The Cabinet Office has reported efficiency savings across shared government functions, but there are opportunities to implement a more robust approach, according to a new report by the National Audit Office (NAO).
Government functions1 were established in 2013. They are 14 specialist groupings across government, seeking to boost its expertise. This includes the Government Communication Service and the Government Counter Fraud Function.
Following Lord Maude’s review of government functions in July 2021,2 the Cabinet Office has reported annually on efficiency savings achieved by the functions. This report explains how and why the functions track efficiencies, who does what, and highlights some of the lessons learnt from this exercise that can be taken forward in government’s future work.
In July 2023, the department reported cross-cutting central functional teams had achieved £4.4 billion of financial savings: £3.4 billion of ‘cash-releasing savings’ that can be spent elsewhere, and £1 billion of ‘non-cash-releasing’ savings which do not directly reduce budgets of departments or client bodies but for example, improve the quality of service delivery.
Through its audit, the NAO found that most functions had clear methodologies underpinning and evidence supporting claimed headline savings. However, the NAO also highlighted that overall, there are opportunities to improve the rigour and completeness of the reporting. For example, the Cabinet Office only reports data from functions it hosts for the period it is reporting on – 10 out of 14 in 2021-22. The Government Internal Audit Agency (GIAA)3 noted that this means that the reported efficiencies are potentially incomplete.
The GIAA audits the functions’ savings each year. Through its examination of Cabinet Office processes, the GIAA found some weaknesses in the functions approaches to assuring data, risking some savings claims being overstated. The GIAA’s ability to audit the savings was also sometimes hindered by gaps in the evidence.
The GIAA has sought to improve the methodologies and evidence bases supporting the savings claimed by the functions, providing 21 recommendations in 2023, such as greater consistency in the reporting of data, and enhanced documentation to support calculations. So far, the Cabinet Office has completed implementing 9 of the recommendations.
HM Treasury has issued a broader framework for tracking, monitoring and overseeing efficiency savings in departments and arms-length bodies, resulting in a dual-track approach for assessing efficiencies in government. HM Treasury expects this to be implemented departments reporting efficiency savings for the financial year 2023-24 and by arm’s-length bodies in 2024-25– anticipating natural convergence with the approach taken by Cabinet Office and functions – but does not currently expect all functions to adopt the new framework.
The NAO recommends the Cabinet Office should embed a more consistent approach to reporting functional savings so that it can provide clarity and transparency about the nature of the figures it publishes. Additionally, it should continue to work with HM Treasury to make sure their processes align; lessons are learned, and good practices are shared.
“Transparent and clear reporting of efficiencies allows government to demonstrate where and how savings are being made, and make good decisions about where to best invest limited resources in the future.
“Cabinet Office is only two years into publishing efficiency savings and has learned some valuable lessons, but it has further to go to be able to robustly quantify savings delivered by the functions.”Gareth Davies, the head of the NAO
Read the full report
Notes for editors
- Functions were introduced in 2013 as part of a series of reforms intended to minimise duplication within government and provide expert policy planning and delivery guidance to departments. Since then, this functional model has become embedded in civil service working practises. In 2021 His Majesty’s Treasury (HMT) mandated that all departments adhere to minimum working standards, stipulated by functions. These standards set minimum requirements for what needs to be done to ensure collaboration between functions’ experts and policymakers in government and are different for each function
- Lord Maude published a review of government’s cross-cutting functions in July 2021. The report found that functions’ ability to provide central oversight had weakened over time. It recommended that functions be given a renewed mandate and that the functions should publish performance data to demonstrate their benefit.
- The Government Internal Audit Agency (GIAA) is responsible for assuring the claimed savings before publication. GIAA assesses whether the methodologies have been appropriately designed, are robust and fit for purpose. A moderate assurance rating (a reasonable level of confidence in the savings reported) or above is required for a group of savings to be published by the Cabinet Office.
- In the 2021 Spending Review HM Treasury set multi-year budgets for departments, encouraging them to achieve efficiency savings of approximately 5 per cent by 2024-25. In the Spring Budget 2023, the government stated its commitment to “continuing to identify ways to work more efficiently and reduce day-to-day running costs of government.”