The National Audit Office (NAO) has released a report scrutinising claims made by the government’s Efficiency and Reform Group (ERG) that it made some £10 billion savings between 2012 and 2013, which identifies that IT reform and digital services makes up just 3.6% of this final figure.
There are also concerns that the £365 million savings in this area is based on planned spend, rather than actual spend.
The ERG was set up by the coalition government to help departments reduce spending and drive cost savings.
Although the saving attributed to IT is small, IT plays a major role in other areas of focus for the ERG where savings are more significant, but aren’t included in the ‘IT reform’ savings. For example, the common infrastructure programme, managing commercial relationships with suppliers and centralising procurement.
The NAO gave the ERG an important endorsment when it found that in most areas of reform, the methodologies used to evalaute claimed savings were sound and that the claimed savings for the taxpayer were real.
However, when looking at IT reform and digital services specifically, the NAO raised some concerns.
The ERG has targeted savings in this area through tighter control of government digital services, which has been achieved through greater scrutiny, approval, or refusal, of departmental requests to spend over £5 million (£1 million for back office/administrative systems) on ICT projects, and by the Government Digital Service substantially amending or stopping digital projects.
Savings for the first of these is calculated based on recording the difference between a submitted and approved business case. However, the saving will not necessarily result in reduced spend unless overall budgets are being reduced.
The NAO report states: “Care needs to be taken when presenting these savings publicly as the basis of calculating them is different to other savings, making it potentially inappropriate to add them together.”
Also, when examining the savings the Internal Audit found a number of errors in the evidence base, which included insufficient evidence to justify the amount of savings reported and incorrect profiling of savings between different years. In light of this, the ERG reduced the overall savings claim by 25%.
As a result of these, the NAO has recommended that the ERG should take steps to identify whether savings are leading to real-terms reductions. It states that the ERG could draw on other evidence sources, such as accounts or the spending database maintained by the Government Procurement Service, to better demonstrate the impact of these measures on historic spend.
ERG should also work with Internal Audit to identify the underlying reasons for errors in 2012-2013 and make improvements to the control environment, which is likely to include more training for staff recording savings.
“The Efficiency and Reform Group has worked to improve the calculation and assurance of saving categories and its own approach is now much stronger,” said Amyas Morse, head of the National Audit Office.
“While ERG has undoubtedly achieved significant savings for the taxpayer, in future it could spell out more clearly the different types of savings that are included in its claims.”