Govt slammed over ‘flimsy’ £1.4bn shared services savings estimate

The Committee of Public Accounts has called claims by the government, that it could save £1.4 billion annually through shared services, “a flimsy estimate at best”.


The Committee of Public Accounts has called claims by the government, that it could save £1.4 billion annually through shared services: “a flimsy estimate at best”.

In its report ‘Improving corporate functions using shared services’ the committee said the government lacked information on what the services cost and how well they performed, and had not set benchmarks or timelines for achieving the savings.

In a damning statement on the government’s Shared Services Team, which is tasked with developing the strategy across the public sector, the report said: “The team set up to encourage the use of shared services did not know how much money it had spent or how it was allocated across different activities.”

The government had “lost the calculations” of how the team, with an annual budget of around £3 million, had spent the money.

As a result of the lost figures, the National Audit Office reviewed the spending. It found that the largest area was working with users of corporate services to develop strategies for sharing.

The government has said the money would be saved through overlaps in finance and human resources, reducing what it estimates as £7 billion being spent on those functions each year. It has touted shared services as offering higher service quality while delivering more efficiency, by combining activities across different departments or different sections of the same department.

The report said there needed to be “changes in the culture” of public bodies to secure support for shared services to work, and to maintain tight data security arrangements. They also needed to manage the risk of damage to staff morale, for example, where changes in the work led to reduced customer contact.

The Cabinet Office wanted smaller departments to buy corporate services from larger departments, but only it and the Department for Children, Schools and Families had so far committed to buying services this way.

Edward Leigh MP, chairman of the committee, told parliament: “Government lacks accurate information on what corporate services cost and how they perform. There are no centrally agreed benchmarks against which to measure performance.

“The Cabinet Office doesn't even have a timetable for achieving this level of saving.”

He added: "This is not just a point about poor management information and a lack of grip on detail undermining the move towards greater sharing of services. Whether or not public bodies move to shared services, they must know whether they are receiving value for money from their corporate functions."

The report also examined two specific shared services uses, in the NHS and the Prison Service.

NHS Shared Business Services, a joint venture between the Department of Health and IT services firm Xansa, sold procurement, finance and accounting services to 89 NHS organisations out of a total of 416 eligible bodies.

The report said it was not yet making a profit and has paid no dividend to either the Department of Health or Xansa. In fact, it needed to attract a further 22 organisations to break even, the report said, and in order to deliver its forecast savings of £250 million by 2014-15 it would need to attract 180 more customers.

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