10 February 2006
The official overseeing Whitehall's £40bn efficiency agenda this week urged public bodies to rethink plans to share back office services, amid Treasury concerns that too many 'centres of excellence' have been proposed.
John Oughton, chief executive at the Office of Government Commerce, the Treasury body co-ordinating the all-encompassing 'Gershon' efficiency review, said as many as 130 shared services centres have been proposed by public organisations; too many to make the programme efficient in the way intended by government.
Oughton told Public Finance that the Treasury now had 'serious concerns' that many public bodies had proposed sharing 'too few services with too few partners' – a situation that 'would leave them unable to produce the critical mass of users, costs and services required to make programmes effective'.
Oughton also revealed that his OGC review team was behind the decision last year to scrap plans by the Treasury, Cabinet Office and Office of the Deputy Prime Minister to share back office functions, such as human resources.
The three departments were set to launch a shared services centre – dubbed 'Whitehall One' – only to be told following an OGC review that a merged body representing just 200,000 government staff was unlikely to produce sufficient savings.
Plans have been re-drawn, and a second initiative is due to be launched, involving more services, the OGC confirmed.
The Cabinet Office last year launched a 'transformational government' initiative aimed at making public bodies share corporate services such as finance and HR, in order to produce economies of scale and to prevent wasteful duplication.
The idea is that savings would contribute to efficiency targets identified by Sir Peter Gershon's eponymous 2004 review, which aims to free public resources for frontline services. Local authorities have also been urged to join the programme, which complements plans to merge public procurement processes.
Oughton told a conference in London on February 8 that while 'we are much further ahead than a couple of years ago,' problems with shared services have emerged.
'Departments have generally signed up to the idea of sharing functions like finance, HR and IT in principle, but often want to retain the function and invite others to join them rather than look for another service provider that they can join.
'In practice, this means that a large number of potential shared services centres are being set up and the business case for them all can't work.' He added that 'if all the proposals go through, over 130 centres will be required – that's more greenfield sites than Tescos'.
Backed by Chief Secretary to the Treasury Des Browne, Oughton has urged public bodies to 'look around to see what services are already on offer and consider whether you might actually be satisfied by [a shared services centre] already set up'.
However, Tony Travers, director of the Greater London Group at the London School of Economics, warned: 'The problem the OGC faces is that the government is currently devolving decision-making down to local level; making schools, NHS trusts and councils more autonomous.
'Such organisations are unlikely to take kindly to being told exactly how best to use that autonomy. The idea of shared services pulls in the opposite direction to other government initiatives.'
PFfeb2006
