The Government has made progress delivering its latest strategy to share back-office services1 across Whitehall departments in the past year, but remaining barriers will need to be addressed for it to deliver its plans by 2028 and achieve value for money, according to the National Audit Office.2
The Government has failed to deliver on successive shared services strategies, and it launched a new strategy in 2018 that aimed to ensure value and efficiency by: moving to cloud-based technology by 2025; standardising processes and data across government; and better meeting end-user needs.
After slow progress the Cabinet Office had to revise its approach in 2021, because it concluded that allowing departments to work independently would not deliver its objectives. Instead, it grouped Government departments into five delivery “clusters” of varying size. It aims to simplify the existing way departments operate, ensure that all departments are on cloud-based technology by 2028 at the latest (three years later than originally planned), and deliver savings of 10% to 15% in operating costs by 2028. Most departments consider the cluster model to be a sensible approach. Shared services plans are progressing, but while some clusters have already begun implementing new systems, others have yet to go to market to start the procurement process.
The Cabinet Office is still unclear about the extent of the benefits this programme can be expected to bring and it does not know how much implementation has cost to date. Governance arrangements are fragmented and cumbersome, resulting in duplicated effort and disjointed decision-making, and the Cabinet Office has yet to start monitoring progress.
The Cabinet Office has taken steps to learn from past failings, such as implementing an end-to-end risk management framework that will help it to deliver its ambition as planned. However, there is more to do to avoid repeating past mistakes. For example, current performance indicators do not allow the Cabinet Office to understand how its Shared Services strategy is progressing overall, including how well departments are doing with data and process convergence.
Several barriers to future delivery have yet to be addressed. These include delays to the funding of clusters’ shared services plans after the Treasury last year rejected all three Spending Review bids by clusters, which could lead to key deadlines being missed. The Cabinet Office also does not have a back-up plan for delivering its Shared Services Strategy if clusters do not secure the requisite level of funding for their preferred options.
Clusters have forecast they need £382 million to £403 million to deliver their preferred options in the current Spending Review period up to 2024-25. However, the Treasury only approved a funding package of £300 million.3 There is also uncertainty over future funding. With deadlines for replacing some systems expiring as soon as 2023 the concern is that some infrastructure will soon be unsupported, increasing the risk of both system failure and additional maintenance costs.
The NAO recommends several measures to ensure the transition to a cluster shared service model is a success. These include the Cabinet Office and clusters considering the feasibility of delivery, as well as making contingency plans if expectations for funding levels are not met and streamlining governance arrangements to help embed the cluster model.
Departments working together as clusters should also demonstrate how they have taken on board lessons from previous strategies and share this with the Cabinet Office. The NAO also recommend that the Cabinet Office should stagger the timing of clusters going out to market, so they do not all begin procurement for IT systems at the same time. This should help to ensure capacity and capability across the programme and address the risk of systems expiring before a new solution can be found.
“Efficient back-office functions are key to delivering front-line services and reducing costs but, at present, the strategy is not on track to deliver value for money, and it remains unclear what level of financial benefits it will bring. Several fundamental elements of the Government’s latest Shared Services Strategy need to be put in place to ensure its successful delivery.”
Gareth Davies, the head of the NAO
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Notes for editors
- All government departments need a range of corporate functions including human resources, finance, procurement, and payroll to manage their operations effectively. Collectively known as the ‘back-office’, these functions deliver the core business processes needed to support front-line services.
- In 2018, the Cabinet Office published a new ten-year strategy for shared services which had three overarching objectives: delivering value and efficiency by moving to cloud-based technology by 2025 at the latest; standardisation of processes and data; and meeting end-user needs. The strategy delegated responsibility to government departments to deliver these objectives, with each department establishing its own programme.
- In 2021, HM Treasury rejected all three Spending Review bids received from clusters, with a combined value of £759 million, due to concerns that the Cabinet Office had not done enough work to consider fundamental elements of the Shared Services strategy including governance arrangements and cluster design. Although the submitted bids were rejected, HM Treasury approved a funding envelope of £300 million for the period up to 2024-25 to support these three clusters to go out to market and address short-term risks resulting from ageing systems that have contracts due to expire shortly. It is not clear what clusters plan to do if they do not get the required level of funding in future Spending Review periods.
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