Source · National Audit Office

Improving government’s productivity through better cost information

Published: 15 Sep 2025 Recommendations: 5 Type: Value for Money NAO confirmed: 5 Department: Cross-government

Government departments often lack insight into what drives cost in individual activities that make up an overall end-to-end service.

Dept: Cross-government Topics: Accountability and oversightCommercial and financial managementEfficiency and savingsProgramme deliveryProject and service delivery nao.org.uk →

Recommendations

5 items

5 accepted 5 in progress

Rec	Recommendation	Addressee	Acceptance	Implementation
1	HM Treasury and the Government Finance Function should: a work with leading-practice sponsor departments to produce a new guidance document for departments, setting out how the principles of process and activity costing could and should be applied to government services, including specific, practical examples of what can work, providing a greater level of detail than just high-level principles. Ref Page 6, 10	Cabinet Office; HM Treasury	Accepted	In progress ✓ NAO
2	Permanent secretaries and departmental senior leaders should: b create incentives for those involved in business processing and service delivery to underpin and ensure compliance with the new guidance, such as new performance objectives. Ref Page 6, 11	Cabinet Office; HM Treasury	Accepted	In progress ✓ NAO
3	Departments should: c define the scope and boundaries for all major services and designate a senior responsible service owner at a high level of seniority for each, with sufficient accountability for the end-to-end service and understanding, managing and improving service costs at the operational level; d embed ownership at the service level to help ensure consistent ways to provide evidence-based conclusions that can guide decisions such as where to cut costs, invest more, redesign services or improve efficiency; and e establish governance arrangements such as oversight boards or assurance processes to monitor progress, validate cost data usage, track system benefit realisation and provide accountability to senior leadership and relevant stakeholders. Ref Page 6, 12	HM Treasury	Accepted	In progress ✓ NAO
4	Departmental finance functions should: f use the techniques suggested in this report to understand the organisation?s cost drivers, and where to target cost savings, including where simple ?quick wins? could deliver results and maintain impetus; g work with service owners and responsible directors to monitor and manage service costs towards relevant and agreed productivity targets; and h identify where targeted capability building would help ensure that finance teams and service owners are equipped to deliver on these expectations Ref Page 6, 13	HM Treasury	Accepted	In progress ✓ NAO
5	HM Treasury and the Government Finance Function should agree with Cabinet Office the accountabilities and responsibilities for taking forward the following recommendations. Ref Page 6, 9	HM Treasury	Accepted	In progress ✓ NAO