Feature / Back on the agenda

There can be no doubt that efficiency in back office operations will remain a focus of attention in the public sector.

Since 2004, when the government commissioned a review of public sector efficiency led by Sir Peter Gershon, until the operational efficiency programme report that accompanied the 2009 Budget statement, there has been a spotlight on the efficiency of corporate services.

The five UK public sector audit agencies – the Audit Commission, Audit Scotland, National Audit Office, Northern Ireland Audit Office and Wales Audit Office – whose role is to assess value for money secured in the use of taxpayers’ money providing public services, share the government’s view that there is the potential for significant efficiency savings in corporate services across public sector bodies.

To help identify these savings, the agencies have developed value for money benchmark measures in five key corporate functions – finance, ICT, human resources, procurement and estates management – with work in hand to produce further benchmark measures for legal services and public relations.

The measures have been designed around key features of a modernised organisation and are intended to have a major impact on outcomes or the performance of the organisation as a whole.

For example, within the finance set the measures target both efficiency and effectiveness, and look at impact, satisfaction and modernisation. The measures should be interpreted collectively in order to understand the impact of the finance function on the effectiveness of the organisation in achieving its key service delivery targets. 

The primary measures include:

• Total cost of the finance function as a percentage of organisational running costs (expenditure) and within this the proportionate cost of a) transaction processing, b) business decision support and c) reporting and control.
• Cycle time in working days from period-end closure to the distribution of routine financial reports to all budget managers and overseeing boards and committees.
• The percentage of variation between the forecast outturn at month 6 and the actual outturn at month 12.
• Percentage of public sector organisation spend for which there are fully costed outputs that are measured by key performance metrics and for which a named individual is accountable.
• Commissioner and user satisfaction index – a composite indicator compiled from the responses to a set of statements by commissioners and users.
• Management practice indicator – CIPFA financial management model
• Management practice indicator – the number of practices that have been adopted by the organisation out of a possible total of 10.

There are also 11 secondary measures for instance covering the number of professionally qualified finance staff, debtor days, cost of customer invoicing function and payroll admin cost per employee paid.

The measures are kept under review and regularly updated by expert groups comprising representatives from across the UK and from across all parts of the public sectors.

They are voluntary, but are strongly encouraged, not least in the OEP report for use by organisations to drive improvements.  

Organisations will benefit through the use of the benchmark measures that help them demonstrate how they are achieving value for money and learn from best practice elsewhere.  Benchmark measures can also help organisations focus on outcomes for corporate service users and commissioners, and support better decision making by giving managers access to better information.

The indicators are available at www.public-audit-forum.gov.uk/publicat.htm

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