Spending watchdog calls on Government to address “remaining barriers” in shared services strategy

The Government has made progress delivering its latest strategy to share back-office services across Whitehall departments in the past year, but “remaining barriers will need to be addressed” for it to deliver its plans by 2028 and achieve value for money, the National Audit Office (NAO) has said.

In 2018, the Cabinet Office published a new ten-year strategy for shared services which had three overarching objectives: delivering value and efficiency by moving to cloud-based technology by 2025 at the latest; standardisation of processes and data; and meeting end-user needs.

The strategy delegated responsibility to government departments to deliver these objectives, with each department establishing its own programme.

The report by the National Audit Office noted that after “slow progress” the Cabinet Office had to revise its approach in 2021, because it concluded that allowing departments to work independently would not deliver its objectives.

Instead, it grouped Government departments into five delivery "clusters" of varying size. This aims to “simplify the existing way departments operate”, ensure that all departments are on cloud-based technology by 2028 (three years later than originally planned), and deliver savings of 10% to 15% in operating costs by 2028.

The NAO recommends several measures to ensure the transition to a cluster shared service model is a success. These include:

• The Cabinet Office and clusters considering the feasibility of delivery
• Making contingency plans if expectations for funding levels are not met
• Streamlining governance arrangements to help embed the cluster model

It said: “Departments working together as clusters should also demonstrate how they have taken on board lessons from previous strategies and share this with the Cabinet Office.”

The NAO also recommended that the Cabinet Office should stagger the timing of clusters going out to market, so they do not all begin procurement for IT systems at the same time, saying: “this should help to ensure capacity and capability across the programme and address the risk of systems expiring before a new solution can be found.”

Most departments consider the cluster model to be a “sensible approach”, the report said. Shared services plans are progressing, but while some clusters have already begun implementing new systems, others have yet to go to market to start the procurement process. 

The report notes that the Cabinet Office is still unclear about the extent of the benefits this programme can be expected to bring and it does not know how much implementation has cost to date.

It described governance arrangements as “fragmented and cumbersome”, resulting in “duplicated effort and disjointed decision-making”, and noted that the Cabinet Office had yet to start monitoring progress.

The NAO said that several barriers to future delivery have “yet to be addressed”, which include:

• Delays to the funding of clusters' shared services plans after the Treasury last year rejected all three Spending Review bids by clusters, which could lead to key deadlines being missed.
• The Cabinet Office does not have a back-up plan for delivering its Shared Services Strategy if clusters do not secure the requisite level of funding for their preferred options. 

Clusters have forecast they need £382m to £403m to deliver their preferred options in the current Spending Review period up to 2024-25. However, the report notes the Treasury only approved a funding package of £300m.

Gareth Davies, the head of the NAO said: "Efficient back-office functions are key to delivering front-line services and reducing costs but, at present, the strategy is not on track to deliver value for money, and it remains unclear what level of financial benefits it will bring. Several fundamental elements of the Government's latest Shared Services Strategy need to be put in place to ensure its successful delivery."

Lottie Winson