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7 March 2012 | Adam Leach
A seven-year project to save UK public funds by
setting up shared service centres failed to deliver £159 million expected savings
and has, in fact, increased operating costs by £255 million.
On top of higher than expected operating costs,
the government spent £1.4 billion on establishing five shared service centres
despite budgeting only £900 million.
The figures were
revealed today by the National Audit Office (NAO) in its report Efficiency and reform in government corporate functions through shared service centres.
The report said the lack of a mandate forcing
departments to use these centres, thereby enabling it to drive efficiency
savings through sheer scale, has resulted in four making a loss and just one
breaking even. It also found that despite the intention to use the shared
services strategy to standardise systems and processes, government departments
had been overly specific in their requirements, limiting the ability to
leverage buying power.
Launching the report, NAO head Amyas Morse, said:
“The initiative for government departments to share back-office functions has
suffered from an approach which made participation voluntary and tailored
services to meet the differing needs of individual departments. The result was
Margaret Hodge, chairwoman of the House of Common’s Committee of Public
Accounts, said: “Departments lost sight of their overall objective to save
money. They ordered tailor-made systems which have cost the taxpayer too much.”
While critical of progress on the project between 2004 and 2011, the
NAO accepted that a new strategy from the Cabinet Office for shared services
addressed many of the issues in the report.
It did, however, make a series of recommendations to the Cabinet Office, including asking for the power to force government
departments to implement the shared services strategy. It also recommended considering
extending the overall timescale of the project to establish more framework agreements,
improve benchmarking and taking better account of the trade off between cost
A Cabinet Office spokeman, said: “A Major Projects Authority,
which reports directly to the Prime Minister, was created in 2010 and
introduced tough new controls for major projects to manage risk. The new
approach to shared services will be overseen by this authority to ensure it
delivers for taxpayers.”