Use of shared services in Whitehall should be mandatory

11 July 2012

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11 July 2012 | Adam Leach

The Cabinet Office's shared services strategy will fail unless central government departments are ordered to pool their back office functions such as procurement, according to MPs.

Efficiency and reform in government corporate functions through shared service centres, published by the Committee of Public Accounts (PAC), praised the Cabinet Office for its “renewed focus” on shared services as a mechanism to drive efficiency. But it said if the mistakes of the past - such as a lack of participation by departments and poor management data - were repeated, then the intended benefits would again fail to materialise.

The government’s Civil Service Reform Plan, published in June, set out plans that shared services would “become the norm” across Whitehall with departments sharing back office services such as procurement, HR and IT.

Since 2004, the eight shared service centres that have been established, which cost £500 million more than estimated to establish, have failed to prove their value. Of the five investigated by the National Audit Office, one broke even, two failed to track their savings and two cost a combined total of £255 million.

To avoid this happening again, the committee recommended departments are mandated to use the new shared service centres, with a “suitably empowered senior responsible owner being given the responsibility to ensure adoption”. The committee said: “If this does not happen, the strategy will again fail to deliver the expected savings.”

Margaret Hodge, Labour MP and chairman of the PAC, said: “In the past [the Cabinet Office] has left it up to individual departments to decide whether they use shared services. Departments which do use shared service centres have been allowed to stick to their own ways of working rather than using a single system suitable for all, undermining the scope for efficiency savings.”

The committee also suggested the Cabinet Office reassess its implementation plan for the new centres. Currently, departments will join one of the existing centres before being transferred again into one of the two new larger locations. Questioning the logic of this two-step strategy, the committee said: “We see scope to better manage the transition to the new shared service structure by promptly closing smaller, uneconomic centres and simplifying roll-out to the rest of government.”

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