Public sector shared service savings hard to gauge, warns audit body

The National Audit Office has cast doubt on whether shared services initiatives across central government can meet the Cabinet Office’s aim of saving £1.4bn.

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The National Audit Office has cast doubt on whether shared services initiatives across central government can meet the Cabinet Office’s aim of saving £1.4bn.

Shared services are a key theme of the Transformational Government strategy launched by the Cabinet Office in November 2005. Reports released earlier this year showed the timetable for introducing shared services in central government had slipped sharply.

In June, the Cabinet Office made moves to lead by example, signing its £32m Public Sector Flex IT and communications deal with Fujitsu – a contract structured to allow other public sector bodies to sign up to a shared services package.

But in a new report, the NAO said existing shared services schemes were “on course to deliver substantial financial savings” but needed to tackle “problems with customer satisfaction” in order to show value for money.

And NAO chief Sir John Bourn warned: "Central government needs to get much better at managing its corporate services. Shared services have the potential to deliver significant efficiency savings but it is not yet clear that the £1.4bn of savings estimated by the Cabinet Office will be achieved."

Central government as a whole had made “slow progress initially” on the shared services agenda, despite it being identified by Sir Peter Gershon in 2004 as a way to make efficiency savings, the NAO report says.

Momentum has “picked up over the last year” but many of the programmes are still “not yet sufficiently established to start delivering savings”.

The NAO warned that a lack of financial information on departments’ performance and in the shared services plans made it impossible to say whether the £1.4bn estimated potential savings could be achieved.

“Sector plans do not contain sufficient financial detail for the Cabinet Office to assess whether the sum of individual projects will deliver savings on the scale required. There is a lack of transparent data about the costs of public bodies’ existing corporate services,” the watchdog’s report says.

A more detailed study of two schemes - NHS Shared Business Services and the Prison Service Shared Service – was also inconclusive. The NHS programme would “potentially” deliver savings of £250m over eleven years, while the prison scheme would deliver £120m over nine years, the NAO report estimates.

But it adds: “Both sets of forecast business results are estimates of future performance based on existing evidence and are therefore subject to some uncertainty.” Neither shared service body was yet performing at “leading practice standards of efficiency”, the report says.

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