NAO questions government's savings claims

17 February 2006
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17 February 2006 | Anusha Bradley

Serious doubts have been raised over the accuracy of government efficiency savings.

The National Audit Office (NAO) report Progress in Improving Government Efficiency, published today, concluded that the programme is "high risk", could be damaging service quality and has "inconsistencies in measuring efficiencies". This, it found, means the claim that £4.7 billion savings have been achieved may be unreliable.

The NAO said the government is relying on 50 of 300 efficiency projects to generate 80 per cent of the total £21.5 billion savings target. For example, it says the majority of gains reported up to the end of September 2005 came from only two departments: the Department of Health and the Home Office, which saved £1.7 billion and £1 billion respectively.

And out of six Office of Government Commerce (OGC) work streams, the NAO said only two clear work areas contributed to the majority of savings. Figures from December 2005 show "procurement" accounted for £2 billion, "productive time" and "other" achieved £900 million each, "policy" achieved £500 million, "corporate services" £300 million and "transactions" £100 million.

The NAO report said high staff turnaround in the OGC's efficiency team, and its lack of authority to mandate departments to make changes, were also problems.

It said another "risk" was that 15 per cent of the efficiency target is dependent on the installation of IT upgrades, such as the £8.5 billion NHS Connecting for Health project. "The public sector has yet to demonstrate it can consistently deliver successful IT programmes of this magnitude," the report said.

It also highlighted inconsistencies in the measurement of efficiency savings and a lack of IT systems to capture savings data as barriers to achieving the targets.

While the NAO said inconsistent measurement of savings could mean departments actually saved more than originally reported, it said it had "significant concerns over whether the adopted measurement methodologies can be relied upon". It added that if quality measures were not in place, reported efficiencies might simply be cuts to services.

The OGC told it would comment on the NAO's findings after a Public Accounts Committee hearing on the report in the House of Commons on 6 March. However, a spokesman added: "We accept that getting measurement of efficiencies right is a challenge. We can always improve on it."


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