Summary

This note sets out the government’s assessment of savings made by the cross-cutting government functions in their work with government departments and other central government organisations.

Understanding these figures

The figures in this publication include both cash-releasing and non-cash releasing savings. Cash-releasing savings are those which lead to a direct reduction (all other things being equal) in a department’s budget; while non-cash releasing savings do not lead to direct reduction in the department’s budget. Some improvements to efficiency and effectiveness, such as increases in quality or avoided expenditure do not deliver cashable savings.

GIAA Audit of 2022/23 efficiency savings

The Government Internal Audit Agency (GIAA) was engaged to audit £4.8 bn of savings put forward at the start of process by the Functions in the Financial Year 2022/23. The audit assessed whether:

• the methodologies used by functions had been appropriately designed, were robust and were fit for purpose;
• reported benefits figures were accurately calculated, transparent and supported by the evidence; and
• benefits identified had been reviewed, verified, and were supported by appropriate governance oversight within the functions.

Savings were audited on a sampled basis, with the GIAA selecting savings from each function for detailed scrutiny on a risk basis. GIAA opines on whether proposed function savings fall into one of four categories:

• Substantial - The framework of governance, risk management and control is adequate and effective;
• Moderate - Some improvements are required to enhance the adequacy and effectiveness of the framework of governance, risk management and control;
• Limited - There are significant weaknesses in the framework of governance, risk management and control such that it could be or could become inadequate and ineffective); or
• Unsatisfactory - There are fundamental weaknesses in the framework of governance, risk management and control such that it is inadequate and ineffective or is likely to fail).

Only savings which have been given an overall level of assurance rating of ‘Moderate’ or ‘Substantial’ have been included in this publication. 

GIAA audit summary of 2022/23 efficiency savings

Only those functions given assurance levels of “Substantial” or “Moderate” have been published here. Functions with both “Limited” and “Moderate” assurance levels have received recommendations to improve their rating in future years.

The GIAA has provided an overall rating of “Moderate”.

Function (team)	Assurance level
Government Commercial Function (Markets, Sourcing and Suppliers)	Moderate
Government Commercial Function (Complex Transactions Team)	Substantial
Government Communication Service	Moderate
Government Counter Fraud Function	Substantial
Government Debt Management Function	Moderate
Digital, Data and Technology Function	Moderate
Government Grants Management Function	Substantial
Government Property Function (Office of Government Property)	Moderate

Summary of GIAA recommendations on the 2022/23 efficiencies and savings

Of the 16 recommendations in the final GIAA Report:

• seven pertained to the gathering or retention of evidence;
• four related directly to the overall assurance of the savings figures;
• three related to methodology and guidance documentation; and
• two pertained to the sign-off of savings.

National Audit Office (October 2023) Recommendations

On the 25th October 2023, the National Audit Office delivered a report on Cabinet Office Functional Savings. The report made six recommendations, setting out that the Cabinet Office should:

a. be clearer about savings reported, the extent to which central functional teams contributed to the savings, and ensure consistency in its application of approach with each function;

b. include in its report, an explanation of:

i) the challenges and limitations of calculating and reporting efficiencies;

ii) how it intends to use the figures produced by functions;

iii) why the different methodological approaches used are robust enough to support their intended purpose; and

iv) the extent of the assurance provided by GIAA over the figures in the functional efficiency savings report. 

c. set out the approach it expects functions to take in identifying and calculating efficiencies, based on the good practice set out by the NAO and considering the Government Efficiency Framework;

d. consider broadening its functional savings exercise to include all functions;

e. work with the functions to ensure the GIAA’s recommendations are responded to in a timely way in accordance with the GIAA’s expected timescales;

f. work with HM Treasury to make sure their (respective) approaches align where possible and are complementary, and that lessons learnt and good practice from both exercises are shared across government.

