MPs say shared service sums 'don't add up'
Cabinet Office's claim 'flimsy'
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MPs say that the Cabinet Office's claim that government could save £1.4bn a year through sharing corporate services is a "flimsy estimate at best".
A key problem is the lack of centrally agreed benchmarks against which to measure the performance of shared functions, including the impact of two of the established shared service centres in the NHS and the Prison Service, according to members of the Commons Public Accounts Committee.
Furthermore, the Cabinet Office does not have a timetable for achieving this level of saving on the £7bn government spends annually on finance and human resources, according to a report issued on 8 May 2008.
"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," said Edward Leigh MP, chair of the committee.
The report reveals that NHS Shared Services, a joint venture between the Department of Health and Xansa to sell procurement, finance and accounting services to 89 NHS organisations, is not yet making a profit and has paid no dividend to either the department or Xansa.
It needs to attract a further 22 customers to break even, and approximately 180 more customers to deliver its forecast savings to the taxpayer of £250m by 2014-15, according to the MPs.
The report says that when HM Prison Service implemented a shared services centre to provide finance, procurement and human resources services to all 128 prison establishments, plus a single site in Newport, it expected this to be challenging.
A major technology failure in the last quarter of 2006 led to a return to manual invoice processing, but the Prison Service told the committee that the system is now working well and it is in the process of agreeing a Memorandum of Understanding to provide corporate services to the Home Office.
However, the Prison Service is unable to prove that introducing shared services has allowed it to cut staff numbers. Although it has seen a reduction in prison operating budgets and has taken these as evidence of savings, the MPs say this is not proof that savings have come as a result of shared services, rather than through other changes.
The report calls on departments to publish an overview of their corporate services performance in their annual reports, including an analysis of how shared services are being used to improve value for money.
In their conclusions, the MPs say that the Cabinet Office does not have sufficient grip on the cost of promoting shared services. The team set up to promote shared services did not know how much money it had spent or how it was allocated.
"To improve performance and operational efficiency, the team should routinely record and analyse all its expenditure and assess the cost effectiveness of different interventions," they say.
This article was originally published at Kablenet.
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COMMENTS
A system devised to prevent corruption, which actively encourages it.
Shared services means for our local NHS operations, that they no longer have the ability to choose the best and most cost effective solution, they have to use an "approved supplier".
We quoted for a replacement to equipment which we had supplied 4 years earlier.
The local management was told that because we were not an approved supplier, we were not able to tender.
The person who makes decisions on office equipment for their area was a logistics manager.
They duly received 2 pieces of equipment, both made by the OEM we represent.
one was obviously reconditioned, and far too large for their office. The other was the same model we had quoted for.
Our Quote was £200 per month lower than the incoming equipment, and was for new machines.
3 months later the printing operation was closed as "not cost effective"
The "approved supplier" was a large Office equipment company with a long history of sharp practice ( presently being sued by 2 local authorities).
The shared resource initiative locks out local suppliers, disenfranchises local management, and encourages corruption.
So your grandma never did a days work
So, I suppose that raising your mother or father, cleaning house and cooking for your grandfather and his children, having sex with him and probably looking after you when your parents couldn't cope with you anymore (as you are obviously a real PITA). don't count as "work".
My grandmother raised 3 children after her husband died when the youngest was 2.
She made it to 89.
Paris because this is possibly the most totally puerile, sexist rubbish I have ever read.
P.S. I am not female.
Shared services does work. Just not for the NHS.
There's nothing wrong with shared services. Economies of scale works.
The problem with the NHS though is that the NHS doesn't exist to make profit, it exists to provide for two groups of people.
Group A think their health is a voting issue (women.) The NHS exists to make them think the government cares about Group A's health.
Group B vote the government out if they're unemployed, despite being not very good at everything. The NHS exists here to employ them, without the people in Group A realising the government's wasting their money. (Not that it usually is Group A's whose money is being wasted, as the section of society that use the NHS the most, are the people who pay the least for it. i.e. women, old women and very old women - whose health costs account for perhaps 70% of NHS expenditure, and 90% of their research budget - viz said it best - my grandma lived to 90 year never did a day's work in her life, yet my grandad worked every day, and died the day before he retired. I wouldn't be in the least bit surprised if Merck's "manufacturing problems" with 10mg Simvastatin has occured because government's realised twenty years hence, we'll have a million men actually wanting some of the pension they've paid into.)
Anyway, back to the topic, since shared services means saving money by reducing duplication and sacking the least good, but the NHS exists to employ them by causing duplication, it follows that for the NHS shared services must be defined to never work.
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