Sharing corporate services could save '£1.4bn'

A new report published today has claimed government organisations sharing corporate services, such as finance and human resource services, could save some £1.4 billion a year.

The report by the committee of public accounts, into the Cabinet Office's effort to improve shared services, claimed the government "lacks accurate information of what corporate services cost and how they perform".

"Whether or not public bodies move to shared services, they must know whether they are receiving value for money from their corporate functions. Without that knowledge, there can be no driving out waste and freeing up money to improve services to citizens," committee chairman Edward Leigh said.

The Cabinet Office has estimated the cost of finance and human resources functions across the government as £7 billion per annum and claims there is potential to save up to £1.4 billion through the sharing of services.

The report highlighted two established public shared services in the NHS and Prison Service.

The NHS Shared Business Services, a joint venture between the Department of Health and Xansa PLC, sells procurement, finance services to 89 NHS organisations out of a total 416.

The committee today claimed that the scheme was not making a profit and had paid no dividend to the Department of Health or Xansa.

It will also have to attract an extra 22 customer just to break even and around 180 more customers if it is to deliver its forecast saving to the taxpayer of £250 million by 2014-15.

The Prison Service's Shared Services Centre, which provides finance, procurement and human resources to all of the 128 HM Prison establishment, suffered a major technical failure in late 2006 and had to return to manual processing, the report declared.

Mr Leigh added there were clear problems with the current system, stating: "There are no centrally agreed benchmarks against which to measure performance. The Cabinet Office doesn't even have a timetable for achieving this level of saving."