Realising best value for money
How can Public Accounts Committees draw attention to
government waste and ensure that cost reduction programmes
are managed well?
Keith Davis, Director of Cross Government Studies
Public Accounts Committees can improve
value for money in different ways
• Sector reports can
• give evidence on specific cases
• identify general issues
• Overall (cross-cutting) reports can
•
•
•
•
•
set expectations
bring out common problems
follow up on action taken
make a difference across government
challenge what has been delivered
• A series of reports can
• track progress
• Apply a consistent framework
Sector reports give evidence on specific
cases
2011 report on DWP
cost reduction
- DWP lacks clear strategy
2011 report on DfID
financial management
– DfID lacks data
to measure value for
money
Sector reports allow the Committee to
identify issues across departments
2011 report on NHS procurement indicates a wider issue
Overall PAC report can set expectations
Key current expectations for Westminster PAC:
• Departments should think about value for money in the
round
• Officials should be personally accountable for delivering
planned improvements
• Concerns about impact on front-line services
Overall PAC report can set expectations
From 2007 efficiency
progress report
From 2010 VFM
savings report
Overall report can bring out common
problems
Common problems identified by Westminster PAC:
• Data quality
• Sustainability of savings
• Centre not in control
• Risk of costs being reallocated not saved
Overall report can bring out common
problems
2007 report –
data accuracy issue
2010 Report: centre
needs to get a grip
Overall reports can follow up on action
taken
Action on our recommendations on the
Efficiency Programme
1
The Report by the Comptroller and Auditor General, The Efficiency programme:
a second review of progress, (HC 156/2006-07) made the following recommendations.
National Audit Office
Efficiency Programme
1 Make progress
transparent.
recommendation
across
the
about
programme
the
more
2 Enable stronger challenge to departments
whether their efficiency gains meet good practice.
on
3 Improve measurement of efficiency gains.
4
Report
headcount
transparency.
reductions
with
How addressed by the VFM Programme
Departments are responsible for reporting savings twice
annually, in their annual and autumn performance reports.
The Treasury has provided guidance on the content of
these reports.
The central challenge function within the Treasury has
been reduced. Savings continue to be insufficiently
challenged before they are reported by departments.
There continue to be issues with reliability of data, reliance
on estimates, inconsistency in the treatment of costs and
supporting evidence but the proportion of robust savings
has increased.
greater
Departments continue to seek savings through staff
reductions but there is no separate headcount reduction
target. Defining and evidencing staff savings continues to
be problematic where they are recycled into higher priority
activities.
5 Focus on the efficiency of all aspects of
departments’ business, not just those covered by
efficiency projects.
Department-wide savings targets have been set which
cover all of departments’ spending. A wider range of
savings has been reported but there is limited evidence of
departments conducting fundamental reviews of the value
for money of their business.
6 Do more to encourage staff to put forward ideas for
improving efficiency.
There is little evidence of savings
influenced by the ideas of front-line staff.
reported
being
Reports can make a difference across
government
2010 Report on consultancy - government
response
Reports can challenge what has been
delivered
A series of reports can track progress on
subjects of perennial concern
• Consultancy (reports in 2002, 2007, 2010)
• Property (report in 2008, following up in 2012)
• Reorganisations (report in 2012 follwing up NAO report
in 2010)
• Procurement (reports in 2004 and 2007, NAO follow-up
in 2006, 2010, 2012)
A series of reports can track progress
2007 Report: Progress towards
2008 target
2012 Report: Change in overall
spending in 2010-11
2010 Report: Progress towards 2011 savings targets
A series of reports can apply a
consistent framework
Stages of cost reduction
Sustainability
Sustainable cost
reduction
Strategic operational
realignment
Tactical efficiency
savings
Quick wins
Prioritisation,
localised cost
savings/process
improvement/
performance
improvement
Cost:value
ratio – better
utilisation/
optimisation
of people,
processes,
technology,
procurement,
capital assets
Change
customer
expectations/
consider
alternative
delivery
models/shift
customer
channels
Implementation time/cost
Structured
cost reduction
programme/
transformational
change
programme
Ongoing
embedded
cost
management
and
continuous
improvement