Source · Select Committees · Public Accounts Committee
Recommendation 26
26
Accepted
Treasury's new Efficiency Framework lacks specific explicit reference to 'cost-shunting' for savings.
Recommendation
The Treasury confirmed that it had incorporated the NAO’s principles for reporting efficiency savings into its Efficiency Framework, which included setting out the requirements for sustainability and avoiding cost-shunting.39 The new Efficiency Framework states that for reporting both cash-releasing savings and non-cash releasing savings there should not be an adverse impact on performance or outcomes. For cash- releasing savings it explains that savings must not adversely impact on the achievement of a department’s strategic priorities, and that departments should be able to demonstrate that because of reforms, the department and sector is delivering better value for money overall. It also states that, to report cash releasing savings, they should be “sustainable and should not be reallocating or deferring costs to future years”. The Framework notes that 34 Committee of Public Accounts, Efficiency in government, Twenty-Eighth Report of Session 2021–22, HC 636, 3 December 2021 35 HM Treasury, Treasury Minutes: Government response to the Committee of Public Accounts on the Twenty- Seventh to the Thirty-First reports from session 2021–22, CP 631, February 2021 36 Q 44; C&AG’s Report, paras 13, 2.7 37 Q 44 38 Q 45 39 Q 76 16 Cabinet Office functional savings cost reallocation or deferral takes place where there is a simple movement in cash across a year end which does not relate to a total net reduction in waste or inefficiency when the two years are taken together. It does not, however, specifically reference cost-shunting.40 Avoiding double-counting efficiency savings
Government Response Summary
The Cabinet Office will include case study examples of best practice and provide guidance to functions on calculating savings and avoiding cost-shunting and double-counting for the 2023-24 efficiency and savings return guidance by end June 2025. They will report back in Spring 2025, noting the GEF also provides checks.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Target implementation date: end June 2025 The Cabinet Office will include case study examples of best practice for the 2023-24 efficiency and savings return guidance, showing how savings were calculated, recorded and reported. The Cabinet Office will also provide guidance to functions on how to avoid cost- shunting and double-counting, with examples. The Cabinet Office will report back to the Committee in Spring 2025. 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.