Policy paper

FY 2021/22 Technical Note

Published 19 July 2023

Summary

This note sets out the government’s assessment of savings made by cross-cutting government functions in their work with government departments and other central government organisations in areas which include reduction of fraud and error, enhanced management of contracts and cross-government IT services.

Understanding these figures

The figures included in this publication are those which meet the definition of cash-releasing savings. Cash-releasing savings are those which lead to a direct reduction (all other things being equal) in a department budget.

Audit of 2021/22 efficiency savings

The Government Internal Audit Agency (GIAA) was engaged to audit the £3.4 billion of 2021/22 cashable savings. In executing their work, they 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.

The efficiency savings subject to audit are set out in the table below:

Functional team	Project	Benefit Description	Savings assured
Digital, Data and Technology Function (Performance and Assurance)	Defra UnITy	The Unity programme was to create a centralised ICT service for six organisations within the Defra Network to deliver the current services consistently and economically where possible. This meant re-designing and migrating most of the existing ICT services to a multi-supplier model before the expiry of its existing ‘single source’ ICT contracts.	£158,585,000
Digital, Data and Technology Function (Performance and Assurance)	DWP - HPE ADMS (FBC)	The department came to the end of contract with HPE who provided Application Development and Management (“ADM”) and Application Support (“AS”) for DWP. They have requested £342m for extension, transformation and exiting contracts. The benefits case has based that the spending will lead to the realisation of future transformation benefits and savings with DWP plans to establish a government company (BPDTS Ltd) who would manage the application development and application support functions for DWP.	£150,018,680
Digital, Data and Technology Function (Performance and Assurance)	Future Service Delivery Contract (FBC)	The Ministry of Defence (MoD) are replacing the IT services that provide support to military personnel including pay, Management Information (MI), pensions and multiple other vital components, collectively the Joint Personnel Administration (JPA). This will be delivered by the Future Service Delivery Contract (FSDC) programme that seeks to transform the way that services and technology for pay pensions and support for Military Personnel, Reservists and Veterans are delivered with key objectives to make them more modern, commercially flexible, and cost-effective.	£62,293,000
Digital, Data and Technology Function (Performance and Assurance)	Licence Agreement	The Nuclear Decommissioning Authority (NDA), an agency of BEIS, is seeking approval to spend up to £33.64m for the first three years of the 3+1+1 contract on a licensing agreement. This contract is a renewal of a contract for services already in place. Those services are for software and hosting services. The contract has made use of the MOU negotiated between Crown Commercial Services and the provider named DTA (Digital Transformation Arrangement) is in line with The Government Cloud First Policy and was competed via Crown Commercial Services Technology Products and Associated Services Framework to select a value-added reseller.	£3,080,727
Digital, Data and Technology Function (Performance and Assurance)	Proc 526 - Technical Architecture	The Home Office, Borders, Immigration and Citizenship Systems (BICS) portfolio requested £45m over 3 years for contracting with a supplier for Technical Architecture services. The GDS Standards Assurance team has approved the contract only for 2 years with no extension options with an approved spend value of £30m. The final actual department cost was £25.4m over 4 years.	£2,300,000
Government Business Services (Pensions)	Royal Mail Statutory Pensions Scheme core charge savings	Comparison of previous administrator fee to new administrator. The gross benefit delivered is the difference between the two costed positions. Outcomes are the same but savings have been made through new contract procurement.	£1,400,000
Government Commercial Function (Complex Transactions Team)	Green Homes Grant Dispute 21/22	The Department and Supplier were in dispute in the achievement of milestones. Complex Transactions negotiated a settlement which delivered a saving against the original supplier invoices	£7,161,835
Government Commercial Function (Complex Transactions Team)	HMPO Thales 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 of £5,000,000	£5,000,000
Government Commercial Function (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	£52,567,758
Government Commercial Function (Markets, Sourcing and Suppliers)	Application & Enrolment Service Agreement	Scope reduction	£960,000
Government Commercial Function (Markets, Sourcing and Suppliers)	Aspire Extension	Contract extension negotiation by HMRC Commercial Team - Capgemini and HMRC negotiated an extension to the current Aspire contract resulting in rate discounts and further value add.	£7,000,000
Government Commercial Function (Markets, Sourcing and Suppliers)	Coronavirus Job Retention Scheme	Repayment of furlough funds received - negotiations of settlement	£22,850,000
Government Commercial Function (Markets, Sourcing and Suppliers)	Defence Information Infrastructure	Contract recompetes	£32,410,000
Government Commercial Function (Markets, Sourcing and Suppliers)	Future Defence Infrastructure Services Procurement	Departmental reform	£16,000,000
Government Commercial Function (Markets, Sourcing and Suppliers)	HMCTS	Negotiation of settlement	£1,000,000
