Central Finance and Treasury

Progress in improving government efficiency

“There are many worthwhile activities going on within the efficiency programme and I am pleased that some good progress is clearly being made. However the time is now right for government to move on from isolated, one-off efficiency initiatives, covering selected activities, towards a much more all-embracing approach to achieving efficiency. To sum up, efficiency is not an ‘add on’, a separate programme from ‘core business’. Efficiency is the way ‘core business’ has to be delivered and improvements in the quality of public services secured.”

Report cover showing community services at work

"There are many worthwhile activities going on within the efficiency programme and I am pleased that some good progress is clearly being made. However the time is now right for government to move on from isolated, one-off efficiency initiatives, covering selected activities, towards a much more all-embracing approach to achieving efficiency. To sum up, efficiency is not an 'add on', a separate programme from 'core business'. Efficiency is the way 'core business' has to be delivered and improvements in the quality of public services secured."

Sir John Bourn, 17 February 2006


Sir John Bourn, head of the National Audit Office, said today that progress is being made towards the £21.5 billion ‘Gershon’ efficiency target but that because of the extent of the risk that efficiencies may not be measured accurately, and time lags in reporting of data, gains reported so far should be considered provisional and subject to further verification.

The National Audit Office found that many efficiency projects are making good progress towards achieving efficiency gains and that in many respects departments are managing their efficiency programmes well, particularly through effective senior management focus and some high calibre project management. The Office of Government Commerce (OGC) is now providing thorough monitoring and challenge of departments’ progress.

However, caution is needed at this stage in assessing what has been achieved. Some reported gains are robust, and greater confidence can be placed in gains reported more recently. At the same time, lags in the reporting of data mean that there could already be further gains achieved beyond what has been reported. This, together with the need for further data on service quality, and limitations in measurement methodologies mean that the reported gains of £4.7 billion should not be regarded as final.

The report also points out that the Efficiency Programme is high risk because it requires a change programme with a diverse set of challenges. The top 50 out of some 300 projects are taking the lead in delivering around 80% of the £21.5 billion target.

As part of its work the National Audit Office researched experiences of improving efficiency in the public and private sector, and also overseas. Through its analysis of successful efficiency initiatives it has been able to draw out some important lessons for government.

Beyond the immediate targets, the National Audit Office calls for a number of broader improvements if government is to achieve longer term, sustainable efficiency:

Strategic leadership from the centre of government. Strong strategic leadership at the centre of government is essential to ensure the most is made of opportunities for reform. For example, in seeking greater sharing of corporate services functions, a wide number of public bodies acting together rather than in isolation or in small groups will deliver the optimal outcome.

Staff professionalism and expertise. More needs to be done to ensure that staff in key roles have the right skills and expertise and the freedom to use them. Departmental Capability Reviews and the Professional Skills for Government programme will be critical to achieving this.

Quality and timeliness of data on efficiency and productivity. Public sector managers need to be able to base their decisions on clear and timely data which link costs to specific outputs.

Integration of efficiency into day-to-day thinking and systems. Staff in the public sector need to think ‘efficiency’ as they go about their activities.

Use of comparisons of efficiency between organisations. Management boards of public bodies should demand clear information on how their efficiency compares to others and act on the results.

Collaboration between public sector organisations. Different parts of the public sector need to be more willing to learn from the experience of others and to work jointly to achieve efficiencies.


Publication details:

ISBN: 0102937087 [Buy from TSO]

HC: 802-I and 802-II 2005-2006