UK government’s shared services programme cost more than it saved, report warns

By on 20/05/2016
Sir Amyas Morse comptroller and auditor general of the UK's National Audit Office

The UK government’s shared services programme has cost more than it has saved the government so far and weaknesses in the initiative’s design have undermined its success, the public spending watchdog has said in a report published today.

The National Audit Office (NAO) said that the creation in 2013 of two shared service centres has required £94m of investment and saved departments just £90m in the first two-and-a-half years of operation – compared to the £128m of annual savings forecast by the government initially.

This, the report says, “it is because some departments have not outsourced and transformed their back office functions as planned.”

The government signed contracts with two private sector companies – Arvato UK Ltd and Steria Ltd – to operate the two independent shared service centres, which started providing outsourced services to participating departments and arm’s-length bodies in 2013.

The Cabinet Office currently estimates that the two contracts will generate savings of £484m in total by 2023-24 at a cost of £159m.

In order to achieve the planned savings, departments were required to transfer their existing back-office functions to one of the two centres, along with a migration of all customers to a single operating platform where systems and processes would be standardised.

But today’s NAO report found that due to delays in designing, building and testing the systems, only two of the 26 planned customer agencies have joined a single operating platform and at one of the centres, four customers have exited their contracts.

Costs have also increased significantly for both the customer departments and the suppliers of the shared service centres as a direct result of the delays, owing mainly to maintaining and extending the life of existing and ageing systems, the report says.

The NAO goes on to say that the Cabinet Office did not develop an integrated programme business case to include both independent shared service centres and the customer departments and that therefore showing customers how their decisions impact on the programme has been difficult.

It adds that the Cabinet Office did not secure sufficient buy-in from departments at an early stage of the programme and that departments varied in the extent to which they believed in the merits of the shared service centres and some said that they were pressured into joining the programme.

The Cabinet Office did not act in a timely and effective manner as problems emerged with the programme, in part because it did not have a clear mandate to act on behalf of customers, the report found, which calls on it to “take a more proactive role if such programmes are to be a success in the future.”

Amyas Morse, head of the NAO, said: “The Cabinet Office’s failure to manage the risks around the move to two independent shared service centres from the outset means that the programme has not achieved the significant anticipated savings and benefits to date.  

“The Cabinet Office has begun to find its role in leading the programme but the delays have meant that technology has moved on significantly.

“The programme will only achieve value for money in future if the Cabinet Office shows clear leadership, and government accepts the need for collaborative and flexible behaviours from all departments involved.”

A Cabinet Office spokesperson said: “We welcome the NAO’s report, and will carefully consider its recommendations for government.”

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See also:

Shared Services Canada heavily criticised in audit report

Singapore launches single platform for government e-services

Singapore launches single platform for government e-services

UK Treasury and Cabinet Office urged to help senior officials stand up to ministers

National Audit Office warns over UK civil service cuts

About Winnie Agbonlahor

Winnie is news editor of Global Government Forum. She previously reported for Civil Service World - the trade magazine for senior UK government officials. Originally from Germany, Winnie first came to the UK in 2006 to study a BA in Journalism & Russian at the University of Sheffield. She is bilingual in English and German, and, after spending an academic year abroad in Russia and reporting for the Moscow Times, Winnie also speaks Russian fluently.

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