Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Accepted
Set out impact of recent plan changes on expected savings and monitor service efficiency.
Recommendation
HMCTS has not specified how its recent changes to the programme will impact the savings promised, nor can it demonstrate whether reformed services are on track to deliver the required efficiencies. In 2019, HMCTS expected the programme to save £244 million a year and claimed that it had saved £133 million so far. The National Audit Office found that HMCTS expects reforms to deliver £220 million in annual savings from 2025–26 onwards. However, it has not outlined how these savings will be impacted by its recent decision to pause reforms to some of its services. In response to our previous concerns that HMCTS’s ability to monitor whether programme savings are directly linked to reforms, it has developed a new methodology to assess how efficiently its services are working. But HMCTS acknowledges that this methodology still needs to be refined as although it provides comparative information about the cost of services, it still cannot identify whether this is due to the effect of reforms, or due to another reason such as changes in demand. Although the analysis cannot explain why, the results suggest that the costs per user have increased rather than decreased for most services, so there is still a lot to do to reduce costs and make savings. HMCTS recognises it needs to do more to understand whether reforms are having the impacts they intended. Recommendation 5: As part of its Treasury Minute response, HMCTS should set out: a) The impact of recent changes to its plans on the expected savings from the programme; and b) What it is doing to better understand how efficiently reformed services are working and how it will use this information to ensure it is on track to deliver expected savings.
Government Response Summary
The government agrees and details that while savings will be delivered later, the full £227 million annual net savings are still expected by 2026-27, with a £50 million reduction by 2025-26. It further explains its methodology for monitoring efficiency through quarterly updated unit costs across 15 services, with oversight from finance committees and the board.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation Recommendation implemented Recent changes to plans mean that savings will be delivered later than originally envisaged, but the overall Reform programme is still expecting to achieve the full value of ‘end state’ benefits in the Reform business case. The delay in achieving benefits will result in £50 million fewer recurring annual net savings by the end of 2025-26. However, the full recurring annual net savings of £227 million are still expected once benefits have fully accumulated, in line with the original business case, and this will include additional benefits to restore the £12 million benefits lost from the projects descoped by the recent changes. These full benefits will be achieved a year later than originally expected - by the end of 2026-27. HMCTS has developed unit costs of outputs across 15 of its largest services, which are updated quarterly. By tracking changes in unit costs over time, HMCTS can obtain important evidence about the impact of Reform and other changes on the efficiency of service delivery. The unit costs are now showing, for example, that the operational cost of processing a divorce case has reduced from a baseline of £121 (the unit cost estimate prior to the COVID-19 pandemic) to £68 in Quarter 4 of 2022-23. A unit cost is derived using both cost and output levels and is therefore impacted by changes in either of these measures. Unit costs are monitored routinely by the HMCTS Finance and Performance Committee chaired by the HMCTS Chief Financial Officer and are tracked against the unit cost reductions that are expected as a result of HMCTS Reform. Unit costs are also reported to the full HMCTS board.