Sharing back office services cost more than it saved
Pooling resources across Whitehall has cost £500m more than expected, MPs have found, by Kathryn Dobinson. Guardian Professional, Tuesday 10 July 2012. "A key part of the new civil service reform plan to save money by sharing back office functions in Whitehall cost hundreds of millions pounds more than it saved, according to the Commons public accounts committee (PAC).
In its report on five of the eight shared service centres set up in central government, the committee says that the arrangements supposed to cost £900m actually cost a total of £1.4bn to set up - £500m more than expected..."
Further information on Sharing back office services cost more than it saved
Last updated: 11 July 2012
Efficiency and reform in government corporate functions through shared service centres - Third Report
Public Accounts Committee - Third Report, The published report was ordered by the House of Commons to be printed 27 June 2012. "... In this examination we considered five of the eight shared service centres established for central government. Whilst performing adequately, they had cost £1.4 billion to build and operate compared to an expected cost at the start of the project in 2004 of £0.9 billion. These five centres were also expected to have saved £159 million by the end of 2010-11. In the event, the Ministry of Justice centre broke-even, the Department of Work and Pensions and the Department for Environment, Food and Rural Affairs centres did not track their total savings, and the two centres that are tracking savings, the Department for Transport and Research Councils UK, have reported a net cost to date of £255 million.
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. 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 take-up 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 over-complicated systems which also undermine the scope for efficiency..."