National Audit Office Press Releases
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The Efficiency and Reform Group

The Cabinet Office’s Efficiency and Reform Group (ERG) has helped departments make significant savings, according to a report by the National Audit Office. Overall, the NAO has confidence in the £5.5 billion of savings in 2011-12 attributed to the influence of ERG. However, there has not been enough focus so far on the sustainability of savings.

Among the contributions made by ERG towards reducing the cost of staff in departments are changes to the Civil Service Compensation Scheme; restrictions on employing consultants and temporary staff; and the monitoring of the recruitment of permanent staff, central control over procurement of common goods and services and review of major ICT and other projects.

Today’s report does point out that savings to date have differing degrees of sustainability. The level of savings from commercial negotiation with major suppliers and from the advertising moratorium was lower than that in 2010-11. Similarly, some of the 2011-12 savings are unlikely to be sustained.

ERG introduced a clearer and more responsive organizational structure in 2012 and published its first business plan in early 2013, covering all areas of its activities. It is not fully clear how ERG intends to make the reforms necessary to secure £20 billion of annual savings over the rest of the spending review period. Until recently, ERG’s focus has mainly been on the savings themselves, with less emphasis on the longer-term changes and improvement in efficiency necessary to make them sustainable.

ERG is now making good progress in developing strategies in some of its areas of saving activity and it is also beginning to coordinate these strategies with departments.  Among the remaining weaknesses identified by the NAO are that ERG’s strategies include large savings ambitions but the plan for meeting the £20 billion savings aspiration is still in its early stages. ERG, together with departments, also needs a more sophisticated understanding of risks to services at a time of major restructuring.

Today’s report points out that ERG has been strongly led by the Minister for the Cabinet Office, while the Group’s close links with cabinet sub-committees have helped it to promote collective agreements across departments. ERG is also acting to improve the effectiveness of its relationships with departments but it recognizes that its staff turnover, at 25 per cent a year, is too high, with particularly frequent changes at senior level.

Amyas Morse, head of the National Audit Office, said today:

“Nearly three years on from its birth, the Efficiency and Reform Group is clearly helping departments achieve substantial reductions in annual spending. This demonstrates that the ERG is providing value for money.

“As a relatively new organization, ERG has assessed the obstacles it faces and has begun to tackle them energetically. However, it needs to get going on moving beyond the role of imposing central spending controls to placing more emphasis on changes aimed at promoting sustainable savings.”

Notes for Editors

£5.5 bn  - Annual savings in 2011-12 that ERG estimates it has influenced
 
 £20 bn  -
Annual savings in 2014-15 that ERG aims to influence
 
 £72 m  -
Cost of ERG in 2011-12
 

During 2011-12

£1.5 bn - Reduction in staff costs that ERG has influenced
 
£1.8 bn - Department's savings on consultants and other temporary staff
 
£1.5 bn - Other savings in areas that ERG has influence
 
£0.8 bn - Reduction in spending on capital projects that ERG has influenced
 

1.    Staff turnover of 25 per cent includes 7 per cent from the voluntary redundancy scheme in 2011

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 from The Stationery Office on 0845 702 3474.

3.    The NAO’s vision is to help the nation spend wisely. Its independent public audit perspective helps Parliament hold government to account and improve public services. 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 more than £1 billion in 2011.

All enquiries to Barry Lester, NAO Press Office: Tel: 020 7798 7937

Mobile: 07748 181692

 

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