Source · Select Committees · Public Accounts Committee
Recommendation 24
24
Accepted
HMCTS approach to measuring reform benefits requires further refinement.
Recommendation
In 2019, we concluded that HMCTS could not demonstrate whether claimed savings were attributable to the reforms and so taxpayers could not be confident they were getting what was promised. We recommended that HMCTS should set out how it intended to measure and monitor the benefits arising from the reform.49 In response, HMCTS developed an approach to help it understand how efficiently services are working. Its unit cost calculations compare the running costs of a service with the output produced, for example the number of cases resolved, to calculate the cost per person using the service. However, HMCTS acknowledged that it needed to do more to refine its approach. It explained that while the methodology allowed it to monitor organisational costs, it cannot differentiate between the impact of efficiencies gained from introducing reforms and the impact of other factors – for example, increases in cost due to changes in demand.50 43 Q 86; Letter from Nick Goodwin, Chief Executive HM Courts and Tribunals to Dame Meg Hillier MP, Chair of Committee of Public Accounts, 17 March 2023 44 Qq 89, 93, C&AG’s Report, para 3.8, Figure 11 45 Q 88; C&AG’s Report, paras 3.11–3.13 46 Q 90 47 Committee of Public Accounts, Transforming courts and tribunals: progress review, Second Report of Session 2019, 4 November 2019, para 7; In its 2021 business case, HMCTS provided an updated estimate of £237 million in expected yearly savings for its previous 2019 business case. 48 C&AG’s Report, paras 1.11, 1.15 49 Committee of Public Accounts, Transforming courts and tribunals: progress review, Second Report of Session 2019, HC 27, 5 November 2019, para 5 50 Qq 94–95; C&AG’s Report, para 3.5–3.6 Progress on the courts and tribunals reform programme 17
Government Response Summary
The government accepts the recommendation and states that HMCTS has developed unit costs for 15 major services, which are updated quarterly and routinely monitored by its Finance and Performance Committee and board. They anticipate achieving £227 million in recurring annual net savings by the end of 2026-27.
Government Response
Accepted
HM Government
Accepted
5.1 The government agrees with the Committee’s recommendation Recommendation implemented 5.2 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. 5.3 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.