Whitehall shared service centres not value for money, says NAO

20 May 16

A scheme to share back-office functions has so far failed to achieve value for money for Whitehall departments, the National Audit Office has found.

Auditors criticised the government’s Next Generation Shared Services strategy, which has seen government departments transfer back-office functions to two shared services centres, for costly delays, poor programme design and weak leadership.

NAO head Amyas Morse said the Cabinet Office’s failure to manage risks from the outset also contributed to the less-than-expected savings and benefits.

In the first two and half years, the centres delivered some £38m less than the forecast £128m, and generated £94m of costs at the same time – almost two thirds of the £159m in costs the Cabinet Office estimates the operation will generate till 2023-24.

The NAO said costs had increased significantly due to delays caused by design flaws, which proved expensive for the departments and suppliers alike.

Departments had to spend more maintaining and extending the life of existing, aged systems while at the same time being unable to deliver efficiencies from improving their back offices. Efficiency savings had been forecast to be between £172-272m per year.

Delays in the programme have now lasted so long that the NAO said it was likely the current operating platform may be out of date – an issue the Cabinet Office has recognised.

Auditors also criticised the government for failing to secure sufficient buy-in from departments in the early stages of the shared services programme.

There was much variation between departments’ perspectives on the merits of the programme and some told the NAO they were pressured into joining.

Not all of the departments that planned to outsource their back-office functions to the centres have done so, taking another chunk out of the estimated savings.

The Cabinet Office also failed to act in a timely and effective manner as problems emerged, failed to clarify its role in managing and leading the programme and was not proactive enough, auditors said.

Morse stated: “The programme will only achieve value for money in future if the Cabinet Office shows clear leadership, and government accepts the need for collaborative and flexible behaviours from all departments involved.”

A Cabinet Office spokesman said: “The report recognises that the Cabinet Office is addressing the challenges involved in managing digital transformation, but we accept that we need to go further, and we will.”

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