Conclusions and recommendations
Reviewing Gershon and Lyons
1. The NAO interim report about Gershon efficiency
savings highlighted serious problems in measuring efficiency.
We are concerned the NAO did not audit the final Gershon efficiency
savings. This has led to a lack of confidence on the part of some
organisations in the reported savings. We heard from the Treasury
Minister that using resources to check Gershon savings would not
be efficient, but we believe it is important to check that efficiencies
have actually been achieved. At a time when the public sector
will be pressed to make further efficiencies, it is vital that
any savings made are properly recognised and quantified. We want
the Government to continue to work with the NAO to ensure that
future efficiencies are accurately measured. (Paragraph 18)
2. We welcome the NAO's role in auditing the
work on the Value for Money Programme. The Government has increased
the Value for Money target three times in the last two years,
perhaps suggesting the calculation of the target was insufficiently
robust in the first instance. In our future monitoring of the
performance of the Chancellor's Departments we will assess the
extent to which these efficiencies have been achieved. (Paragraph
23)
3. Low staff morale at HMRC has been caused,
in part, by uncertainty about the future, a lack of understanding
about the chosen efficiency targets, especially when service quality
is perceived to have fallen, and increased pressure—having
to do the same job with less resources. (Paragraph 32)
4. We were assured that HMRC senior management
take the issue of morale seriously but we would like to see more
evidence of action taken to back these words. Communication is
key: staff should hear about office closures and headcount reductions
from their managers, not the media. We welcome the Government's
reassurance that training will not suffer as a result of the efficiency
programmes. (Paragraph 33)
Finding further savings
5. Now, more than ever, efficiency savings that
can be made in the public sector should be welcomed. The Operational
Efficiency Programme Final Report presents significant scope for
long term savings. However, we are concerned that these efficiencies
will require considerable co-operation between departments to
yield the full savings identified in the review. We have yet to
see evidence that the necessary structures are in place to facilitate
such co-operation and ask the Government in its response to this
Report to outline the practical steps taken to date. (Paragraph
43)
Generating efficiency in a recession
6. We note that additional £5 billion added
to the Value for Money target in the 2008 Pre-Budget report was
a figure chosen by Ministers without prior consultation with the
relevant Departments. As such, it does not inspire confidence.
We recommend that the Government, in planning to put the public
finances back on a sustainable basis in the medium term, considers
a more business-led approach to cost cutting in the public sector
than setting an arbitrary target and requiring the civil service
to meet it. (Paragraph 49)
7. While the private sector has much to offer
in exercises of this kind its assistance is often poorly specified
and procured. We note the claims that skills are developing among
public sector professionals in leading initiatives of this kind.
The evidence of previous programmes suggests an uneven picture
at best. The Government should set out where capabilities have
been developed, where there are shortages and how capacity may
be increased so that private sector support is procured in a strategic
context. (Paragraph 61)
8. It is vital that all opportunities to deliver
greater value for money within the public sector are explored.
We welcome the appointment of Ministerial Champions of value for
money within each department. Bearing in mind the limited experience
of most politicians of programmes of this kind, training is essential.
We also recommend that the Government provides guidance to each
Minister to encourage a culture of efficiency within their departments
and place a greater emphasis on empowering staff throughout the
organisation to identify where savings could be made and working
practises modernised. (Paragraph 62)
Measuring and reporting efficiencies
9. It appears that, time and time again, the
establishment of data collection systems needed to validate savings
is being initiated after efficiency programmes are launched. This
order is illogical. For example, Mr Bowles, Chief Finance Director
at HMRC did not know how much the merger between the Inland Revenue
and HM Customs and Excise had saved Government. (Paragraph 68)
10. If Government does not evaluate the costs
and savings of major efficiency programmes, then it is unclear
whether such programmes represent real value for money. We want
the Government to establish robust data collection processes at
the start of future efficiency programmes. (Paragraph 69)
11. To ensure that only true efficiencies are
captured and reported, it is important that they are measured
appropriately and accurately. We expect Government departments
to have implemented the NAO's recommendations concerning measurement.
We expect the Treasury to monitor the progress of departments'
improvement in measuring efficiency. We will return to this issue
after we have reviewed the Chancellor's departments' annual reports.
(Paragraph 70)
12. We welcome the Government's assurances about
maintaining service quality in light of the drive for efficiency
savings. However we are concerned that reported measures of service
quality are inconsistent with some of the evidence we have received.
We acknowledge that creating new measures may incur costs, but
ensuring that service quality is not adversely affected by efficiency
savings should be a priority. The fact that departments can select
their own measures of service quality may lead to a biased selection
of measures that do not give a representative picture of service
quality. Departments should work with the NAO to define adequate
service quality measures preferably using data drawn from users.
(Paragraph 75)
13. Each department will publish its own figures
for the costs of efficiency programmes and the savings they produce.
It would be more useful if all information relating to efficiency,
including total staff numbers in the civil service, was published
in one document. We understand that Government departments are
different but it would be useful to compare efficiency measures
where possible. Publishing total numbers of civil service staff
would put the efficiency savings through headcount reductions
in context. Having one annual efficiency progress document compiled
on methodologies applied consistently across departments would
enable best practice to be identified and comparisons made between
different programmes. (Paragraph 79)
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