Government Commercial Function (Markets, Sourcing and Suppliers)	HMP Forest Bank	Through negotiation with supplier, 396 additional prisoner places were made available at HMP Forest Bank. Lower incremental cost represented a saving to the authority.	£300,000
Government Commercial Function (Markets, Sourcing and Suppliers)	HR Connect	Price reduction on run costs for services	£730,000
Government Commercial Function (Markets, Sourcing and Suppliers)	MOD Defence Digital (ISS) DFTS	Rate discount	£17,800,000
Government Commercial Function (Markets, Sourcing and Suppliers)	NHS PCSE	Rate discount	£25,000,000
Government Commercial Function (Markets, Sourcing and Suppliers)	SPP OGVA Pricing	Rate discount	£37,070,000
Government Communications Service	Advertising, marketing and communications (AMC) spending control	Creating efficiencies in campaign expenditure across government, increasing coordination and reducing duplication, as well as driving improvements in professional standards	£100,436,078
Government Counter Fraud Function	BBLS Change of Director Flag	Lenders have used the Change of Director flag to decline fraudulent Bounce Back Loan applications upfront.	£40,444,111
Government Counter Fraud Function	BBLS Incorporation Flag	Lenders have used the newly incorporated company flag to decline fraudulent Bounce Back Loan applications upfront.	£40,270,815
Government Counter Fraud Function	DWP Savings	DWP created a range of new initiatives to prevent/detect fraud with particular focus on Universal Credit case cleanse and correction activity	£1,043,000,000
Government Counter Fraud Function	ESFA 1	Data sharing initiative by Education and Skills Funding Agency (ESFA) to prevent and detect fraud by learning providers	£715,896
Government Counter Fraud Function	Experian	Use of Experian data on bank accounts and company status to prevent and detect fraud.	£325,528
Government Counter Fraud Function	Intel - Hotline	Use of Intelligence gained from citizen hotline to detect fraudulent bounce back loans.	£50,000
Government Counter Fraud Function	NFI AppCheck	Local Authorities use of NFI data to decline fraudulent applications for public services upfront.	£1,703,525
Government Counter Fraud Function	NFI Private Sector Insurance	Private sector insurance companies use of NFI data to prevent and detect insurance fraud	£7,368,000
Government Counter Fraud Function	NFI Vehicle Hire	Vehicle hire companies use of NFI data to prevent and detect vehicle fraud.	£6,248,880
Government Counter Fraud Function	NFI Web application - ODT, grant recipients, HMRC, Fraud Hub and Scotland SBBS	Extensive data matching delivered across 1,100 organisations across the UK. Prevent and detect fraudulent/erroneous claims to public services in a wide range of areas.	£195,003,644
Government Counter Fraud Function	Travel Passes and Residents Parking	Use of NFI data to prevent and detect fraud in travel passes and parking permits.	£48,000
Government Counter Fraud Function	Utilities	The identification of properties fraudulently declared empty when they were in fact occupied - allowing the status to be corrected and preventing future losses.	£785,905
Government Debt Management Function	Additional Resource for Debt Pursuit	Additional Resource for Debt Pursuit introduced additional staff to target lower value debts (<£40K).	£816,000,000
Government Debt Management Function	Aged Debt Taskforce	A taskforce set up to tackle aged tax debt over 9 months old with a value of up to £20,000.	£3,080,000
Government Debt Management Function	DMI Additional Yield	The Debt Market Integrator (DMI) is a cross-government debt recovery service, providing a single route to market for the recovery of debts owed to central government utilising third party debt collection agencies. The gross collections of £445m are presented inclusive of costs.	£445,000,000
Government Debt Management Function	Private Sector Funding	Additional tax credit collections. The gross collections of £42.6m are presented inclusive of costs.	£42,600,000
Government Debt Management Function	Protecting Taxes in Insolvency	Protecting Taxes in Insolvency reduces forced insolvency as a way of avoiding a tax bill.	£600,000
Government Debt Management Function	Tax credits collection through DEAs	Collection of tax credits through Direct Earnings Attachment.	£14,700,000
Total:			£3,361,907,382

The approach taken by GIAA was to assess a sample of the total value savings of each functional team set out in the table above and to provide an overall level of assurance for each functional team. An Internal Audit report has been issued to Cabinet Office setting out in full GIAA’s findings for the functional teams. This has enabled Cabinet Office to determine what benefits will be claimed in the 2021/22 efficiency review and those that will not be claimed following GIAA’s audit review.

The methodologies detailed by the functional teams are set out below.

Cross-government area	Methodology
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 within the department before they are assured through a GIAA audit.
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.
Commercial function (Markets, Sourcing and Suppliers team)	Markets, Sourcing and Suppliers (M&S) 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 M&S 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 M&S team’s involvement with supporting evidence. M&S 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 Communications Service	The Strategy and Campaigns team 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).
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 CDDO 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 CDDO 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 ICT Strategy. 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.