Cabinet Office’s response to the NAO Recommendations

The Cabinet Office accepts the six recommendations made, and is implementing the first two as part of this publication. Responses to (c), (d), (e) and (f) have also been set out below.

a. The main publication document disaggregates savings under separate headings: Audited cash-releasing savings delivered by central government function teams, and Audited cash-releasing savings delivered by function teams embedded in departments.

b. This publication sets out the following:

i) Challenges and limitations: Calculating and reporting function efficiency savings requires development and refinement (over time) of a methodology that reflects the work of the function and is consistent with guidance provided. It is also the case that savings only show a part of the wider benefits delivered by the functions.

ii) Intended use of figures: The efficiencies and savings are published for transparency and accountability that demonstrate the government’s commitment to delivering value from taxpayers’ money, while also showing investment in the government’s priorities. In his July 2021 review of the cross-cutting functions and the operation of spend controls, Lord Maude recommended that ‘publication of numbers for efficiency savings should be resumed’ in order to enhance transparency and accountability.

iii) Robustness of methodological approaches: The functions’ methodologies for measuring and reporting efficiency savings reflect the diversity of functional activity undertaken in their respective areas. These methods range from release of cash (commercial function), efficiencies baselined against projected scenarios (communications function), fraud prevention, detection and recovery (counter fraud function) to cash collected over business as usual (debt function). More detail is outlined in the Methodologies section of this Technical Note.

iv) GIAA assurance of efficiency figures: Information about the levels of assurance provided by GIAA is included in the GIAA Audit of 2022/23 efficiency savings and GIAA Recommendations 2024 Report sections of this Technical Note.

c. The Cabinet Office is working closely with HMT to transition reporting of functional efficiency savings based on the Government Efficiency Framework (GEF). This will ensure consistency of reporting across departmental and functional savings.

d. Previous publications of function efficiency savings have highlighted the work of central function teams based in the Cabinet Office. The Cabinet Office will continue working with the non-Cabinet Office based Functions (Finance, Legal, Audit, Finance and Analysis) to reflect their savings in future publications.

e. The Cabinet Office will ensure GIAA recommendations for each round of audit are actioned promptly, including where possible, before the start of the next reporting cycle. The Cabinet Office has worked with GIAA to clarify response timelines for each recommendation.

f. The Cabinet Office and HM Treasury are working closely together as GEF moves into expected transition and implementation in 2024. Recognising the reporting of efficiencies across departments will be phased, the Cabinet Office and HM Treasury are piloting the reporting of some functional savings in the first round.

Public Accounts Committee (2024) Recommendations

On 10th January 2024, the Public Accounts Committee (PAC) held an inquiry hearing on Cabinet Office Functional Savings, and they issued their report on the 1st March 2024, which made nine recommendations.

The Cabinet Office and HM Treasury responded to these recommendations through the Treasury Minute, published on 25th April. All of the recommendations were accepted, starting with a commitment to produce functional savings targets by October 2024, and ending in December 2025 with a commitment to carry out reporting of functional efficiencies via the Government Efficiency Framework.

Government Efficiency Framework

The Government Efficiency Framework (GEF), published in July 2023 by HM Treasury, sets out a standard approach and framework for the tracking, monitoring, and oversight of efficiency savings. 

It provides definitions and reporting standards for efficiency savings, best practice guidance for reporting processes, and guidance on how departments should be reporting efficiency savings to HM Treasury. Effective, standardised reporting improves understanding of what is being done well and where improvements can be made.

The Cabinet Office and HMT Treasury are working closely as the GEF is implemented by departments and the cross-government functions.

Table of savings

Individual savings are set out in the table below:

