A report by the Public Accounts Committee (Pac) has said that there are doubts over the way government departments report efficiency gains in certain IT projects and sasy that there is evidence that some efficiency projects may be having an adverse impact on service quality.
"The Treasury claimed at the end of last year that, by the mid-point of its Efficiency Programme, it had already achieved an annual £13.3bn of efficiency savings. This claim does not stand up to close scrutiny. Our committee found that there is a question mark over the reliability of nearly £10bn worth (74%) of the savings claimed," said MP Edward Leigh, chairman of the Committee of Public Accounts.
The report said though most efficiency projects have not incurred significant ongoing costs, the Department for Work and Pensions ignored substantial additional costs when reporting £300m of efficiency gains from an initiative to pay benefits electronically. Because not all customers have bank accounts in which to receive such electronic payments, the government introduced the Post Office Card Account.
The contract for administering this account cost the department £164m in 2005-2006, but this cost was not accounted for in its reported efficiency gains, thus giving an overly optimistic picture of what has actually been achieved and of the true benefit of the initiative to the taxpayer.
The report recommended that departments need to improve their measurement of efficiency by establishing reliable baselines, taking account of all additional costs involved in achieving efficiencies and having supporting evidence which is subject to independent challenge by, for example, internal audit.
The Government's Efficiency Programme is designed to achieve ongoing efficiency gains across the public sector of £21.5bn a year by 2007-2008 to improve front line services, to reduce civil service posts by more than 70,000 and to reallocate a further 13,500 posts to front-line services.