Report published by the National Audit Office claims that billions of pounds of savings reported to have generated by centralised functions based within the Cabinet Office may have been overstated
Efficiency savings of £7.8bn attributed to government functions based in the Cabinet Office may have been “overstated” because of differing calculation methods, the National Audit Office has said.
The public-spending watchdog said investigations had found “gaps” when looking for supporting evidence of efficiencies delivered by functions such as the Government Communication Service, the Government Counter Fraud Function and the Government Debt Management Function – which, earlier this year, was moved from the Cabinet Office to HM Treasury.
The NAO said issues included differing methodologies for calculating efficiency savings and the lack of a requirement to identify whether savings claimed by functions might involve costs to other parts of government. Reporting efficiency savings is a recent task for functions, recommended by former Cabinet Office minister Lord Francis Maude in a 2021 review .
Figures released by the Cabinet Office last year claimed the 10 functions it hosted had achieved £3.4bn in savings in 2020/21. In July this year, the department said the functions had saved £4.4bn in savings in 2021/22 – of which all but £1bn were “cash releasing”.
Four other functions were not included in the efficiencies roundup because they were not part of the Cabinet Office for that period. The NAO said the Government Internal Audit Agency had observed that the omission meant the picture of efficiencies related to functions was “incomplete”.
However, the NAO also said there were reasons to believe that the figures could also have been “overstated” because the GIAA’s recent work had “found some weaknesses in the functions’ approaches to assuring data”.
The watchdog said functions used different approaches for tracking and claiming savings from their work.
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It said the Government Communication Service compared the baseline forecast for each campaign to the final value approved through the advertising, marketing and communications spending control process to calculate its efficiencies; whereas the Government Debt Management Function monitored the additional yield it created over and above the day-to-day activities carried out.
The NAO also noted that a figure of £445m in benefits reported by the Debt Management Function had not factored in any fees paid to the contracted debt-collection company because the function said it was not possible to accurately separate out and apportion costs. The gross figure was used in the publication with a caveat stating that it included additional costs.
The NAO said the GIAA had given the Cabinet Office’s efforts to measure functional efficiencies a “moderate” assurance rating overall, but there were “gaps in the assurance it is able to provide” and “no external assurance of individual savings”.
NAO head Gareth Davies said the Cabinet Office needed to embed a more consistent approach to reporting functional savings so that it was able to provide clarity and transparency about the nature of the figures it publishes.
“Transparent and clear reporting of efficiencies allows government to demonstrate where and how savings are being made, and make good decisions about where to best invest limited resources in the future,” he said. “Cabinet Office is only two years into publishing efficiency savings and has learned some valuable lessons, but it has further to go to be able to robustly quantify savings delivered by the functions.”
In its recommendations, the NAO said the Cabinet Office needed to be clear about what savings it is reporting and the extent to which central functional teams contributed to the savings. The watchdog said future reports should outline the challenges and limitations of calculating and reporting efficiencies, and the extent of assurance provided by GIAA over the figures.
The NAO added that the Cabinet Office should work with the Treasury to make sure both departments’ approaches to reporting efficiencies align where possible.
It also suggested that the Cabinet Office should consider broadening the overview of its work in the area to include all 14 functions.
A government spokesperson thanked the NAO for its report and said the findings were being considered “carefully”.
“Ministers have announced an ambitious reform agenda to build on the progress already made to improve efficiency and productivity across the public sector, this approach is working, and in the last financial year alone, we saved over £4bn through efficiencies,” the spokesperson said. “The Government Efficiency Framework, published in July 2023, sets out a standard framework for the tracking, monitoring, and oversight of efficiency savings. This framework will ensure consistency of future reporting of functional savings.”