3 Embedding efficiency into the public
sector
11. The purpose of the Efficiency Programme was not
only to produce annual efficiency gains of £21.5 billion
by 2008, but to create a public sector that is always seeking
to improve the efficiency with which it delivers public services.
In order to drive this cultural change, the OGC established an
Efficiency Team which is responsible for the overall delivery
of the Programme.[21]
While each department is responsible for achieving its own efficiency
targets, the Efficiency Team co-ordinates, monitors and supports
departments' progress.
12. Embedding change, and in this case greater efficiency,
usually needs strong, external challenge. The OGC has challenged
departments more effectively over the past year through more structured
six-monthly meetings between the Chief Executive of the OGC and
departments' Permanent Secretaries,[22]
and issuing more comprehensive guidance on measuring and reporting
efficiency gains.[23]
However, that only a quarter of reported efficiency gains are
judged to be reliable indicates that the Programme would benefit
from greater challenge of departments' progress. The fact that
the Department of Health's incorrect adjustment of a baseline
went unchallenged, though inflating reported efficiency gains
by £300 million, shows that there is still more to do.[24]
13. For efficiency to become part of the culture
of the public sector, reported efficiency gains need to be based
on sound measurement principles. The Efficiency Programme established
a number of principles that departments should follow when measuring
their efficiency gains, which were the basis on which the efficiency
targets were set. However, a number of these principles do not
represent good practice, such as reporting efficiencies gross
of additional costs, and improvements only needing to be sustainable
for two years.[25] Any
future efficiency programme needs to learn from experience with
this Programme if it is to produce reliable numbers that are both
useful and trustworthy. It is a positive step that the Treasury
has stated its intention to report efficiency gains net of implementation
costs in the next spending period.[26]
14. Although departments report progress against
their own efficiency targets in their annual department reports
and autumn performance reports, the level of detail varies and,
prior to the 2007 Budget there was no consolidated view of progress
against the Programme overall.[27]
Without this transparency there is a risk that the importance
of efficiency is lost, making it harder to embed within the management
culture of the public sector.[28]
Transparency was improved in the 2007 Budget Report, which included
a breakdown of progress by department and reference to further
consolidated details on the OGC website.[29]
15. Measuring activities in isolation does not make
it possible to determine whether government as a whole is becoming
more efficient.[30] Departments
need more comprehensive measures of efficiency, such as the unit
costs of key outputs, to assess overall efficiency more reliably.
These measures should in turn be part of a general performance
framework that positions efficiency alongside issues of departmental
capability, and progress towards strategic objectives such as
Public Service Agreement targets.[31]
For example, the Home Office reported that it has secured more
than 90% of its efficiency target, while at the same time the
Home Secretary declared it 'not fit for purpose'. Although these
statements are not contradictory, they highlight how reporting
indicators of performance in isolation can distort perception
of a department's overall performance.
21 From April 2007 responsibility for co-ordinating
the Programme was transferred to HM Treasury. Back
22
Q 28 Back
23
C&AG's Report, para 4.2 Back
24
Q 9 Back
25
Qq 34, 35 Back
26
Budget Report 2007, para 6.24 Back
27
Q 4, 20 Back
28
C&AG's Report, para 4.8, 4.9 Back
29
Budget Report 2007, para 6.18 Back
30
Q 16, 28 Back
31
Q 27 Back
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