The
Commons Public Accounts Committee publishes its 3rd Report of Session
2012-13, Efficiency and reform in government corporate functions through shared
service centres, as HC 463.
The Rt
Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:
"Government could save
significant sums of money if it pooled back office functions such as finance,
HR and procurement. Securing efficiency savings is essential to protect public
services from further cuts that could otherwise have been avoided.
However, shared service centres
have failed to deliver the savings they should have. They cost £1.4 billion to
set up, £500 million more than expected, and in some cases have actually cost
the taxpayer more than they have saved.
I welcome the Cabinet Office's
ambitious new strategy for improving shared services. But unless it learns from
the past it will end up making the same mistakes again.
In particular the Cabinet Office must
show much stronger leadership. In the past it has left it up to individual
departments to decide whether they use shared services. Departments which do
use shared service centres have been allowed to stick to their own ways of
working rather than using a single system suitable for all, undermining the
scope for efficiency savings.
It is extremely frustrating that
the Cabinet Office has ignored recommendations made by this Committee in our
previous reports. We expect it to engage constructively this time around."
Margaret
Hodge was speaking as the Committee published its 3rd Report of this Session
which, on the basis of evidence from the Cabinet Office, Department for
Education and the Department for Work and Pensions, examined the provision of
shared service centres in central government.
Sharing
services offers the public sector the chance to secure significant efficiency
savings and improvements in the quality of administrative functions.
Since 2004, central government has sought to reduce the cost of administering
finance, human resources and procurement services through sharing back-office
functions. In previous examinations we found that the Government had not
yet realised the potential to save taxpayers’ money.
We
welcome the renewed focus on improving shared services provided by the Cabinet
Office's ambitious new strategy. The strategy contains risks, and has a
particularly challenging timetable for implementation, but we look forward to
seeing real progress this time round. The recommendations we make in this
report are designed to help the Cabinet Office succeed with its new strategy
and learn from the mistakes of the past. We expect the Cabinet Office to
engage constructively with our recommendations and not, as happened following
our 2008 report, to ignore recommendations which, if implemented, would have
left them much better placed today.
In this
examination we considered five of the eight shared service centres established
for central government. Whilst performing adequately, they had cost £1.4
billion to build and operate compared to an expected cost at the start of the
project in 2004 of £0.9 billion. These five centres were also expected to have
saved £159 million by the end of 2010-11. In the event, the Ministry of
Justice centre broke-even, the Department of Work and Pensions and the
Department for Environment, Food and Rural Affairs centres did not track their
total savings, and the two centres that are tracking savings, the Department
for Transport and Research Councils UK, have reported a net cost to date of
£255 million.
The
current strategy will only be effective if the Cabinet Office demonstrates
strong leadership to deliver greater value for money and gets buy-in from
departments. So far it has been left up to individual departments
and their arm’s length bodies to decide whether they use shared service
centres. This has led to low take-up and so the centres are unable to achieve
the economies of scale necessary to deliver savings and value for money. Those
bodies which have become customers of shared service centres have retained
their own processes rather than adopt those of the centre, resulting in
over-complicated systems which also undermine the scope for efficiency.
The
Cabinet Office must drive cultural change to secure the intended savings. The
Cabinet Office should also develop comparable data on the cost and quality of
services provided by the shared services centres, which should allow it to
establish a baseline for current performance and set benchmarks for improvement.
It should consider whether it can extend its shared services strategy to
include other common functions needed by central government departments.
Public Accounts Committee -
Third Report
Efficiency and reform in government corporate functions through shared service centres
Efficiency and reform in government corporate functions through shared service centres
Here you
can browse the report together with the Proceedings of the Committee. The
published report was ordered by the House of Commons
to be printed 27 June 2012.
No comments:
Post a Comment