Update on the Next Generation Shared Services Strategy

31 Mar 2014 02:50 PM

Full report: Update on the Next Generation Shared Services Strategy

The Cabinet Office will have to work with other government departments to ensure that the full benefits of its shared services strategy are realised and that service is maintained, according to a report from the National Audit Office today.

In December 2012, the Cabinet Office published its Next Generation Shared Services strategy. This set out how it intended to reduce the cost of administering finance, human resources and procurement services through sharing back-office functions. The Cabinet Office estimated that the savings would be between £400 million and £600 million per annum. The estimated implementation cost was between £44 million and £95 million. To date, the total cost of participating departments has not been collated. The Cabinet Office spending to date on the strategy was £9.8 million.

The Cabinet Office has established two new independent shared service centres. These measures mean a significant change in the role of the Cabinet Office. The Cabinet Office is now responsible for the strategic management of the performance of the outsourced providers in the two shared service centres that provide services to 140,000 customers. The overall programme is broadly on track.

Amongst the NAO’s recommendations is that the Cabinet Office should ensure that departments sign up to the standard operating model, and do not implement unnecessary variations to services.

The Cabinet Office needs to have management information that is robust, more timely and comparable to show that its shared services initiatives have achieved value for money. It will also need to make sure the full benefits of the entire shared services programme are properly realised and tracked.

The NAO today says that the Cabinet Office and other government departments will need to be clear in their reporting of the savings that have been achieved through the Next Generation shared services, as well as the savings that would have been achieved by reduced activity as a result of government spending constraints.

Previous NAO studies have found that the government, as a whole, had not been able to demonstrate value for money from these initiatives.

In 2012, the Committee of Public Accounts was disappointed in how the Cabinet Office had previously engaged with its recommendations. Although the Cabinet Office has made progress, the NAO considers that only two of the seven recommendations have been implemented in full and five are still in the process of being implemented. The Cabinet Office should complete its work to address the recommendations made by the Committee in its 2012 report.

“The Cabinet Office has made progress with its shared services strategy. However, as the initiative enters its most challenging phase, it is crucial that the Cabinet Office fully address previous recommendations by the Public Accounts Committee. In particular, lessons from intelligent customers should be shared, and the Department should prepare and communicate performance benchmarks. There will be a tension between getting departments to join the centres and sticking to the programme's timetable, and maintaining a standard operating model that is acceptable to all users.”

Amyas Morse, head of the National Audit Office, 31 March 2014

Notes for Editors

5

The expected total number of shared service centres for government

2

Independent centres for government that have been created

3

Expected number of standalone centres

£400m to £600m per annum

The expected total annual savings across government from the implementation of the Next Generation Shared Services strategy.

£128m per annum

The expected annual savings, included above, achieved from the full implementation of the two independent shared services centres.

£9.8m per annum

The Cabinet Office spending to date on the Next Generation Shared Services strategy.

1. This memorandum is part of the ongoing work that the NAO is doing to look at the reform of the civil service and the role of the centre of government. It updates the Committee of Public Accounts on the progress the Cabinet Office has made in implementing recommendations from the Committee's 2012 report.

2. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained by using the relevant links on our website.

3. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 860 staff. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of almost £1.2 billion in 2012.