| APPENDIX 6|
Memorandum by Mr Des McConaghy
COMMENTS ON Cm 4181, Cm 4315 and "THEGOVERNMENT`S MEASURES OF SUCCESS" (HMT: 31 MARCH 1999)
In 1999-2000 UK Government Departments willproduce their first sets of audited Resource Accounts and theirfirst set of Output and Performance Analyses (OPAs). This marksa fundamental change in the way the Government reports to Parliamentand the public.
The innovations are therefore of major constitutionalimportance. The process was initiated in 1994 but the new Administrationhas added fresh determination to the definition of its prioritiesand measuring outcomes. There is no doubt the Government wantsto be judged by this initiative when next going to the country.So the reputation of the Government and a major constitutionalinnovation both hang on getting it right.
Why then has it not attracted commensurate publicinterest? Certainly there has been widespread concern about thecentralisation of power and the associated fragmentation of publicagencies; a concern amounting to a "crisis of legitimacy".Some may now see the Treasury's new interest in outcomes as simplyan extension of central diktatwith devolution as a somewhatunresolved anomaly. Then, too, Public Service Agreements and theirOPAs have for the most part been presented to us as technicalinstruments to improve "the economy, effectiveness and efficiencyof services". While these remain important objectives theenormous potential of OPAs for bulwarking democratic accountabilityhas been either underestimated or played down.
It is viewed primarily as an internal departmentalprocess. Thus "formal external validation is not required"but departments "should be able to justify the figures toParliament or the NAO as part of any value for money study".My paper attempts to redress this imbalance. In the meantime OPAsalready face profound technical dilemmas which will continue tothreaten progress (paras. 1-7) The only way through theseendemic technical problems is to assert the primacy of the validationprocess in the rules for the operation and control of OPAs. Myproposals therefore unite the technical and political definitionsof OPAs by:
"customising" OPAs in amanner analogous to the private sector retail market; ie by ensuringthe disaggregation of expenditures to the point of delivery andthe continuous feedback of local and/or sectoral impacts (paras.8-11).
promoting user-friendly programmeswhereby Parliamentary Committees, Elected Members, public authoritiesand citizens can all access OPA information across departmentalboundaries at any appropriate level of aggregation (paras.12-15).
1. The original 1994 Green Paper on ResourceAccounting advanced simplistic proposals for output and performancemeasures (Cm 2626). Many commentators pointed to the conceptualand practical difficulties; it is traditionally a problematicarea of work because it is not wholly amenable to static analysis.The NAO echoed this concern, warning that departments would have"great difficulty in achieving meaningful measures"in the way then set out by the Treasury (HC 123 1994-95).
2. That concern must be set against thewider anxieties expressed by the Treasury and Civil Service Committeeabout loss of detail in the reformatted Supply Estimates. It waspart of their ongoing and very serious worry that Parliament andthe public would have insufficient information following the shiftfrom the traditional cash based system of government accountingto resource accounting.
3. Then, in 1995, the White Paper (BetterAccounting for the Taxpayers' Money; Cm 2929) allocated just oneparagraph to output and performance measures. It seemed as ifTreasury staff were becoming overwhelmed by their topic; a fairreaction given the intractable nature of a purely technical approach.In any event while the earlier Green Paper had shown objectivesagainst costs there was now some distancing of output and performancemeasures from formal accounts. OPAs were and are threatened byany isolation of performance data from financial data.
4. At this point your Committee`s SpecialistAdviser Professor Heald warned, "The provision of improvedperformance data is the quid pro quo for Parliament's acceptanceof a reduction in the amount of detail traditionally presentedwithin the Estimates cycle. Concrete improvements in the qualityand consistency of output data are necessary if fashionable rehetoricabout buying outputs rather than inputs is to be anything morethan a good line in rehtoric" (HC 186 (1996-97), page 36).
5. