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Efficiency in action

Friday October 14th, 2011

By Morven MacNeil, GO Content Editor

The Public Accounts Committee has published a report on the Efficiency and Reform Group (ERG) which examines the Group’s progress during 2010-11 and its longer term plans to improve government efficiency.

The ERG was established within the Cabinet Office in May 2010 to lead efforts to cut government spending by £6 billion in 2010-11. Its long-term aim is to improve value for money across government by strengthening the central coordination of measures to improve efficiency.

The Group’s core objective is to improve value for money across government. The Committee believes it has made a good start in its first year towards ensuring central government better coordinates its activities.

The imperative to make savings in the short term has involved the Group imposing new controls on departments, such as moratoria on certain expenditure. This approach has depended on the support of ministers and informal relationships with the Treasury, but sustained efficiency improvements will need a much deeper change to both the culture and institutional structure of government. In the longer term, the committee expects to see a clear plan for what the Group intends to achieve and how it will get there.

The Group also needs to clear up confusion over who is accountable for what in terms of improving value for money, especially in defining its responsibilities and those of the Treasury and individual departments.

Since the committee’s hearing, the Group has reported efficiency savings of £3.75 billion across departments in 2010-11. The Committee stated that the Group’s clear reporting of these savings demonstrates a welcome improvement on previous efficiency initiatives, where the committee was dismayed by the poor quality of reporting by departments.

The scale of the challenge to deliver efficiencies is huge: the Government intends that half of the £81 billion reduction in spending planned over the next three years should come from efficiencies rather than through cuts to services or delays to important projects. Many of the efficiencies must be achieved in areas where the Group currently has a limited influence or by local bodies where it has none.

The Committee wants the Group to set out how it will operate to ensure that its approach can be replicated across the wider public sector, while respecting the objective of devolving decision making authority to local bodies.

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, said: “The Efficiency and Reform Group has made a good start, but a lot of that is down to key players in government pulling in the same direction with a high-profile target in mind. In the long term there will need to be a much deeper change in the cultural and institutional structure of government.

“We welcome the level of detail in the Group’s reported savings. This degree of transparency is a big improvement on the very poor standard of reporting by departments.

“Less clear are the respective responsibilities of the Group and individual departments for achieving value for money. The Group can now intervene in the management of major projects, but departments must remain accountable for their own projects and not duck responsibility.

“The Group has a huge task ahead in making an impact beyond Whitehall. About half of the £40 billion efficiency savings required over the next three years will have to be achieved by local public sector bodies over which the Group has no direct control.

“The Group has a short-term focus on cutting government spending but is less clear on what its aims are in the longer term. The Group needs to specify what constitutes success and how progress will be measured.”

To view the report, please click here

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