6. The Group oversaw the emergency measures introduced by the Coalition Government to contribute around half of the £6 billion budget reductions imposed on departments for 2010-11.8 Following the hearing, the Group reported to us that the measures reduced spending by £3.75 billion in 2010-11.9 The savings included £806 million from renegotiating contracts with the largest cross-government suppliers, and cuts in spending on consultancy and agency staff of £869 million and £492 million respectively.10
7. The Group does not have a standard definition of efficiency across the public sector. It told us a saving was any action which replaced or reduced the likelihood of a cut in front line services. However, there is also no clear definition of what constitutes a front line rather than a support service and it is not clear that there is an accepted understanding of where expenditure on support services improves efficiency in frontline service delivery.11
8. The Group is looking to ensure that data on spending is collected on a consistent basis to provide a "single version of the truth".12 We have commented frequently in our past reports on the poor quality of management information on performance and delivery available within government, and this has contributed to the unconvincing claims made for previous efficiency initiatives.13 In our previous examinations of central efficiency initiatives, we found that only 38% of departments' claimed savings met the specific criteria set by the Treasury.14
9. Furthermore, there may be significant financial costs incurred as a result of making savings, for example if work previously done in-house is outsourced, or from the costs of early staff exits. There is also a risk that cuts in one area are replaced by higher expenditure elsewhere.15 A substantial element of the savings made in 2010-11 were lower employment costs following reductions in the number of civil servants. If these cost reductions simply mean expenditure is deferred, they do not constitute sustainable savings.16 The Group recognises that while cash savings may arise from stopping a project, sustained savings will depend on more systemic reform.17
10. The Group is responsible for the Major Projects Authority, which assesses departmental proposals for high cost and high risk projects prior to obtaining Treasury agreement to proceed. The Authority also monitors projects during their contracting, design, and construction stages, with a formal review every three months. Where the Authority and the owning department cannot agree on the management of a project, the Group is able to seek the intervention of the Prime Minister.18 The Group told us it considers its role is to run an assurance process, make judgements and report them honestly, not to run the projects themselves - although it has the mandate to intervene through the Minister for the Cabinet Office if a project is going off the rails. For example, its intervention resulted in the E-borders project going back to the drawing board.19
11. The Group is taking the lead on behalf of departments and their arm's length bodies for negotiating supply contracts for common categories of goods (commodities) such as office supplies, travel and professional services. It uses a wide range of suppliers, including small and medium sized companies, to avoid becoming dependent on a single supplier. It estimates that around half of the £13 billion a year spent by departments is currently going through its approved procedures. It also proposes to use a wide range of innovative techniques including reverse e-auctions and spot buying of large orders.20
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9 Ev 21
11 Qq 56-58
12 Q15; C&AG's Report, Appendix One, p 33
14 Committee of Public Accounts, Fourth Report of Session 2010-11, Progress with VFM savings and lessons for cost reduction programmes, HC 440
16 Qq 37-39, 101; C&AG's Report, para 1.12 and Figure 6
17 Ev 18