Press Release - Releasing resources to the frontline: the
Department of Health’s Review of its Arm’s Length Bodies
25 January 2008
The Department of Health is on track to meet most of the key
targets identified in a review of its arm’s length bodies,
according to a report out today by the National Audit Office. By
the end of 2007-08, expenditure will have reduced by £555 million,
against the target of £500 million. And the number of posts in the
sector will have decreased by 27 per cent, compared to the target
of 25 per cent.
Over the same period, the Department will have spent £61 million
on implementing the review, including redundancy costs of £47
million. While year-on-year savings are being released from the
arm’s length body sector, the Department expects that full savings,
net of final implementation costs, will be realised from 2010
onwards.
In 2004 the Department of Health initiated a review of its arm’s
length bodies (ALBs), with the aim of reducing expenditure, cutting
posts and substantially reducing the number of such bodies.
The report found that, while the Department did collect
performance information on its arm’s length bodies prior to the
review, this was put into a standard format only in 2006-07. There
are lessons to be learnt for departments generally in managing
change programmes, including having clear baselines for performance
measurement at the outset and assessing wider value for money.
The report found that the Department will have reduced the
number of bodies, by the end of 2007-08, from 38 to 23. The target
set was for 20 bodies to remain by 2008-09. The Department expects
this to be achieved from the beginning of 2009-10. Over half of the
headcount reduction has been achieved through transferring posts
out of the sector although they remain on the NHS payroll. For
example, nurses working for NHS Direct count towards the target,
because they have been reclassified as ‘frontline’ staff.
Considerable savings have been achieved through the Department
closing down organisations. The closure of the NHS Information
Authority contributed to the £66 million savings made by the Health
and Social Care Information Centre. The report highlights that five
organisations were identified for closure within five years of
opening.
The report concludes that the review has certainly cut costs,
posts and the number of bodies, and secured some notable savings.
In the wider context of developments in efficiency measurement
since 2004, there remain some areas in which further evidence would
be required to quantify the overall value for money achieved.
In order to achieve further efficiencies, the Department will
have to work within tighter requirements for demonstrating
efficiency gains as set out in the Comprehensive Spending Review
2007. The NAO recommends that when departments undertake major
change programmes, they should establish baseline performance
information in order to assess the ‘before and after’ effect.
Sir John Bourn said today:
“The Department should be commended for its management
of the review, having achieved its savings targets. But there are
lessons to be learnt more generally about making sure that targets
are clear and focused on delivering value for money and improving
performance. And it is essential that departments are able to
measure their progress against a clear set of baselines, which need
to be identified before projects start.”
Notes for Editors:
- Arm’s Length Bodies are a diverse set of stand-alone
organisations, such as NHS Blood and Transplant, the Healthcare
Commission and the National Institute for Health and Clinical
Excellence (NICE), sponsored by the Department of Health to deliver
specialised services and functions. The terms of reference of the
arm’s length body review were set out by the Department of Health
in its An implementation framework for reconfiguring the DH arm’s
length bodies (2004).
- Press notices and reports are available from the date of
publication on the NAO website, which is at http://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 04/08
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