Whitehall cost-cutting plan to 'back office' staff

2022-11-30

Whitehall cost-cutting plan to get departments to share ‘back office’ staff and reduce £525million annual admin bill is savaged by auditors who say it is behind schedule and has yet to prove it will save taxpayers any money

Cabinet Office-managed ‘shared services’ programme launched in 2018
Designed to get departments to combine back-office functions
They include human resources, finance and procurement and IT systems
But National Audit Office it has not worked out how money will be saved

Government plans to streamline Whitehall’s admin operations to cut the annual £525million bill risk running behind schedule and have yet to prove they can say the taxpayer any money, ministers have been warned.

The Cabinet Office launched a 10-year ‘shared services’ programme in 2018 designed to get departments to combine back-office functions like human resources, finance and procurement and IT systems.

But the programme was altered last year to create five ‘clusters’ of departments who would team up to save money and ensure they were using similar systems by 2028.

However a National Audit Office report says that while some progress has been made the project risks missing its deadline and is embroiled in a new row over funding with the Treasury, which wants to cut its budget.

It also suggested that the plans so far laid out by the Cabinet Office, which is masterminding the project, have yet to provide evidence they will save any money.

Gareth Davies, the head of the NAO said: ‘Efficient back-office functions are key to delivering front-line services and reducing costs but, at present, the strategy is not on track to deliver value for money, and it remains unclear what level of financial benefits it will bring.

‘Several fundamental elements of the Government’s latest Shared Services Strategy need to be put in place to ensure its successful delivery.’

A National Audit Office report says that while some progress has been made the project risks missing its deadline, especially with a new row over funding with the Treasury, which wants to cut its budget.

Meg Hillier, the chairwoman of the Public Accounts Committee, said: ‘Today’s NAO report shows that government’s latest attempt at a shared services strategy is at serious risk of repeating past mistakes. It is like Groundhog Day.’

It its report the NAO said the Cabinet Office was ‘still unclear about the extent of the benefits this programme can be expected to bring and it does not know how much implementation has cost to date’.

It said governance of the project so far had been ‘fragmented and cumbersome, resulting in duplicated effort and disjointed decision-making’.

It credited the department with learning from past mistakes, but said there was more than needed to be done.

It cited a lack of ‘performance indicators in the plans, which mean that the CO does not ‘understand how its Shared Services strategy is progressing overall, including how well departments are doing with data and process convergence.’

It added: ‘Clusters have forecast they need £382 million to £403 million to deliver their preferred options in the current Spending Review period up to 2024-25.

‘However, the Treasury only approved a funding package of £300 million. There is also uncertainty over future funding. With deadlines for replacing some systems expiring as soon as 2023 the concern is that some infrastructure will soon be unsupported, increasing the risk of both system failure and additional maintenance costs.’

Meg Hillier, the chairwoman of the Public Accounts Committee, said: ‘Since 2004, government has overseen many failed attempts to cut the cost of back-office functions, by sharing these services across departments. These shared services – from human resources to procurement – are crucial to front-line service delivery.

‘Today’s NAO report shows that government’s latest attempt at a shared services strategy is at serious risk of repeating past mistakes. It is like Groundhog Day.

‘Its strategy is missing fundamental elements that it will need to succeed, including a comprehensive assessment of costs and expected benefits. The Cabinet Office, working with other departments, must get its house in order before its presses on with another half-baked strategy.’

A government spokeswoman said: ‘Ministers have made finding efficiencies a priority so we will be going further to modernise and share back office services in Government to deliver better services at the lowest possible cost to the taxpayer.

‘We welcome that the NAO have recognised the progress made in our Shared Services plan.’

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