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Focus On Series


Improving Public Sector Efficiency

Improving Public Sector EfficiencyAudit Summary

Publication Date:
February 2010

Audit Office:
Audit Scotland

Link to full report:
http://www.audit-scotland.gov.uk/docs/central/2010/nr_100225_improving_efficiency.pdf

Audited Entities

  • The Scottish Government
  • Fieldwork was conducted at a sample of 15 public bodies: five National Health Service bodies, five councils and five central government bodies.

Audit Objective(s)

  • To assess whether public bodies have the building blocks in place to identify, measure, manage and report efficiency savings under the Efficient Government Programme.
  • To assess the progress made against the recommendations of Audit Scotland’s 2006 report on the Efficient Government Initiative.
  • The study also looked at the savings reported in the first year of the Efficient Government Programme (2008/09).

Audit Scope

  • The Efficient Government Programme
  • Fieldwork was conducted at a sample of 15 public bodies: five National Health Service bodies, five councils and five central government bodies.

Audit Criteria

  • Not available.

Main Audit Findings

  • The public sector has reported £839 million of efficiency savings in the first year of the Efficient Government Programme. This is 57 per cent higher than the £534 million target. Of the reported savings, £254 million (30 per cent) have been delivered through better purchasing, better asset management and shared services, but there is still scope to increase savings from these areas.
  • Planning for two per cent efficiency savings each year will not be sufficient to bridge the gap between projected future spending and future funding.
  • The scale of the financial challenges facing the Scottish public sector means that a new approach is needed that fundamentally reviews priorities and the delivery of services.
  • Although public bodies have overall cost information, they still do not have sufficient information on unit costs and costs related to activity and quality of services. This information is needed to demonstrate improvements in efficiency and productivity and to provide assurance that the savings reported through the Programme are being delivered.
  • In seeking efficiencies, some public bodies – around a fifth of councils and a third of NHS bodies – have relied on non-recurring savings such as asset sales. It is reasonable to take advantage of opportunities like this as part of longer-term service planning and restructuring, but relying on one-off savings in the short term is not a sustainable option for the future.

Audit Recommendations

The Scottish Government and public bodies should:

  • ensure they have a priority-based approach to budgeting and spending;
  • consider using alternative providers of services, if these providers can improve the efficiency, productivity or quality of services;
  • improve information on costs, activity, productivity and outcomes, including setting baselines to measure performance against;
  • give greater urgency to developing benchmarking programmes;
  • maintain the momentum of activities and initiatives to improve purchasing and asset management and extend shared services;
  • ensure that plans are in place to deliver savings, clearly setting out what action will be taken, the level of savings to be delivered and how these will be measured; and
  • reduce reliance on non-recurring savings to meet financial targets and generally use these as part of a wider and longer-term strategy.

The Scottish Government should:

  • challenge the use of non-recurring savings reported by public bodies and develop clear guidance on how to measure and report savings from the three priority areas of better purchasing, better asset management and shared services to ensure there is no double counting.