Spending Review 2015: CBI urges renewed shared services and digital push to meet savings call

Major business lobby group sets out stall ahead of government-wide Spending Review – with shared services, digitisation, and payment-by-results top of the agenda

By Civil Service World

17 Sep 2015

Britain's biggest business lobby group has set out the steps it believes Whitehall needs to take to meet George Osborne's call for a fresh £20bn of departmental savings over the parliament.

In its submission to the Treasury ahead of November's government-wide Spending Review, the CBI – which represents approximately 190,000 private sector businesses – calls for a "truly transformational" rethink of public services.

While the group's submission says the civil service "can be proud of the progress departments have made on efficiency" since 2010, it claimed a further £16.3bn of savings could be made through "fundamental reforms".

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Among its recommendations, the CBI urges the government to extend the use of shared back office functions – including HR, payroll and accounts – across the civil service.

The 2013 civil service reform plan saw the creation of two shared services centres – dubbed ISSC 1 and ISSC 2 – with a promise to achieve up to £600m of savings, and the CBI uses its submission to urge a renewed push from the centre to get all departments on board.

"Although the shared services centres are currently supporting 17 customers, many key departments including the Treasury, Home Office and Department of Business, Innovation and Skills continue to operate individually," the CBI says.

"As early as possible government should migrate all departments onto the shared services centres in order to realise as much of the potential £640m savings by the end of the parliament."

It adds: "Migrating the remaining departments to the centres will require leadership from the centre. The Cabinet Office must strengthen the evidence base for migration and communicate its benefits both in terms of improving the quality of administrative functions and establishing significant savings."


The organisation also calls for a more "joined-up and cross-departmental" approach to social problems, pointing to the Troubled Families programme – a £448m joint initiative between the Department for Communities and Local Government, the Department for Work and Pensions, and local authorities – as a successful example of cross-Whitehall working.

"The Troubled Families programme has demonstrated how a joined-up strategy combined with the use of a Payment-by-Results (PbR) model to tackle multiple disadvantage can improve outcomes whilst reducing costs over a period of time," it says.

The CBI says government should "seek to replicate this model to other cohorts" and extend the use of payment-by-results (PbR) mechanisms when using outside contractors to deliver services.

A recent report by the National Audit Office spending watchdog estimated that some £15bn of public spending was now subject to PbR, which makes payment contingent on providers meeting particular targets while granting them a large degree of freedom over the methods used to meet those aims.

However, the NAO's report raised concern over a lack of oversight and consistency in the way the schemes were used, and said PbR "carries costs and risks that government has often underestimated".

'Low-hanging fruit'

The CBI's document also urges Whitehall to "build on the positive work" of the central Government Digital Service (GDS) unit, and says digitising the remaining 22% of transactional services could yield £800m-a-year in savings.

And the business group also identifies possible further savings through a renewed effort to improve the collection of unpaid fees, fines, taxes and loans.

While there is support for the Government Property Unit's efforts to efforts to drive a the more efficient use of the estate owned by the government, the CBI warns against relying on "non-recurring savings or one-off revenue raising measures", saying that the release of government land for sale – which the Treasury has made a key plank of the Spending Review process – is "neither a sustainable nor reliable way of tackling the deficit".

Commenting on his organisation's submission, CBI chief John Cridland acknowledged that savings in this parliament would be "harder to come by", with the "low-hanging fruit from the last parliament" having already been picked.

But he added: "Commitments to keep within public spending limits will only be achieved through ambitious reforms. All departments, including those protected by ring-fences, need to be open to new ideas and ways of working."

The CBI's ideas – which will be weighed by the Treasury as it considers ministers' own proposals for how they are to meet the chancellor's latest austerity drive – came in the week the Institute for Government think tank sounded the alarm on the UK's ability to address major productivity challenges.

In its latest report, the IfG said Britain continues to suffer from "a series of persistent policy problems to which existing institutions and processes seem unable to produce adequate long-term solutions".

The IfG cites a lack of affordable housing, insufficient skills and inadequate infrastructure investment as some of the big challenges policymakers have struggled to address, and warns of weaknesses "built right into the very institutions that shape big policy decisions".

Report author Miguel Coelho says: "Rather than looking at the problems associated with individual projects, and looking at housing policy or transport development as separate issues, we must take a step back to consider the pressures and incentives that shape the way policy is made in these areas.

"Only then can we reform flawed institutions, address these deeply rooted problems, and ultimately, ensure the UK is able to realise its full potential for economic growth.”

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