Efficiency drive 'increased costs'

WhitehallA massive seven-year Government efficiency programme has backfired - by increasing the cost to the taxpayer by hundreds of millions of pounds, a public spending watchdog said.

Whitehall departments have spent £1.4 billion over the last seven years in a bid to save £159 million by sharing "back-office" functions such as personnel and procurement.
Private-sector firms typically slash a fifth off their annual spend within five years using similar methods, the National Audit Office (NAO) said in a damning report.

But a combination of poor co-ordination, over-expensive IT systems, weak or non-existent sanctions and an insistence on highly-tailored services saw public-sector costs rise instead.

Detailed investigations by the NAO discovered that the Department for Transport system had so far cost £129 million more to set up and run than it had saved.

With the net savings of joint working with related agencies totalling only £1.3 million last year, the watchdog said "at this rate it would seem difficult to break even".

One issue uncovered by the report was that the Maritime and Coastguard Agency was blocked from joining the DfT scheme because it did not have security clearance for Whitehall IT systems.

Another unit, set up by Research Councils UK, has recorded a net cost to the taxpayer so far of £126 million - though the NAO said a parallel scheme may help it break even by 2014.

Those sums could be just the start, however, as two of five schemes examined by the NAO - at the Department for Work and Pensions (DWP) and the Department for the Environment, Food and Rural Affairs (Defra) - have not kept track of whether or not the changes are saving money.

The other, run by the Ministry of Justice, was saving £33 million a year and broke even ahead of schedule - at which point officials there also stopped monitoring performance.

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