Watchdog queries efficiency savings

2 March 2006
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02 March 2006 | Anusha Bradley

The National Audit Office (NAO) has raised questions over the methodology of government efficiency gains and described £4.7 billion savings announced last year as "provisional".

In a report, Progress in Improving Government Efficiency, the government spending watchdog queried the timing of the government claim that £4.7 billion savings had already been achieved. The figure was announced by Gordon Brown in his pre-budget report in December.

Speaking to SM, Keith Davis, NAO efficiency director, said baseline data and better measurement methods should have been established prior to April 2005 when the drive began.

The NAO added the efficiency programme could have "inconsistencies in measuring efficiencies" and be damaging service quality.

The Office of Government Commerce (OGC) said it would comment on the findings after a Public Accounts Committee (PAC) hearing on the report in the House of Commons on 6 March.

However, a spokesman said: "We accept that getting measurement of efficiencies right is a challenge. We can always improve on it."

The NAO also highlighted the efficiency programme's reliance on 50 of the 300 projects to generate 80 per cent of the total target, describing this strategy as "high-risk".

Under current plans, five departments will contribute 77 per cent of gains, and of the top 50 projects, 70 per cent will come from local services, such as police, schools and healthcare.

The majority of gains reported up to the end of September came from only two departments: the Department of Health and the Home Office, which reported savings of £1.7 billion and £1 billion respectively.

Assessing the OGC's methods, the NAO said of six OGC work streams (procurement, productive time, policy, corporate services, transactions and "other"), only "procurement" and "productive time" contributed to the majority of savings, with £2 billion and £900 million respectively.

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

As a result the NAO said it had "significant concerns over whether the adopted measurement methodologies can be relied upon". According to the report, if quality measures are not in place, reported efficiencies might simply be cuts to services.

A Confederation of British Industry (CBI) survey of 300 members, also out last month, found 56 per cent were "not at all confident" Gershon targets would be achieved, up from 37 per cent last year.

Edward Leigh, Conservative chair of the PAC, said in a statement: "Grand declarations of billions of pounds of savings amount to little unless backed up by credible systems of measurement and validation."


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