Wednesday, 13 July 2016

We input to the Public Account Committee Shared Service Centres Inquiry - If its not broken don't fix it

When questioned by the public accounts committee under the Shared Service Centres inquiry on the 27th June 2016 John Manzoni (Chief Executive of the Civil Service and Permanent Secretary Cabinet Office) responded, effectively agreeing with us - if it is not broken, don't fix it. 

Chair PAC: That is great, but the taxpayer has lost as well. Can I ask briefly about the MOD shared services approach, which I am sure we will look at at some point? I had not realised until we had a submission on this how massively complicated it is. It includes much more than what we are talking about today. What are you doing as a result of what has happened from this experience to learn about that? Have you done a detailed analysis of the sort I have just described of whether it is actually the best approach to outsource shared services?
John Manzoni: We haven’t done a detailed analysis of the MOD process. As you say, it is quite big and complex, and it is actually quite efficient. When you look at the benchmarks, the cost per user and so on say that it is a very efficient service, so there is no burning platform there.
The motivation of MoD looking to take DBS to the market needs to be seriously questioned.

Scope of the inquiry

Government’s programme to transfer back-office functions to two shared service centres has made savings but has not achieved value for money to date, according to the National Audit Office (NAO). The NAO reported on the Cabinet Office's Next Generation Shared Services strategy in 2014, which included the creation of two independent shared service centres to provide back-office functions for up to 14 departments and their arm's-length bodies. The NAO have found, found that while the two centres have led to some cost savings, the programme is not progressing as planned.
Most departments which planned to outsource functions to one of the two centres have successfully done so. The centres have delivered overall savings of £90 million to customers in the first two and a half years of operation with costs of £94 million. These savings are less than the £128 million a year originally forecast because some departments have not outsourced and transformed their back-office functions as planned. The Cabinet Office currently estimates that the two contracts will generate savings of £484 million in total by 2023–24 at a cost of £159 million.

Costs increased "as a direct result of delays"

Costs have also increased significantly for both the customer departments and the suppliers of the shared service centres as a direct result of the delays. The increased cost to customers owes mainly to maintaining and extending the life of existing and ageing systems. 
Our Submission
Record of Oral Evidence

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