The government's flagship implementations of shared services initiatives are running way over budget and are seemingly losing, rather than saving, taxpayers' money.
A report published today by the Public Accounts Committee (PAC) runs the rule over five shared services centres that are being established for use by central government departments. The report notes that the quintet of deployments are "performing adequately", but notes that they cost £1.4bn to build, an increase of more than 50 per cent on the cost of the £900m forecast in 2004.
The five centres were projected to have saved £159m by the end of 2010-11, but the reported net cost so far stands at £255m. This loss comes from figures supplied by the Department for Transport and Research Councils UK. The Department for Work and Pensions and the Department for Environment, Food and Rural Affairs have not been tracking savings, while the Ministry of Justice is only at break-even level.
The report states that "the Cabinet Office must drive cultural change to secure the intended savings", and encourages the government to ensure it has adequate data to compare the cost and performance of services.
"The current strategy will only be effective if the Cabinet Office demonstrates strong leadership to deliver greater value for money and gets buy-in from departments," adds the report summary. "So far it has been left up to individual departments and their arm's-length bodies to decide whether they use shared service centres.
"This has led to low uptake and so the centres are unable to achieve the economies of scale necessary to deliver savings and value for money. Those bodies which have become customers of shared service centres have retained their own processes rather than adopt those of the centre, resulting in overcomplicated systems which also undermine the scope for efficiency."
In the report's list of seven conclusions, the Cabinet Office is also warned that its two-step implementation plan could prove too complex, and criticised for lacking "a wider strategy to extend shared services beyond central government back-office functions".
PAC also warns that constraints being placed on spending may prove to be "a barrier to long-term investment and value for money".
The report concludes: "We understand the limited scope for 'invest to save' proposals under current cash constraints, but nevertheless consider there is scope to reconsider whether centres should be able to retain savings generated for future investment, and to think more holistically about investment across government and over longer timeframes.
"With this in mind, the Cabinet Office and Treasury should review funding arrangements to consider how they could be more conducive to effective long-term investment and long-term savings."
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