The Cabinet Office has laid out plans for how it intends to deliver savings of up to £600 million a year across government through shared corporate services – providing departments reach high performance levels.

Earlier this year the National Audit Office said that the government had failed in its attempts to make departments share back office functions and had in fact created ‘complex services tailored to individual departments’, which had ‘increased costs and reduced flexibility’.

The Cabinet Office’s latest plan will reduce the number of planned service centres from eight to five, where two will be independent (one run by a private sector partner, the other by the divestment of the Department of Transport function).

Standalone service centres will be operated by the Ministry of Defence, HM Revenue and Customs and the Ministry of Justice.
It expects that the majority of migrations and transformational activity will be complete by the end of 2014.

“Sharing services simply makes sense. There is absolutely no need for departments and arms–length bodies to have their own back-office functions, and duplicate efforts, when they can be delivered more efficiently by sharing services and expertise,” said Minister for the Cabinet Office, Francis Maude.

“Plus it will save the taxpayer half a billion pounds a year. That’s why we have taken action and fundamentally changed the way central government departments share their services.”

He added: “We want sharing services to become the norm, so every department has high quality, flexible and resilient services available. This means they can focus on their priority of implementing policy and delivering key public services.”

However, despite the unwavering optimism in the Cabinet Office’s press release, the strategic plan itself recognises that the £600 million figure is very much at the upper end of what savings can be expected. It says: “Key to the success of the programme is the positive involvement of the departments which will benefit from the strategy.”

Depending on this engagement from departments, the lower end of the savings spectrum could be just £128 million – not the £400 million to £600 million quoted frequently elsewhere. In fact, to reach £300 million to £400 million of savings per year the Cabinet Office “assumes that all ISSCs (independent shared service centres) and departments using them reach upper quartile performance across transactional and retained functions”. 

To then reach the highest possible savings of £400 million to £600 million, the Cabinet Office “assumes that all ISSCs and departments, including the standalone SSCs (shared service centres), reach upper quartile performance across transactional and retained function”.

Achieving optimum success within shared services projects is notoriously difficult, not only from a technical consolidation point of view, but from a political and collaborative stand point. This is likely to be a barrier for central government, which has a history of not being able to engage siloed departments that are used to working independently from the rest of Whitehall.

Nonetheless, Stephen Kelly, chief operating officer for government, who has been put in charge of overseeing the programme, has said he will be working with departments to enable this transition.

“Next Generation Shared Services is an exciting and innovative programme which will gain real momentum in 2013,” said Kelly.

“This strategic plan is the roadmap for a robust, measurable and successful programme for shared services which is fundamental to Civil Service Reform. The outcomes of better service quality, value for money and price certainty are keenly anticipated by departments, and I look forward to its full implementation.”

The government has undertaken a number of initiatives in recent months to drive down the cost of IT spend in the public sector, some of which include the launch of the single government domain, GOV.UK, mandating all departments to adopt open standards, the launch of the second iteration of the Cloudstore, and the release of the government’s Digital Strategy, which looks to digitise hundreds of thousands of transactions across government.