Source · Select Committees · Public Accounts Committee
Recommendation 25
25
Accepted
Cabinet Office lacks robust independent verification and controls for efficiency savings cost-shunting.
Recommendation
We therefore asked the Cabinet Office how confident it was that efficiencies were genuinely cash savings, and had not resulted in additional costs elsewhere in government. The Cabinet Office told us it asked the heads of function to answer that question, but did not seek independent verification. It explained that it was “wary” about cost-shunting type activity, but that it thought that this was “probably not an area that is particularly susceptible to so-called cost-shunting”.37 We therefore asked what controls it could introduce to ensure that cost-shunting was not taking place. The Cabinet Office recognised that it did not currently have “that extra loop” to check with departments whether savings had resulted in a tertiary impact. It told us that it would be taking up the NAO’s recommendation to be more prescriptive in its guidance to ensure that the cost savings being put forward by departments were “net of cost shunting in other places”. It did not, however, propose to change the methodology of its central team or the GIAA, or to have an independent verification of whether savings had resulted in service implications.38
Government Response Summary
The government agrees to provide an update to the Committee by end December 2024 on assurances received from functions and departments that cost shunting and double counting have not led to costs elsewhere, emphasizing that the GEF provides additional checks against these issues.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Target implementation date: by end December 2024 Cabinet Office and HMT will provide an update to the Committee on assurances received from functions and departments that cost shunting and double counting have not led to costs elsewhere. The Committee should be aware that the implementation of the GEF provides additional checks and balances against cost shunting and double counting. The GEF takes a systematic approach to efficiency, stating that an efficiency saving should not push costs elsewhere in the public sector and should not have adverse impacts to outputs and outcomes. The GEF also standardises the holding and reporting of efficiency data, including for joint efficiencies, which further strengthens scrutiny not just within departments but also across departments so that cost shunting and double counting does not occur.