Press Release - Improving corporate functions using shared
services
29 November 2007
Shared service centres in the NHS and HM Prison Service are on
course to deliver substantial financial savings. But a report out
today by the National Audit Office found that central government
was initially slow to adopt shared services. While the momentum has
picked up it is not clear that the shared services initiative is
yet on a scale sufficient to deliver the level of savings that is
possible.
Shared services are about combining corporate service activities
across different parts of an organization, or across different
organizations, to bring efficiency savings and to improve service.
Shared services do not represent an end in themselves, but they
provide one possible means of achieving greater efficiency and
effectiveness. Today’s report looked at government’s achievements
so far, and how it can get more from the shared services
initiative.
The Cabinet Office estimates that departments could save £1.4
billion a year on finance and human resource functions by
implementing shared services. However, the report found there has
been limited progress in measuring the performance of corporate
services to date or demonstrating how it can be improved through
shared services.
The report found that,although shared service programmes are
progressing across government, savings reported so far are
relatively small. At March 2007, departments had reported annual
savings across all corporate service functions of £1 billion, £315
million of which related to finance and human resources. It is not
possible to determine how much of this is related to shared
services, but it is clear that there is substantial opportunity for
securing further savings through shared services and other
means.
The report also found that the Cabinet Office has promoted
shared services, and assisted in tackling barriers to their
creation, but lacks a clear overview of the benefits being secured
by departments. It does not have powers to force departments to
adopt shared services and it has not prescribed any particular
models to help departments implement shared services
successfully.
Both the NHS Shared Business Service and the Prison Service
Shared Service, reviewed in detail by the NAO for this study, are
on course to deliver savings, demonstrating that both are more
efficient than the arrangements they have replaced. Although
neither of the bodies are currently performing to levels of
efficiency achieved in leading practice private sector
organisations, they are both pursuing improvements.
Customers of the NHS and Prison Service centres expressed early
dissatisfaction with the quality of the service being provided. But
the NAO found that customer satisfaction levels had risen over
time. Both centres continue to address customer concerns and
evidence of decreasing complaints and increasing compliments
suggest that customer satisfaction is improving as the service
matures.
Shared services have also brought wider benefits. Better
management information, faster paperless transaction processing and
substantial savings in procurement were all mentioned by customers
of NHS Shared Business Services that had seen improvements over the
arrangements they had used before.
The NAO concludes that there needs to be an improvement in the
overall management of corporate services. Public bodies should
streamline their corporate service processes in line with best
practice, improve how they analyse the performance of their
corporate services and review regularly whether there are more cost
effective ways to obtain their corporate services.
The NAO also recommends that to improve the take-up of shared
services the Cabinet Office should work to encourage newly formed
departments to adopt shared services. Every department within the
central government sector of small departments should carry out a
business case evaluation for buying corporate services from one of
the two designated sellers. And central government should examine
whether existing incentives to sell shared services are
sufficient.
Sir John Bourn, head of the National Audit Office, said
today:
"Central government needs to get much better at managing its
corporate services. Shared services have the potential to deliver
significant efficiency savings but it is not yet clear that the
£1.4 billion of savings estimated by the Cabinet Office will be
achieved."
Notes for Editors:
- Corporate services provide vital support to the delivery of
effective and efficient public services that meet citizen’s needs.
They include activities such as finance and accounting, human
resources, procurement, IT, facilities management and estates
management.
- 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 55/07
All enquiries to Donna Watson,
NAO Press Office: Tel: 020 7798 7038
Mobile: 07917 555 388