Efficiency and Reform in Government Corporate Functions Through Shared Service Centres

Audited Entities

• Cabinet Office; Civil Service Steering Board; Department for Environment; Food and Rural Affairs; Department for Transport; Department for Work and Pensions; Ministry of Justice; Research Councils UK

Audit Objective(s)

• This report looks at whether shared services have delivered value for money for central government and highlights the challenges which departments and the Cabinet Office have faced.

Audit Scope

• The report analyses how Shared Services Centres have been commissioned, how well government has performed as a customer, and provide a detailed review of five of the eight shared service centres.

Audit Criteria

• An Analytical Framework to assess Centre performance is presented in Appendix 2 of the report.

Main Audit Findings

• Departments have invested significant cost and effort in implementing shared services, but have not realised the planned benefits.
• Most customers of shared service centres have not driven benefits.
• The services provided are overly customised.
• The software systems used in the Centres have added complexity and cost.
• The Cabinet Office and Civil Service Steering Board could have done more to ensure shared services were implemented appropriately.
• Departments have struggled to fully roll-out shared services across all their business units and arm’s-length bodies.

 Audit Recommendations

• The Cabinet Office should consider all of its options and assess whether a lower risk solution would provide better value for money, for example by extending the overall timescale of the project or by establishing additional procurement frameworks for back-office services. It should also ensure that its projections from the business analysis adequately reflect the identified risks of the project and have sufficient allowance for optimism bias.
• If there is an overall value-for-money case for the taxpayer, the Cabinet Office should seek appropriate authority to mandate the shared services strategy and its implementation. The Cabinet Office should also make sure that there is clear accountability for implementing its new shared services strategy. This should be managed as part of a wider change programme, ensuring sufficient capability exists in the shared service centre and customer.
• Costs and benefits will need to be measured in both shared service centres and customers and the Cabinet Office should use these to establish a clear baseline and incentivise continuous improvement. Performance information should be used to inform current and future strategy.
• The new strategy helpfully includes proposals to develop reliable cost and performance benchmarks. The Cabinet Office should publish its measurement system and establish at an early stage benchmarks that can be used to assess the success of its strategy. These benchmarks should cover the performance of both customers and providers.
• Customers, or those commissioning shared services, must set out clear accountability for managing all costs and benefits associated with shared services (not just those incurred in the shared service centre). They should make sure that these are recorded, independently scrutinised and then benchmarked with appropriate external comparators to assess performance.
• Customers should implement a professional management function to ensure shared services comply with service level agreements and reduce costs, by for example, standardising services, managing demand and improving service delivery.
• Centres need to investigate ways of becoming more efficient in delivering their service to customers. They should explore all opportunities to reduce costs including accommodation, staffing, process and technology.

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