Functional Team	Project	Benefit Description	Savings
Commercial (Markets Sourcing and Suppliers)	Cross-government pricing negotiation	Service Re-Design and Alternative Delivery Mechanisms	£9,000,000
Commercial (Markets Sourcing and Suppliers)	Defence - contract negotiation	Service Re-Design and Alternative Delivery Mechanisms	£100,000
Commercial (Markets Sourcing and Suppliers)	Defence - supply chain rationalisation	Service Re-Design and Alternative Delivery Mechanisms	£8,000,000
Commercial (Markets Sourcing and Suppliers)	Defence - contract renegotiation	Service Re-Design and Alternative Delivery Mechanisms	£39,790,000
Commercial (Markets Sourcing and Suppliers)	Whitehall Boiler System Operational Temperature Reduction Works: Phase 1	Cost avoidance of litigation costs as a direct result of SPM intervention.	£12,400,000
Commercial (Markets Sourcing and Suppliers)	Solar Panels	Government priority/directive	£3,000,000
Commercial (Markets Sourcing and Suppliers)	Service transformation	Logistics, Commodities and Services Transition	£83,200,000
Commercial (Markets Sourcing and Suppliers)	Contract recompete	Service Re-Design and Alternative Delivery Mechanisms	£5,100,000
Commercial (Markets Sourcing and Suppliers)	Facilities Management Services UK and Europe	Cost avoidance of data breach costs	£45,000,000
Commercial (Markets Sourcing and Suppliers)	System consolidation	Service Re-Design and Alternative Delivery Mechanisms	£40,000,000
Commercial (Markets Sourcing and Suppliers)	Legacy to cloud transition		£19,440,000
Commercial (Complex Transactions Team)	BEIS / DESNZ Energy Affordability Scheme	Saving delivered through negotiations of some initial proposals from suppliers to deliver the service.	£1,990,196
Commercial (Complex Transactions Team)	MoD AWE Management and Operations negotiation	MoD’s Defence Nuclear Organisation sought to terminate a contract for convenience, requiring a negotiated settlement with the incumbent supplier. Complex transaction support the termination and the negotiations, securing a reduction in fees	£134,574,800
Commercial (Complex Transactions Team)	HMPO Dispute	HM Passport Office were in Dispute with their supplier providing passports. Complex Transactions negotiated a resolution to the dispute which produced a cash releasing saving	£650,801
Commercial (Complex Transactions Team)	Office of National Statistics Negotiations for professional services support	Saving  was generated through negotiations to both condense the scope of requirements and reduce rates for resources.	£900,360
Commercial (Complex Transactions Team)	DWP Restart	Saving was generated by renegotiating contracts before they became onerous for providers to avoid having to react to market conditions.	£11,000,000
Commercial (Complex Transactions Team)	MOD Brize Norton	Saving generated following Contract re-competes with negotiation	£4,224,400
Commercial (Complex Transactions Team)	DLUHC Electoral Management System	Saving was generated through negotiations from the initial supplier proposal.	£1,739,525
Communications	Performance with Purpose Programme	Savings generated through restructuring the central team and designing a new central operating model reducing the headcount within the function by 55%	£7.9m
Communications	Advertising, marketing and communications (AMC) spend control 2022/23	Savings delivered by working with departmental and ALB communication teams to identify opportunities for efficiencies and join-up in campaign plans.	£137,284,809
Counter Fraud	National Fraud Initiative	Extensive data matching delivered across 1,100 organisations across the UK. Prevent and detect fraudulent/erroneous claims to public and private sector services in a wide range of areas.	£171,043,376
Counter Fraud	Bounce Back Loans - Bulk Dissolution Objections	Lenders have used the new dissolution objection process to prevent companies from dissolving where there was an outstanding  Bounce Back Loan.	£40,509,531
Counter Fraud	Bounce Back Loans - Phase 1 Fraud flags	Lenders have used the fraud risk flags to identify suspected fraudulent Bounce Back Loans and refer for enforcement and / or recovery action.	£99,476,014
Debt	Private Sector Funding Measure 1016	Adds capacity and capability by providing government departments with access to a suite of private sector debt collection services	£726,565,330
