Government shared services fail to deliver

Latest PAC report criticises shared services schemes for failing to deliver savings targets, and being over budget

The Public Account Committee's (PAC) latest report has criticised the government's delivery of its shared services scheme, stating that the programme has simultaneously failed to deliver what it promised, and gone over budget.

The report, entitled "Efficiency and reform in government corporate functions through shared service centres", published today, follows another report from government spending watchdog the National Audit Office, which in March this year found that the five shared services projects it had been tracking were £500m over budget.

Today's announcement revealed similar figures.

"[The five shared services projects] cost £1.4bn to build and operate compared to an expected cost at the start of the project in 2004 of £0.9bn."

It also found that the expected savings had not been achieved, where such figures had been tracked at all by government.

"These five centres were also expected to have saved £159m by the end of 2010-11. In the event, the Ministry of Justice centre broke even, the Department of Work and Pensions and the Department for Environment, Food and Rural Affairs centres did not track their total savings, and the two centres that are tracking savings, the Department for Transport and Research Councils UK, have reported a net cost to date of £255m."

The report adds that the government has failed to implement the PAC's recommendations from four years ago.

"The Cabinet Office has failed to implement fully the recommendations from our 2008 report on improving corporate functions using shared services, which are still relevant today. In this inquiry, the centres we considered have cost more to set up and operate than initially planned, and not delivered the expected savings, so the government has failed to meet its stated objective.

"It is frustrating that government has not learnt lessons from the past and there is a risk that the Cabinet Office's new strategy will repeat similar mistakes with, for instance, over-optimistic timescales and a lack of performance data."

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Government shared services fail to deliver

Latest PAC report criticises shared services schemes for failing to deliver savings targets, and being over budget

Commenting on the report, Rama Saleh, senior consultant at IT consultancy Hudson & Yorke, said that stronger leadership is needed within government IT.

"One recommendation from the report urges the government to secure buy-in from more departments by showing stronger leadership and encouraging more departments to take part. The report notes that departments which have started using shared service centres have 'retained their own processes rather than adopt those of the centre', which has also prevented efficiency savings being met," said Saleh.

"Forcing departments to take part is unlikely to work, and the current situation whereby departments have transferred to the shared service centres while keeping their old processes seems to demonstrate a lack of engagement," she added.

"Clearly a half-hearted approach is not going to deliver the required savings. The government must convince key stakeholders that this approach will provide real benefits for them to secure their buy-in. Mistrust is another potential challenge the government will face, a risk with any major changes to the status quo. Clear communication is key, particularly with departments that have handled a number of functions for many years without any changes," concluded Saleh.