Source · Select Committees · Public Accounts Committee
Recommendation 25
25
Accepted
Reformed HMCTS services exhibit significantly higher unit costs than anticipated.
Conclusion
HMCTS’s analysis covering April to June 2022 found that unit costs of its fully or partly reformed services were 19% to 146% higher than expected. HMCTS undertook some analysis of these services to try and understand this variation. Its analysis indicated that some services were not working as efficiently as expected. For example, it found that cases in its online probate and divorce services still required significant manual interventions from staff.51 We asked HMCTS how it planned to ensure that reformed services will deliver the intended savings, given that it does not have routine data to determine how efficiently they are working. HMCTS told us that it intended to use its unit cost approach to identify where there are variations between actual and expected costs. It explained it will then do further analysis to explore reasons behind this variation and develop action plans to address any issues it identifies. We asked whether HMCTS was confident that it would deliver the efficiency savings expected from the programme. HMCTS accepted that it still had a lot of work left to do to ensure savings materialise, but that it expected to be able to deliver them, and that it had built contingency into the efficiency savings to support it to achieve this.52 Lessons learned
Government Response Summary
The government agrees with the committee's findings, stating that HMCTS is already using a quarterly updated unit cost approach across 15 services to monitor efficiency and track against expected reductions. They acknowledge that savings will be delivered later than expected but 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.