Debt	In Year Additional funding for DCAs Measure 4094	Adds capacity and capability by providing government departments with access to a suite of private sector debt collection services	£107,089,443
Debt	Tax Collection through DEAs	Maximising collections of tax credits to increase monies to the exchequer	£16,136,000
Debt	Protecting taxes in Insolvency Measure 5047/1071	Minimises HMRC’s losses caused by business insolvency.	£5,700,000
Debt	Additional resource for debt pursuit Measure 1012	Increase in debt collected as a result of additional resource	£1,059,000,000
Debt	Spend to raise DM capacity Measure 1035	Increase in debt collected as a result of additional resource	£411,000,000
Debt	Supporting customers & making it easier to pay Measure 7032	Increase in debt collected as a result of making payment to HMRC easier for customers	£13,100,000
Grants	Spotlight Commercial Savings - Bank Verification Checks	The Spotlight due diligence tool provides a centralised service for bank verification checks, as opposed to users needing to procure individual digital solutions for higher rates.	£1,807,800
Grants	Spotlight Effectiveness	Improved effectiveness enabled the use of Spotlight due to its ability to conduct due diligence on multiple checks, which may not have been otherwise considered, enabling a payment to be stopped or reduced.	£ 6,570,969
Grants	Spotlight Efficiency	Administrative resource saving from Spotlight due to its ability to conduct due diligence at a faster pace than manual efforts, and bring multiple checks together in one place.	£ 3,795
Grants	Value for Money	Value for money savings through optimised implementation of the Grants Functional Standard.	£76,762,401 - £153,524,801
Digital, Data and Technology Function	DWP - HPE ADMS	The cost savings arose from transitioning away from the existing supplier and establishing an in-house capability to manage services.	£149,200,000
Digital, Data and Technology Function	Money and Pensions Service	The savings were achieved after the department was challenged on the length of the contract and its value, leading to the department revising their plans and implementing cost reductions.	6,849,087
Digital, Data and Technology Function	Biometrics	The cost reduction is attributed to contract disaggregation and the transition to a single system that is capable of supporting more users. This has led to a decrease in spending on hardware and software maintenance.	£17,300,000
Digital, Data and Technology Function	Proc 526 - Technical Architecture	The savings result from approving a contract for only 2 years instead of the requested 3 years, thereby reducing the cost.	£2,300,000
Digital, Data and Technology Function	DBS Future Service Delivery Contract (FSDC)	The Ministry of Defence (MoD) saved money by updating its IT services for military personnel through the Future Service Delivery Contract (FSDC) program. This modernization made the services more efficient and cost-effective.	£27,544,075
Digital, Data and Technology Function	Microsoft Enterprise License Agreement	The saving was achieved after the department’s original spend request was challenged, prompting them to revise the cost.	£3,245,133
Digital, Data and Technology Function	Technology Sourcing Programme	The savings resulted from HMRC’s IT modernization, including supply chain control improvements and contract disaggregation. The transformation initial cost projections were reduced through advisor collaboration.	£824,600,000
Digital, Data and Technology Function	Defra UnITy	The Unity Programme was to create a centralised ICT service for six organisations within the Defra Network to deliver their services. This meant re-designing and migrating most the existing ICT services to a multi-supplier model before exiting its ‘single source’ ICT contracts.	£166,485,000
Property	Property Efficiency & Disposals Programme - Disposals	Gross capital receipts from the sale of surplus property	£1,104,817,908
Property	Property Efficiency & Disposals Programme - Running Cost Savings	National Property Control challenges to departments’ lease event plans, resulting in alternative property solutions which have saved gross rental costs for the Exchequer.	£121,296,235

