The government is unlikely to be able to justify its claim of saving £1.4bn from £7bn costs through sharing data-processing services for financial and staff applications between government departments, MPs warned today.
The Public Accounts Committee found the government "lacks reliable information on the cost of corporate services". Furthermore, it was unclear how it would achieve the savings as it lacked a time-scale for the project and comparative costs for alternative solutions.
In today's report, Improving Corporate Functions Using Shared Services, the parliamentary watchdog said, "The Cabinet Office [which is running the shared services project] does not have sufficient grip on the cost of its activities to promote shared services."
It said the Cabinet Office's Shared Services project team "was unable to explain how the team has spent its budget for 2005-06 and 2006-07", a sum of some £3m, of which £1m had been allocated incorrectly.
The PAC also looked in detail at shared services projects run by the NHS and the Prison Service. It found that two-thirds of the 416 potentially eligible NHS bodies would have to use NHS Shared Business Services, jointly owned by the NHS and Xansa, if it was to save £250m by 2014-15. Just over one in five does now, it said.
It also found that the NHS matched fewer than one in three invoices it paid against purchase orders. This increased the risk of wrong or unjustified payments, it said.
Regarding savings on staff costs at the Prison Service, the PAC found "inconclusive evidence" to support claims. "The Prison Service needs to have better information to track reductions in staff costs, which should be validated by internal audit or other assurance arrangements," it said.
The PAC said economies of scale were possible provided the government's two designated sellers of shared services, HM Revenue & Customs and the Department for Work and Pensions, developed the capacity to provide shared services and to market them to smaller public sector bodies.
A Cabinet Office spokesman said, "Over half of all central government employees now benefit from shared corporate services, releasing people and resources to focus on delivering top-quality public services. We welcome the PAC's report, which raises some important points that will help us continue to improve our work in this area."