National Audit Office warns more savings can be made through use of shared services

Government departments have been slow to adopt shared services and it is unlikely whether they will save the predicted £1.4bn a year, the public spending watchdog has warned.

A report by the National Audit Office (NAO) found pockets of good practice across Whitehall and the public sector, but said it was not clear that the shared services drive was yet on a scale sufficient to deliver big savings.

The Cabinet Office has estimated that departments could save £1.4bn a year on finance and human resource functions by implementing shared services. However, the report found that, although programmes were progressing across government, savings reported so far were relatively small.

At March 2007, departments had reported annual savings across all corporate service functions of £1bn, £315m of which related to finance and HR.

It is not possible to determine how much of this is related to shared services, but it is clear that there is substantial opportunity for securing further savings through shared services and other means.

Sir John Bourn, head of the National Audit Office, said: “Central government needs to get much better at managing its corporate services. Shared services have the potential to deliver significant efficiency savings but it is not yet clear that the £1.4bn of savings estimated by the Cabinet Office will be achieved.”

The report also said the Cabinet Office lacked a “clear overview” of the benefits and had not prescribed any particular models to help departments implement shared services successfully.

The NAO recommended that the Cabinet Office should work with newly formed departments to adopt shared services and every small department should carry out an evaluation for buying corporate services from one of the two designated sellers.

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