New framework for measuring the cost of services will include a minimum data set for technology. Ministries will also need to appoint an SSO for all digital services by 2027.
HM Treasury plans to introduce better guidance to help departments record their technology costs, after watchdog MPs complained that most government organisations “lack a sufficient understanding” of their service costs.
Members of parliament’s Public Accounts Committee said in a recent report that departments needed help from the Treasury and the Government Finance Function on the practical steps they can take to improve and upskill.
The recommendation came against the backdrop of evidence that transformation efforts over the past decade have found government departments prioritising “simpler” services for change, rather than “more complex and costly” ones.
Among their recommendations, PAC members said HM Treasury should set out “concrete ways” in which departments must start to identify and record service costs, including what needs to be improved and practical guidance on how to make improvements.
MPs made their recommendations to the Department for Science, Innovation and Technology, which has oversight of IT within government.
In its response, DSIT has said that the Treasury and the Government Finance Function are co-ordinating practical costing guidance that is being produced in conjunction with departments and being informed by National Audit Office advice.
Related content
- MPs seek reassurance on DWP’s ‘highly challenging’ legacy IT plans
- Defra legacy mitigation framework aims to ‘prioritise the highest-impact activities’
- Legacy IT warning as UK hit with twice as many ‘nationally significant’ cyberattacks in past year
“The guidance will sit alongside Managing Public Money and Value for Money and provide a common, proportionate approach to service costing, including activity‑based techniques, overhead apportionment, staff‑time capture options, and linking costs to outcomes,” it said.
DSIT said the Treasury will set a “consistent standard for service costing”, driven by departments and coordinated by the Government Finance Function.
It said the standard will define: clear scope and boundaries for end‑to‑end services; a minimum data set for service costs (people, process, technology, estates); benchmarking and continuous improvement mechanisms; integration of risk, schedule and performance metrics; and governance and assurance requirements at key decision points.
The guidance has a “target implementation date” of July this year.
DSIT said consistency will be supported by the NOVA reference model, which is the government’s standardised digital reference model that sets out leading‑practice processes and data standards for finance, HR, commercial and grants functions to improve consistency, efficiency and interoperability across departments.
There will also be a rollout of common enterprise resource planning solutions under the Shared Services Strategy for government, and a common chart of accounts, enabling comparable capture and reporting of service costs.
SSO push to drive cost-reduction
Elsewhere in their December report, PAC members called on ministers to require departmental permanent secretaries to appoint senior single service owners for all remaining services identified by the Cabinet Office and the Government Digital Service as not yet having one in place.
MPs said the lack of SSOs with accountability for all aspects of an end-to-end service inhibited departments’ ability to identify the visibility of a service’s end-to-end cost and the incentive to reduce it.
In its Treasury Minutes response, DSIT said this recommendation is being progressed with a target implementation date of March next year.
“Assigning a senior service owner for all digital services is a valuable tool,” it said. “The Government Digital Service and the Cabinet Office will work together, issuing a letter encouraging permanent secretaries to complete an assessment of all SSO gaps within six months, maximum, and to appoint SSOs within 12 months, taking into account the technical feasibility of the data collection scale. The timescale will be accelerated if possible.”
DSIT rejected a recommendation from MPs calling for it to identify to the committee which legacy IT systems should be targeted as a priority for further investigation because of the potential to “significantly reduce” the costs of the services they support.
The department said it is “currently focussing on better understanding the wider landscape of legacy IT in the United Kingdom public sector alongside the costs associated with this”, in line with previous PAC reccomendations.
“Having a more accurate and data-driven cross-government baseline is a pre-requisite to sequencing the required steps to address legacy systems,” it said.
DSIT said its Legacy IT Action Plan, which is due to be published later this year, would set out “improvements to the visibility process” to baseline legacy across government.
“This improved baseline will inform the sequencing and prioritisation of scalable interventions to remediate legacy systems,” it said.
