Research councils' shared services ''flawed''

21 October 2011

The plan to streamline back-office functions for the seven research councils has so far not been good value for money and there is a risk that the councils may not recover the money they have put into the project, according to a National Audit Office (NAO) report.

When it was up and running 15 months behind schedule, the 'Shared Service Centre' was delivering services across the five functions planned but some services, notably finance, are not yet where they need to be, the report said.

The aim was to save money by sharing services such as finance, human resources and procurement but by the end of March 2011 the project was £51m over budget. There is a "lack of clarity" about the savings made but it would appear that the project has underachieved against total expected savings by at least £73m. And it is likely to take two years longer than planned before the project recovers its set up costs.

The original business case for the centre was flawed, the report said and it would have benefited from "a proper financial analysis" which never happened.

One of the problems was that a contract with Fujitsu, the supplier of the Centre's ICT systems, was terminated wasting £13m. And when the project started to go off-course, the Department for Business Innovation and Skills failed to intervene.

Said NAO head Amyas Morse: "This is yet another example of a project embarked upon without the necessary planning. Once it did start to go wrong, proper governance or intervention from the department should have rectified the problems, but this did not happen until a great deal of taxpayers' money had been spent."

He added: "The department, the research councils and the Shared Service Centre now need to get performance up to where it needs to be. Any plans for expanding the range of clients served by the centre must be based on a thorough and realistic assessment of value for money."

Commenting on the report, Richard Bacon, a member of the Commons public accounts committee, said: "It is clear that the research councils seriously underestimated the challenge involved in moving seven distinct organisations to a shared service model. If the research councils are going to see any return on their investment, the management of the centre must be considerably tightened up. The Department for Business, Innovation and Skills must also be certain that the decision to move its own back office functions into the centre won't make the situation any worse."

Bacon went on: "Sharing back office functions is a commonsense way for public sector bodies to find real savings for the taxpayer, but actually doing it has many potential hazards. Those in charge must understand the risks properly and have a good knowledge of the many mistakes made in the past. These are not new problems and these failures are not for want of previous warnings."