Shared service centres have failed to deliver expected savings for Whitehall and, in some instances, have cost taxpayers more than they saved, a report has revealed.
A study published by the Public Accounts Committee found that, of the five central government departments which signed up to the programme in a bid to cut costs by sharing back office functions such as HR, finance and procurement, only one – the Ministry of Justice – has broken even.
Although the shared service centres were supposed to have saved £159 million by the end of the 2010/11 financial year, the Department for Transport and Research Councils UK generated net costs of £255 million instead.
But the Department of Work and Pensions and Department for the Environment, Food and Rural Affairs failed to even track their total savings at all.
PAC’s chair, Margaret Hodge, said: “Shared service centres have failed to deliver the savings they should have. They cost £1.4 billion to set up, £500 million more than expected and, in some cases, have actually cost the taxpayer more than they have saved.”
As a result, the Committee made a number of recommendations:
- The Cabinet Office should appoint a “suitably empowered senior responsible owner” who has the authority to ensure that departments use shared services rather than simply leave it up to them, the aim being to generate necessary economies of scale
- A simple one-step implementation plan should be evaluated by the Cabinet Office to replace the currently “complex” two-step one, which involves joining and merging centres
- The Treasury and the Cabinet Office should review current funding arrangements in order to consider how they could be “conducive to effective long-term investment and long-term savings”.
“I welcome the Cabinet Office’s ambitious new strategy for improving shared services, but unless it learns from the past, it will end up making the same mistakes again,” Hodge said.
It was extremely frustrating that the Cabinet Office had ignored recommendations made by PAC in previous reports, but the expectation was that it would “engage constructively this time around”, she added.
