Government plans for next generation shared services in the public sector will save taxpayers up to pound 500m a year, the Cabinet Office has claimed.
In a new document dubbed the Next Generation Shared Services Strategic Plan, the government has outlined how its departments and associated bodies will work together to share functions such as human resources, procurement, finance and payroll. Its aim is to make potential savings of between pound 400m to pound 600m a year in administration costs.
The government says that this is the first stage of a comprehensive plan to expand shared services to other areas, including legal services.
The Minister for the Cabinet Office, Francis Maude, who unveiled the plans, said: "There is absolutely no need for departments and arms-length bodies to have their own back-office functions and duplicate efforts, when they can be delivered more efficiently by sharing services and expertise. Plus, it will save the taxpayer half a billion pounds a year.
"That's why we have taken action and fundamentally changed the way central government departments share their services. We want sharing services to become the norm, so every department has high quality, flexible and resilient services available. This means they can focus on their priority of implementing policy and delivering key public services," he added.
The key objectives of the plan include creating and operating a "Crown Oversight Function", which is intended to work with departments to deliver improvements in their quality of service and to reduce the operating costs of shared services.
Another objective is to create two independent shared services centres (ISSCs).
One of the independent centres will be run by the Department for Transport (DfT) with a private-sector partner. The operating partner should be in place by March 2013.
The other ISSC will be built on the Department for Work and Pensions shared service centre, and an operating partner should be in place by March 2014 or earlier.
It will also provide oversight, sharing of best practice and benchmarking facilities to three standalone departments: the Ministry of Defence (MoD), HM Revenue & Customs (HMRC) and the Ministry of Justice (MoJ).
The final key objective of the strategy is to ensure that a lower cost enterprise resource planning (ERP) solution is available as part of the ISSC network, to remove the barriers to entry for smaller departments by reducing software and maintenance costs through consolidation.
"Without the provision of a single ERP [solution], and therefore single processes, the government will struggle to reach its upper-quartile efficiency targets and, therefore, testing this will be an early part of the programme," the plan reads.
Some pound 128m of the projected pound 400m to £600m per annum savings will come from scale savings, efficiencies and lower ERP costs. The plan states that ERP annual operating costs could be reduced by more than 40 per cent through consolidation, and by up to 70 per cent through the use of lower-cost ERP solutions alongside about pound 32m of "avoided" system upgrade costs through system consolidation.
The document reveals that the current estimate of total spending on back-office functions is about pound 1.5bn per annum, which the government claims is significantly lower than earlier estimates.
