2.1 Alongside data on signed savings, the Treasury also gathers data quarterly from departments on 'pipeline' savings. These savings are not as certain as signed savings but are savings that authorities hope to turn into signed savings in due course. HM Treasury does not report publicly on the savings 'pipeline', but uses the information to monitor potential future savings for internal briefing purposes.
2.2 Because pipeline savings have a degree of uncertainty, the Treasury does not score them in their entirety as reported by departments. Not having a signed contract amendment means there is a risk that, prior to signing, a deal might change materially from the current agreement or fall through entirely. By recognising only a proportion of the pipeline savings, the Treasury allows for slippage and/or material adjustment to the savings, so as to prevent the value of the pipeline being overstated. Treasury refers to this adjustment as a confidence adjustment. As of June 2013, the value of the confidence-adjusted savings 'pipeline' stood at £1,281 million.
2.3 Figure 4 sets out the different categories the Treasury uses to classify its pipeline savings.
Figure 4
Composition of the savings pipeline
Treasury | Definition | Value of | Proportion of | Savings as |
'Agreed' | The authority and contractor have agreed in principle to a saving, but it is not yet underpinned by a legally binding contract variation | £1,120m | 70 | £784m |
'Identified' | The authority has internal or business case approval for discussion with the contractor | £408m | 60 | £245m |
'Proposed' | The authority has proposed savings for internal review | £373m | 50 | £187m |
'Ambition' | A preliminary planning estimate | £164m | 40 | £66m |
Totals | £2,065m |
| £1,282m | |
Source: HM Treasury data at June 2013