Methodologies

The functions’ respective methodologies for measuring and reporting efficiency savings reflect the diversity of functional activity undertaken in their respective areas. These methods range from release of cash (commercial function), efficiencies baselined against projected scenarios (communications function), fraud prevention, detection and recovery (counter fraud function) to cash collected over business as usual (debt function).

FUNCTION	Approach to measuring Savings	Baseline	Key Tool/Service/Innovation	Internal Sign-Off
Debt Management	Additional cash being collected for the Government	Additional debt collections over and above business-as- usual debt management / collection activity.	-Debt Market Integrator/Debt Resolution Services -Policy and Strategy Measures - most are announced through fiscal events	Deputy Director level sign off
Commercial (Complex Transactions)	Release of cash relating to commercial expertise	Varies, depending on project	Commercial expertise	Commercial Director sign-off
Commercial (Markets, Sourcing and Suppliers)	Release of cash relating to working with strategic suppliers	Varies by contract	Contract negotiation or re-negotiation	Commercial Director sign-off
Communications	Savings driven by advertising, marketing and communication (AMC) spending control	Varies by campaign	Specialist expertise and challenge to paid campaign plans	Chief Executive sign-off
Counter Fraud	Losses prevented and fraud detected/recovered	Nil - all savings from activity are in scope	Data matching/analytics solutions including National Fraud Initiative	Internal saving assurance (including Deputy Director) before audit
Digital Data and Technology	Identified through the spending controls process (changes to projects, cancelled projects and ICT strategy savings)	Depends on the type of savings. - ICT strategy  Either the  forecasted costs if the project were not implemented,  ‘do nothing’ option or if this is unavailable or unsuitable, current cost data or ‘do minimum’ costs from the business case  - Controls  The savings baseline is the department’s forecasted spend for each project year. If a previously rejected project is resubmitted for the same business need, the original forecast spend serves as the baseline.	Specialist expertise and challenge to digital spending plans.	CDDO Assurance Executive Board
Grants	Various depending on activity	Various depending on activity	Spotlight, Expert Support, Complex Grants Advice Panel	Director
Property	Bi-annual collection of disposal data. Monthly reconciliation of National Property Control cases refused/ withdrawn	Disposals - gross capital receipts in the year of measurement. NPC - existing rental commitment	Technical property expertise and challenge to property strategy	Deputy Director

Government Debt Management Function

The Government Debt Management function (GDMF) works in collaboration with departments to identify opportunities to maximise debt collections over and above business as usual activity. This identifies benefits and additional yield (savings), which result in additional cash being collected for the government. As these collections are over and above business as usual activity, the baseline is zero. 

The GDMF sets the central strategy and provides specialist expertise directly to departments to identify strategic gaps. The GDMF also works across government to design appropriate solutions. This includes the Debt Market Integrator (DMI) that creates a cross-government debt recovery service providing a single route to market for the recovery of debts owed to the government using third party debt collection agencies. This generates additional recoveries that would not have been recovered without the DMI’s existence. 

The GDMF has set up a robust process to ensure the figures are accurate and have been signed off at the relevant board / level wiUncleathin the department before they are assured through a GIAA audit.

Government Commercial Function - Complex Transactions Team

The Complex Transactions team helps to generate savings by providing specialist commercial expertise directly to departments. The savings are defined as:

• Release of cash that relates to an activity that has already happened
• Not just relocating or deferring costs
• Fairly calculated and clearly positioned
• Captured in year and accrue within period
• Net of any double counting
• Understood and seen as reasonable by an impartial third party. The financial savings are agreed between government departments and the Cabinet Office using a baseline which is unique to each project. This is evidenced through the department’s commercial director sign-off of a savings validation form, which acknowledges CTT involvement and has supporting evidence. CTT review the baseline in the savings validation form along with sources of evidence, including but not limited to:
• Original contract
• Departmental report, including calculation of savings against baseline
• Contract change notice and recomputation of contract.

Government Commercial Function - Markets, Sourcing and Suppliers

Markets, Sourcing and Suppliers (MSS) is part of the Commercial function that focuses on making savings from 40 strategic suppliers to the government. The strategic suppliers work with central government, arm’s length bodies and the wider public sector. The savings are split between the Strategic Partnership programme (SPP) and the Strategic Supplier Relationship Management (SSRM) programme.

SPP: a Strategic Partnering Manager is allocated to each supplier to improve the value of that supplier’s service to government. This can be achieved through reducing the cost of supply, improving the quality of service, mitigating risk, enabling additional cost avoidance and facilitating continuous improvement of the service.

SSRM: There are Supplier Relationship Management (SRM) leads allocated to government bodies. Benefits are categorised as either; financial, relationship, risk, or service improvements and are initially identified from joint workshops. Upon workstream implementation, benefits are captured in a case study or workstream tracker. For financial benefits, a senior civil servant in that government body approves a case study (where values are stated) or the government body itself reports the benefits in its own reporting mechanism. Savings are defined as:

• Release of cash that relates to an activity that has already happened
• Not just relocating or deferring costs
• Fairly calculated and clearly positioned
• Captured in year and accrue within period
• Net of any double counting
• Understood and seen as reasonable by an impartial third party.

