Poor leadership caused £500m shared services overrun

MPs have blamed budget overruns at shared government services centres on a "complete lack of leadership" from the Cabinet Office.

A report by the National Audit Office earlier this year found that five shared services centres, serving the Ministry of Justice, DWP, Defra, DFT and Research Councils UK, had overrun their costs by a combined £500 million. The plan had been to cut costs by 20%.

A Public Affairs Committee investigation into the NAO’s findings attributed the overruns to the absence of overriding leadership. "The thing that is really hitting me in the face about all this is the complete lack of leadership, to be honest," Conservative MP Jackie Doyle-Price said in the Public Accounts Committee meeting, the minutes of which were published as part of the committee’s report.

The report reveals an interview between the committee and Ian Watmore, speaking before he stepped down as permanent secretary of the Cabinet Office. The committee asked Watmore why he believed the shared services projects would be able to succeed now when they had not in the past. He responded that the government now has greater choice in procuring IT systems to support its shared services intiatives.

"When the [shared services] plan was put together, the choice was broadly Oracle or SAP," Watmore said. "Today the choice is not that. [There are] many more products, such as cloud-based computing, smaller and medium-sized units. Part of our plan [is] to get more of those, so that the Departments have the choice between SAP and Oracle or one of these newer style ones."

Commenting on the report, committee chair Margaret Hodge said: "Government could save significant sums of money if it pooled back office functions such as finance, HR and procurement. Securing efficiency savings is essential to protect public services from further cuts that could otherwise have been avoided.

"However, shared service centres have failed to deliver the savings they should have. They cost £1.4 billion to set up, £500 million more than expected, and in some cases have actually cost the taxpayer more than they have saved.

"It is extremely frustrating that the Cabinet Office has ignored recommendations made by this Committee in our previous reports. We expect it to engage constructively this time around."

The PAC report recommended that Cabinet Officeappoint one person to ensure that apartments use shared services, and not their own back office functions, as some of the shared services centres are running at 50% capacity; measure the success of its shared services centres; and plan to extend shared service centres beyond back-office functions.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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