The needless duplication of administrative functions in the public sector is costing taxpayers millions of pounds a year and damaging the effectiveness of service delivery, according to a new report from the CBI.
The business lobby group says the government should match the savings achieved in the private sector by merging back-office functions such as HR and finance administration.
The report says central government departments alone could save as much as £560m over the next two years if they implemented ‘best in class’ HR and finance shared services.
The calculation, which excludes the Ministry of Defence and the devolved Welsh and Scottish administrations, is based on the government reducing the 2.5% of its budget that it spends on HR and finance to the 0.75% that ‘best-in-class’ organisations typically spend.
The CBI suggests that top civil servants should have tough targets set in their individual performance management objectives as an incentive to deliver shared-services savings more quickly.
The report, Transformation through shared services: improving quality, increasing efficiency, outlines the business case for shared services, including economies of scale, better information sharing, aggregation of buying power and greater opportunities for staff to develop specialist skills.
But it says the implementation of shared services by the government has, to date, been ad hoc and incremental, achieving few savings or improvements to public service delivery.
CBI director-general Sir Digby Jones said: “Sharing administrative functions can deliver massive savings, freeing up resources to improve the quality of the services people use.
“There has been a lot of talk about shared services, but not much action. Our research shows the savings can be made by bringing together similar back office functions of neighbouring government organisations.
“We need to see an end to some parts of the public sector operating with blind indifference to each other, wasting money undertaking functions separately that would work better delivered together.”
The report also raises issues of managerial capability within government, recommending that procurement and business planning skills be enhanced for the public sector to use new techniques and technologies to improve service delivery.