Departments estimated in March 2011 that transition costs would be £425m, but the National Audit Office says that they will be at least £830m. This means that departments will need to find gross savings of £3.5bn to achieve the net savings target of £2.6bn from quango reform.
“There is a risk that because there isn’t a clear understanding of the scale of transition costs, funding may be taken out of other activities and frontline services,” Keith Davis, the lead author of the report and director of the NAO’s cross-government work, told CSW.
“The Cabinet Office and others have a poor understanding of the costs of these changes,” he added. “The departments’ view was: ‘We’ve just got to get on and do this thing.’ It wasn’t a priority for them to be able to quantify the transition costs.”
Departments are also failing to measure whether the intended benefits of quango reform are realised, the report says. The government claimed that the policy would improve accountability, but only one of six departments analysed – the Department for Communities and Local Government – has set out how to measure this.
“Our concern is that it felt too vague. If you’re trying to manage the delivery of benefits, you need to be very clear what those benefits are and to have specified them very clearly,” Davis said.
A Cabinet Office spokesperson said: “The NAO notes that we are on course to deliver cost reductions. Their figures suggest that the administrative cost of public bodies will be between £800 million and £900 million lower per year by 2014-15, after taking account of the cost of these reforms.”
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