1.  Government lacks reliable information on the cost of corporate services. Activities such as finance, procurement, human resources and facilities management are important for delivering high quality public services, but the resources they consume must be fully justified. Departmental Management Boards should receive clear information on the cost and performance of their corporate services on a regular basis so that they can consider the contribution these services make to key business objectives and whether they are providing value for money.

2.  Inconsistency in the way corporate services are recorded prevents regular benchmarking to help secure improvements in value for money. The Cabinet Office should develop standard definitions for what constitutes corporate services and how their costs and activities should be reported. Departments should require their internal audit functions to provide assurance that such a standard is consistently followed. The Cabinet Office should undertake regular benchmarking exercises to identify scope for further efficiencies.

3.  It is not clear how the £1.4 billion potential annual savings from shared services will be achieved. The Cabinet Office will find it difficult to drive improvements until it obtains clear information on the relative performance of departments' corporate services. Departments should publish an overview of their corporate services performance in their annual report, including an analysis of costs by corporate function, how shared services are being used to improve value for money, and performance against centrally agreed benchmarks.

4.  The Cabinet Office does not have sufficient grip on the cost of its activities to promote shared services. The team set up to encourage the use of shared services did not know how much money it had spent or how it was allocated across different activities. To improve performance and operational efficiency, the team should routinely record and analyse all its expenditure and assess the cost effectiveness of different interventions.

5.  The number of NHS organisations using NHS Shared Business Services will need to increase significantly if the forecast annual savings of £250 million are to be secured by 2014-15. The proportion of NHS organisations using Shared Business Services will have to increase from the current level of 21% to 65% if the planned savings are to be achieved. To encourage greater participation, the Department of Health should lead by example by setting a firm date to become a customer now that the system has been redesigned to meet the Department's needs. Where corporate services are retained in-house, the Management Boards of NHS organisations should be clear that the decision represents better value for money than alternative options such as NHS Shared Business Services or outsourcing.

6.  Within the NHS, less than 30% of invoices received reconcile with purchase orders, increasing the risk of incorrect or unjustified payments. NHS Shared Business Services is developing an electronic invoicing system that would improve financial control by making it impossible for a supplier to submit an invoice unless it already had a valid purchase order. The Department of Health should work with NHS organisations, regardless of whether they are customers of NHS Shared Business Services, to achieve a dramatic improvement in the proportion of invoices that match to purchase orders, improving productivity and timeliness.

7.  There is doubt about the scale of staff cost savings in HM Prison Service arising from the use of shared services. The Prison Service claims that reductions in prison budgets are proof of staff cost savings arising from the introduction of shared services, but only has inconclusive evidence. The Prison Service needs to have better information to track reductions in staff posts, which should be validated by internal audit or other assurance arrangements.

8.  Further savings could be achieved through economies of scale if more small departments bought their corporate services from larger departments. Smaller departments should evaluate the benefits of buying corporate services from one of the two designated sellers—HM Revenue and Customs and the Department for Work and Pensions. To allow this to happen, these two departments must develop the capacity to provide shared services and market the benefits to smaller public sector bodies.

9.  Whether or not they move to using shared services, public bodies will miss potential efficiency savings if they do not streamline their administrative processes. Without careful analysis of whether all the steps in their processes are really adding value, public bodies cannot know whether they are receiving value for money from their corporate functions. Even when shared services are not adopted, public bodies should be able to show that they have mapped all the key processes in their corporate functions and used the results as a basis for driving out waste.