Press Release - The Efficiency Programme: A Second Review of
Progress
8 February 2007
Sir John Bourn, head of the National Audit Office, reported to
Parliament today that, halfway into the three-year efficiency
programme, government departments have reported £13.3 billion in
annual efficiency savings, 62 per cent of the £21.5 billion
target.
But departments’ progress towards achieving their individual
targets varies, indicating that some departments still have a lot
more to deliver than others. Progress ranges from the Home Office
and the Department for Work and Pensions reporting the achievement
of more than 90 per cent of their efficiency targets by September
2006 to the Department for Education and Skills reporting only 28
per cent of its target.
There is clear evidence of positive change across the public
sector, such as the £1.2 billion saved annually by the Department
of Health in procuring pharmaceuticals. On the measurement of
efficiencies, the NAO’s assessment shows that:
- 26 per cent (£3.5 billion) of the £13.3 billion reported
efficiency savings fairly represent efficiencies made;
- 51 per cent (£6.7 billion) represent efficiency but carry some
measurement issues and uncertainties; and,
- 23 per cent (£3.1 billion) may represent efficiency gains but
the measures used either do not yet demonstrate efficiency or the
reported gains may be substantially incorrect.
The report concludes that the Office of Government Commerce
(OGC) is fulfilling its role in co-ordinating the Efficiency
Programme well. However, the problems in measurement identified by
the NAO show that efficiency gains require greater review before
they are reported.
The OGC has issued comprehensive measurement guidance to
departments and initiated a new reporting system that emphasises
the need to maintain service quality. As a result, departments have
shown a greater focus on measuring service quality and all projects
across the programme have established baselines against which to
measure efficiencies. There are many examples across the Programme
where service quality has been at least maintained. But some
projects are finding it hard to demonstrate fully that quality has
not been affected.
Departments are also making good progress in achieving the
70,000 headcount reduction target and have reported 45,551 (65 per
cent) headcount reductions. The NAO found reported reductions by
departments to be broadly robust. However, while the resulting
reductions are not significant in relation to the size of the
Programme, there are some differences in baseline dates and these
diminish confidence in what has been achieved. Furthermore, only
limited assurance can be given on reported reallocations to
frontline roles.
In today’s report, the NAO has called for a number of
improvements to assist the government in meeting the £21.5 billion
efficiency target by 2008 and beyond in order to embed efficiency
for the long term.
Among the recommendations are that the Office of Government
Commerce makes progress across the Programme more transparent by
making more information on progress publicly available. The NAO
also recommends that departments should improve their measurement
of efficiency gains and report their headcount reductions with
greater transparency. They should also focus on the efficiency of
all aspects of their business, not just those covered by efficiency
projects, and do more to encourage staff to put forward ideas for
improving efficiency.
Sir John Bourn said today:
“When I last reported on the Efficiency Programme,
nearly a year ago, I concluded that reported efficiency gains
should all be treated as provisional. Since then, progress has been
made in improving the robustness of how gains are measured. But
many reported efficiency gains still carry a significant risk of
inaccuracy.
“In this spending period, there is more to do to show
that all reported gains are both genuine and sustainable. Looking
further ahead the next spending period provides an opportunity to
ensure that efficiency is improved across all aspects of the
business.”
Notes for Editors:
- Press notices and reports are available from the date of
publication on the NAO website, which is at
www.nao.org.uk. Hard copies can be obtained from
The Stationery Office on 0845 702 3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 850 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 09/07
All enquiries to Donna Watson, NAO Press Office:
Tel: 020 7798 7038
Mobile: 07917 555 388