MPs sceptical of £26.5bn of Gershon IT savings

MPs from the three main parties have cast doubt on government claims to have saved £26.5bn through IT and other efficiency savings.

MPs from the three main parties have cast doubt on government claims to have saved £26.5bn through IT and other efficiency savings.

Gordon Brown has told Parliament on several occasions about the achievement of efficiency savings of £26.5bn - and he has referred to the savings without any caveats.

But MPs on the Treasury committee are not convinced the figure is accurate or supported by any independent evaluation.

In a report published today [28 July 2009] the committee's MPs also draw attention to weaknesses in the way efficiency savings are measured.

The committee was told by Jennifer Law, principal lecturer at the University of Glamorgan, that "efficiency results could be manipulated by choosing a low baseline from which to compare progress".

The committee's report goes on to question new efficiency savings promised by the government as part of the Budget 2009, a follow-on to the Gershon savings (so called after Peter Gershon, who was commissioned in 2003 by the government to assess how the public sector could make efficiency savings and subsequently published a report). The committee calls for a "more business-led approach to cost-cutting in the public sector than setting an arbitrary target and requiring the civil service to meet it".

In May 2009, the government released a report, the Operational Efficiency Programme, in which Martin Read, former chief executive of Logica, said annual savings of £4bn in back-office operations and £3.2bn in IT were possible - but only with major changes in ways of working .

Jon Sibson government and public sector leader at PricewaterhouseCoopers, confirmed that change was vital if savings were to be achieved. Sibson told the Treasury committee that, although new savings were realistic, they required a different approach, as the usual series of tactical efficiency savings would not yield the required results.

He said that simplified and standardised processes were needed, as well as improved co-operation between organisations in government.

But the committee said: "We have yet to see evidence that the necessary structures are in place to facilitate such co-operation."

The National Audit office has twice reviewed the government's claims to have already saved £26.5bn under the Gershon Efficiency Review. But the NAO was unable to confirm that the full savings had been achieved.

The Treasury committee said: "We are concerned that the NAO did not audit the final Gershon efficiency savings. This has led to a lack of confidence on the part of some organisations in the reported savings we believe it is important to check that efficiencies have actually been achieved".

But Read also told the committee that he was struck by some instances of good management in the public sector. "One of the things that I was taken with in doing this review is that I did see some really excellent examples of what I would consider best-in-class practice, and I do not believe they could have been achieved without real leadership.

"So there is nothing that tells me that this is something you cannot do in the public sector and only the private sector can do that."

The committee said that the quality of services to the public must not suffer because of cost cutting. It expressed concern that departments can devise their own measures of service quality.

"The fact that departments can select their own measures of quality of service may lead to a biased selection of measures that do not give a representative picture of service quality," said the committee's report.

On 31 March 2009 Brown told the House of Commons: "Having achieved 86,700 workforce reductions and £26.5 billion of efficiency savings as part of the Gershon efficiency programme, the government are going further to ensure that resources are focused on improving key front line public services."

He added: "As well as delivering £35 billion of Value for Money gains by 2010-11, the government will bear down on the cost of running government, with 5% reductions in real terms in the cost of running government in each of the next three years."

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