17 February 2006
Government claims of achieving billions of pounds worth of efficiency savings under the Gershon programme must be treated as provisional and require further validation, a public spending watchdog is warning.
The National Audit Office says the reported £4.7bn of savings, announced by Chancellor Gordon Brown in his 2005 Pre-Budget Report, against the target of £21.5bn gains annually by 2008, cannot be 'regarded as final'.
Its critical report catalogues a host of problems with the way that government departments calculate their progress.
The report, to be published on February 17, concludes that inadequate data and management information systems, combined with flawed methodologies for calculating efficiency gains, mean in some cases that the resulting figures are not robust. They are also compromised by the time-lag between the availability of data and the period they cover.
Significantly, the NAO warns that these shortcomings mean there is no way of knowing if the search for cost savings is damaging services, which it identifies as the greatest risk associated with the programme. The government has always insisted that the efficiency drive will not compromise standards.
'The biggest risk is that efficiency gains are accompanied by unintended falls in the quality of service delivery. Demonstrating that service quality has not been adversely affected is essential if the programme is to be successful,' the report says.
At the same time, the watchdog concludes that the savings figure is undermined by a failure in some cases to deduct the costs of efficiency projects from the resulting gains.
Edward Leigh, the Conservative chair of the Commons' Public Accounts Committee, says there is now 'a serious question mark' over ministers' claims of success for the Gershon programme.
'There are inconsistencies in how the savings are measured. Grand declarations of billions of pounds of savings amount to little unless backed up by credible systems of measurement and validation,' he added.
In a further blow to ministers, the NAO concludes that the efficiency programme is high risk, because it relies on just 50 of the 300 efficiency-related projects to deliver 80% of the £21.5bn annual savings. It also says there is still a long way to go to establish a 'culture of efficiency' in the public sector.
As a result, NAO auditor general Sir John Bourn is now calling on the government to adopt an 'all-embracing approach' to the Gershon programme. 'Efficiency is not an add-on. Efficiency is the way core business has to be delivered and improvements in the quality of public services secured.'
PFfeb2006
