A government shared services scheme that officials hoped would save £400 million (US$490 million) per year ended up costing taxpayers £4 million, a parliamentary spending watchdog has revealed.
The Commons Public Accounts Committee (PAC) urged ministers involved with the program to improve leadership and governance, arguing it was too easy for departments to opt-out of the scheme “to protect their own interests” and that the Cabinet Office had failed to persuade Whitehall agencies and departments to adopt the project.
“The Cabinet Office was ineffectual in managing this risk because of its inability to force departments to take crucial decisions and an unwillingness to hold the suppliers to account as delays arose,” the cross-party committee said.
The plan involved outsourcing a host of back office functions, including human resources, payroll and accounts services from 26 organizations to two shared service centers and introducing a single operating platform.
“The government set out to save money with this program but it launched with critical flaws Whitehall then failed to address,” said Meg Hillier, the Labour chairwoman of the PAC.
“Each department was able to request multiple changes which led to big cost increases.
“The result has been a net cost to taxpayers and a significant scaling back of ambition for the savings likely to be achieved in the years ahead.”
After two and a half years in operation the scheme had saved just £90 million, less than the £94 million estimated total investment costs of the program, the PAC found in its damning report.
By April 2016, just two of the 26 organizations had adopted the single operating platform.
A spokesperson for the Cabinet Office defended the program and claimed officials are working to address “the challenges involved in cross-government business transformation.”
The spokesperson added officials predict the scheme will save £500 million by 2023/24.