Press Release - Reorganising central
government
18 March 2010
Between May 2005 and June 2009, there were over 90
reorganisations to central government. But a report released today
by the National Audit Office has found that these cannot
demonstrate value for money, given that most had vague objectives
and that costs and benefits were not tracked.
The average annual cost of reorganisations is almost £200
million, around 85 per cent of which is for the reorganisation of
arms length bodies. Since 1980, 25 central government departments
have been created, including 13 which no longer exist. By
comparison, in the United States only two new departments have been
created over the same period.
Central government bodies are weak at identifying and securing
the benefits they hope to gain from reorganisation. There is no
standard approach for preparing and assessing business cases
setting out intended benefits against expected costs. By not
identifying anticipated benefits clearly, public bodies run the
risk of carrying out reorganisations unnecessarily. More than half
of reorganisations do not compare expected costs and benefits of
alternative options, so there can be no certainty that the chosen
approaches are the most cost effective.
Furthermore, no departments set metrics to track the benefits
that should justify reorganisation – making it impossible for them
to demonstrate that the eventual benefits outweigh costs.
The ability of central government to identify reorganisation
costs is poor. There is no requirement to set reorganisation
budgets so no department and only a half of arms length bodies
began implementation with a reorganisation budget in place. In
addition, there is no requirement for bodies to disclose the costs
of reorganisations after they happen – meaning the true cost of
reorganisation is often hidden.
The decisions to reorganise departments and arms length bodies
are often taken at short notice and with inadequate understanding
of what could go wrong. This approach leaves management teams –
particularly in departments where reorganisations often start on
the day they are announced – planning and implementing
reorganisation simultaneously. Only a quarter of arms length bodies
had project plans in place before they announced reorganisations.
Reorganisations of departments are generally announced before
project plans are in place.
Mr Amyas Morse, head of the National Audit Office, said
today:
"With 90 reorganisations in four years, UK central
government machinery is in a constant state of change. At
approximately £200 million per annum, the costs are far from
negligible and the reorganisations inevitably involve disruption
and loss of service.
We believe a more deliberate and carefully planned
process makes sense before such costs are incurred and would also
like to see a slow down in the rate of change."
Notes for Editors
-
'Reorganisation’ means the allocation and reallocation of
functions and responsibilities within and among central government
departments and their arms length bodies. The reorganisations of
the period covered by this report (May 2005 and June 2009) have
varied greatly in scale and complexity, from transfers of business
units through to complex mergers and the creation of new
departments.
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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, Amyas Morse, is the head of
the National Audit Office which employs some 900 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 17/10
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