Savings are agreed on specific contracts between departments and the Cabinet Office, using individual baselines decided once the MSS Team and the contracting authority have run a deep-dive and set up a workstream for a particular contract. The baseline used to calculate savings varies by contract. Savings are evidenced through the department’s commercial director sign-off of a savings validation form, which acknowledges the MSS Team’s involvement with supporting evidence. The MSS Team review the baseline in the savings validation form along with sources of evidence including but not limited to:

• Contract documentation
• Departmental report, including calculation of savings against baseline
• Contract change notice and recomputation of contract
• Ministerial submissions

Government Communication Service (GCS)

GCS helps to generate efficiencies within departments and ALBs through the advertising, marketing and communications (AMC) spending control process. The Strategy and Campaigns team works in collaboration with departmental and ALB teams to identify opportunities for savings, innovation and join-up, and provides specialist expertise and challenge to campaign plans. Efficiencies are calculated using the baseline forecast for each campaign during the annual strategic planning exercise, compared to the final value approved through the control. Efficiencies delivered due to factors outside of the control are excluded from the efficiency calculation and are also net of any double-counting (e.g. due to multiple requests related to the same campaign).

The Performance with Purpose Programme generated savings through restructuring the central team and designing a new central operating model reducing the headcount within the function by 55% The new structure is focussed on the areas where the central function can add most value: strategy and coordination; expert services in areas like data, insight and behavioural science; and driving efficiency, standards and skills, this is reflected in their respective delegation.

Government Counter Fraud Function

The Government Counter Fraud function (GCFF) works in collaboration with government departments and other public and private sector organisations across the UK to support counter fraud efforts. Savings come from two streams:

• Departmental led - where the functional centre works with departments to identify areas where savings can be realised and then the departments lead the activity, supported by the functional centre; and
• Centre led - where the functional centre runs services that lead to the department, or public or private sector organisations, realising savings.

Savings are generated where:

• losses have been prevented - the methodologies for valuing these prevented savings are approved by a cross government panel; or
• fraud has been detected and action commenced/completed to recover these losses.

Many of the savings come from the delivery of data matching/analytics solutions that highlight anomalies that may indicate fraud, thereby enabling better prioritisation of the work of the counter fraud expertise.

For example, the NFI brings together data from around 1,100 public and private sector bodies to identify fraudulent activity including benefit claims, social housing tenancies and private insurance claims. Savings are recognised at the point they are reported (or when there is sufficient evidence for new methodologies). All savings go through robust internal governance, which includes providing detailed evidence packs which are signed off by an internal savings assurance board prior to audit.

Digital, Data and Technology Function

Savings are identified through the spend controls process. This requires government departments to submit their project business cases to CDDO for review if they are considered digital or technology projects and have forecasted expenditure above defined levels.

The methodology defines three types of savings resulting from spend controls:

• Controls - a project is changed following Performance and Assurance team intervention to deliver the business need in a different way resulting in a saving as the total project cost is reduced. The function calculates claimed savings as the difference between the forecast cost of project delivery in the original business case and the approved business case. Savings are claimed on an annual basis, according to the forecasted profile of spend over the life of the project.
• Cancelled projects - a project is cancelled, in part or full, as a result of Performance and Assurance review and the department decides no further project is required to meet the previously identified business need. The baseline for measuring savings is the latest department forecast cost of the project prior to the review that led to the cancellation. The savings are identified as the difference between the forecast spend on the cancelled part(s) of the project and the remaining costs for that year after cancellation.
• ICT strategy savings - a reduction in departmental forecast spend for the year as a result of an IT/digital project being implemented in line with the government’s Technology Code of Practice. The baseline for measuring the savings will be the forecast cost if the department were not to have implemented the IT/digital project (the ‘do nothing’ option in the business case). The savings are identified as the difference between the forecasted expenditure in the ‘do nothing’ option and the forecasted cost of completing the project and implementing the business case. If the business case baseline is deemed an inappropriate measure for this spend control, other management information may be utilised to determine the most appropriate baseline to identify the savings.