Realising best value for money How can Public Accounts Committees draw attention to government waste and ensure that cost reduction programmes are managed.

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 2010 VFM savings report

From 2007 efficiency progress 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

2010 Report: centre needs to get a grip

2007 report – data accuracy issue

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 recommendation about the Efficiency Programme

How addressed by the VFM Programme

1 Make progress across the programme more transparent.

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.

2 Enable stronger challenge to departments on whether their efficiency gains meet good practice.

The central challenge function within the Treasury has been reduced. Savings continue to be insufficiently challenged before they are reported by departments.

3 Improve measurement of efficiency gains. 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.

4 Report headcount reductions with greater transparency.

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 reported being influenced by the ideas of front-line staff.

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 progress2007 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 ofcostreductionSustainability

Implementation time/cost

Tactical efficiencysavings

Strategic operationalrealignment

Sustainablecostreduction

Quick wins

Prioritisation,localised costsavings/processimprovement/performanceimprovement

Cost:valueratio – betterutilisation/optimisationof people,processes,technology,procurement,capital assets

Changecustomerexpectations/consideralternativedeliverymodels/shiftcustomerchannels

Structuredcost reductionprogramme/transformationalchangeprogramme

Ongoingembeddedcostmanagementandcontinuousimprovement