In a scathing report into the Gershon efficiency drive, the Public Accounts Committee (PAC) argues that just £3.5bn of the gains “represent efficiencies”. The remainder of the savings are “uncertain” because departmental calculations are often inconsistent, unsustainable, unsound and incomplete.

Service quality may have deteriorated instead of improved in some instances, the report claimed. Patients spending less time in hospital were classified as an efficiency saving, for example, in spite of a rise in re-admission rates.

The committee’s conclusions echo the findings of an investigation by the National Audit Office this year. Edward Leigh, PAC chairman, said the Treasury claim “does not stand up to close scrutiny”. “Too much of the data on which claims of efficiency gains are founded is simply unreliable.”

As he underlined in Tuesday’s pre-Budget report, Alistair Darling, the chancellor, aims to make £30bn of savings by 2010 with departments making 3 per cent efficiency savings every year.

Many projects included one-off savings rather than long-term improvements, excluded ongoing costs to maximise the apparent gains and misrepresented staffing figures to show headcount reductions.

A £300m saving by the Department of Work and Pensions from paying benefits electronically, for example, failed to take account of the £164m cost of the Post Office card account, through which some of those payments are made.

The committee concluded that the Office of Government Commerce, which verifies efficiency claims, left many calculations “insufficiently challenged”.

From:
http://www.ft.com/cms/s/0/4558bfc0-7787-11dc-9de8-0000779fd2ac.html?nclick_check=1

On March 02, 2006 Health Direct posted Why is NHS productivity falling- yet Labour claims it could be rising? when the Office for National Statistics started a fierce disagreement over output and productivity in the National Health Service this week as it launched a consultation into the issue.

The ONS reported that different techniques could show NHS productivity rose by 1.6 per cent a year between 1999 and 2004 or that it fell by 1.5 per cent a year. Official figures show a decline of close to 1 per cent a year.

The Department of Health’s preferred view raises NHS output by 2.68 percentage points a year, while independent research by the National Institute of Economic and Social Research and the University of York recently estimated a more modest uplift to NHS output of 0.17 percentage points. This would not be enough to show rising health productivity.

The most controversial element in the department’s reasoning is an automatic 1.5 percentage point a year uplift in measured NHS output to reflect the increased value of public services as society becomes richer.

Another problem was the Department of Health’s assumption that patients’ satisfaction at cleaner hospitals has as much weight in its calculations as the NHS’s ability to save lives. Andrew Street, a senior research fellow at the University of York, said there was no “empirical basis for the weights” the department used.