Whitehall fails to back up shared services savings claims

The government last week failed to substantiate to a Public Accounts Committee (PAC) hearing claims that it will save £1.4bn on finance and HR by having departments share data processing services.

The government last week failed to substantiate to a Public Accounts Committee (PAC) hearing claims that it will save £1.4bn on finance and HR by having departments share data processing services.

A National Audit Office (NAO) report published in November said the figure lacked a clear baseline of existing costs, which would have allowed it to better estimate potential savings. "The Cabinet Office found it impossible to obtain such a baseline figure," the NAO said.

Alexis Cleveland, the Cabinet Office's director general for transformational government, told the PAC hearing that the original data came from a survey that showed some government departments could save 20% of their finance and staff costs if they shared IT services such as electronic invoice payments and HR services.

"We took the available information and grossed it up," Cleveland said. However, she could not provide the calculations used to estimate the potential savings.

The government said it currently spends about £7bn a year on finance and staff costs.

The NAO report said, "Many departments cited outdated systems, a lack of transparent information and clouded organisational definitions as reasons why they could not analyse current costs."

The Cabinet Office has agreed to look for the background material that underpins the cost estimates. However, as the NAO noted, this will not give it an accurate baseline figure with which to measure savings.

The government has implemented two shared services operations, one in the National Health Service and one in HM Prison Service, since 2005 and 2006 respectively. The Cabinet Office is expected to start buying some services from the Department for Work and Pensions soon.

Since it was set up in July 2005, the Cabinet Office's shared services team has cost £4m, and has the equivalent of four full-time staff.




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