under pressure from the Assembly Government to cut overheads and red tape.

Ministers want to see savings of £600 million by next year as part of an efficiency drive across the public sector that began in 2004.

Having doubled in the first decade of devolution, the Assembly Government's annual budget of £15 billion is poised to become increasingly constrained by a Treasury spending squeeze.

Mr Colman said the definition of efficiency savings "has led to error and inconsistency’’ and that the Assembly Government had provided unclear and incomplete guidance.

He added: "In the current economic climate, the delivery of significant savings is essential if the public sector is to continue to deliver high quality services with less money.’’ Giving evidence to the committee on next year's budget, Finance Minister Andrew Davies said: "I wouldn't use the phrase efficiency cuts. I would say efficiency savings.

"There is a difference and my fear is that if public service providers do not adopt best practice, do not have at the top of their agenda delivering better services more effectively, then there may well be cuts. But I think they're two different things.’’ In a warning to public services, including the NHS and local councils, he said: "If they are not following best practice then they should justify why there are not doing it.’’