8 Central buying should achieve very large savings, but it is not clear exactly what spending should be centralised. The Cabinet Office wanted to increase CCS's management of direct buying from £0.5 billion in 2013 to £13.4 billion in 2017-18, in order to generate net savings of £3.3 billion. However, it did not have consistent information on what departments spend and there is no agreement with departments about what should be centralised and what should be bought locally. The Cabinet Office's estimates of the common goods and services suitable for centralisation have varied from £8 billion to £15 billion. For example, all departments buy information technology, but many of these contracts are strategically important to the department and hard to specify centrally (paragraphs 1.5, 1.6, 1.16, Figures 1, 6 and 7).
9 The Cabinet Office relied on a Cabinet Committee mandate to get departments to transition their services quickly and did not focus enough on how it would manage them once they were transitioned. CCS was launched in 2014 following decisions by a Cabinet Committee to centralise the buying of common goods and services. CCS aimed to transition two departments to CCS every three months. It set out to agree plans with each department and to agree exactly which goods and services would be defined as common and which buying services would transfer. Although shared services normally carry out the same services for many customers, CCS agreed different services for each of the departments that transitioned and did not focus on improving the quality of services once they had transitioned. CCS could not show us detailed plans on how it would standardise services, integrate processes and manage its customers once they had transitioned. CCS predicted that the transitions would increase the number of CCS staff from 540 to 1,030. It could not show us a detailed workforce management plan to achieve this (paragraphs 1.11, 1.15, 1.18, 1.21, 2.19 and 2.20, and Figure 9).
10 From the start, there was a rapid erosion in departments' confidence in CCS. CCS started to delay transferring services from departments from May 2014, one month after its official launch. CCS agreed service improvement plans for both the Ministry of Defence and Department for Work & Pensions. From 2014 through to 2015, senior departmental commercial staff complained to us of CCS's poor service and their lack of confidence in it to manage the transition and buy goods and services on their behalf. Over the same period, leadership and governance of CCS changed significantly; since 2014, only four of the original 11 board and senior management team have remained unchanged. Since summer 2016, CCS has recruited four senior managers with significant operational experience to its senior management team (paragraphs 1.14, 1.21 to 1.23).
11 CCS has not achieved its original ambitions. CCS's first business plan forecast that creating CCS would reduce central government's workforce working on the procurement of common goods and services by 400 staff (28% of the estimated workforce at that time). It also forecast that the newly formed central unit would buy all common goods and services for central government and achieve significantly better value for money from government purchasing. The plan estimated that these changes would realise net benefits of £3.3 billion over the four years to 2017-18. However, CCS's current management does not consider this plan to have been achievable as it thinks the plan wrongly estimated the amount of common goods and services appropriate for centralisation, and the buying services which should be undertaken centrally. CCS's current management also believe the original plan did not adequately define the activities that customers would still need to carry out. In 2015 CCS suspended the transition of services and changed its targets for transferring buying services to it. By December 2016, seven departments had transferred the responsibility for buying common goods and services to CCS, amounting to £2.5 billion of spending, well below the £13.4 billion envisioned. As a result, most of the planned workforce transfers have not happened. Where they have, some departments have rehired staff to replace those who transferred. The remaining departments continue to manage their own procurement teams, although they do use CCS's frameworks. In spite of the importance of the initiative, the Cabinet Office did not track the overall benefits from creating CCS (paragraphs 1.15, 1.25 to 1.27 and Figures 6, 7 and 8).