Watchdog MPs say departments should be making better use of technology that allows staff time to be tracked as part of a drive to improve efficiency and reduce costs.
A report from members of parliament’s Public Accounts Committee has said that a “significant cultural shift across the civil service” is required to better identify the costs of public services.
MPs called on HM Treasury and the Cabinet Office to set out how they will require departmental permanent secretaries to take ownership of the identification of costs at a level that enables focus on where productivity and efficiency in individual services can be improved.
One specific area the report identified is the use of technology to improve departments’ understanding of “time and people costs” associated with specific business processes.
The report said PAC members were “surprised to learn” that there is no standard civil service policy on how staff time is tracked – despite many back-office enterprise resource planning systems offering time-recording capabilities.
“A shift in mindset is needed to better understand how time is spent and to use the data collected for meaningful insights on where the costs of services are high and potential efficiencies and productivity improvements can be made,” the report said.
MPs said that desired levels of productivity improvement would not be achieved without effectively using every civil servant’s time, as would be the norm in the private sector.
The PAC report follows a National Audit Office investigation published in September. The NAO said a lack of understanding about the exact costs that make up the annual £450bn government spends on its operations represented a “barrier” to achieving the productivity and efficiency aims set at the 2025 Spending Review.
PAC members said departments are neither required nor incentivised enough to identify and use detailed costing information to drive productivity and efficiency. They said that while standards for that information exist, they are applied inconsistently.
Among their recommendations, MPs said that HM Treasury and the Cabinet Office should set out what steps they will take to hold senior leaders to account for taking ownership of the identification of costs at a level that enables them to focus on where productivity and efficiency in individual services can be improved.
HM Treasury is also asked to work with the Government Finance Function to set out “concrete ways” in which departments must start to identify and record service costs.
The Cabinet Office is urged to require all permanent secretaries to appoint “senior single service owners” for services that currently do not have them. SSOs are expected to have full visibility and authority over end-to-end services. The PAC report said the role is crucial for departments to understand and reduce total service costs.
The PAC report also identified outdated IT systems and a lack of common data standards as a major challenge to understanding service costs. Another of the committee’s recommendations called on the Department for Science, Innovation and technology to provide a “baselined list” of legacy systems and the services they support.
Committee members requested a DSIT assessment of which of those systems should be prioritised for replacement in the interests of significantly reducing service costs.
PAC chair Sir Geoffrey Clifton-Brown said: “Billions upon billions of pounds of taxpayers’ money are spent every year on delivering public services. I have no doubt that it would surprise those same taxpayers to know that government has only the haziest of views on specifically how their pound is being spent.
"It is a matter of pure common sense that government’s plans for more affordable public services will not manifest without a far more detailed picture of how much they are in fact costing.”
Responsibility for holding departments to account for improving their cost information is jointly held between the Cabinet Office and HM Treasury.
The Cabinet Office sets the overall performance-management framework expectations, including financial minimum standards. HM Treasury’s role is to make sure departments and accounting officers have the guidance they require and, through the Government Finance Function, arrange and conduct end-of-year reviews.
Civil Service World sought responses to the report from both the Cabinet Office and HM Treasury.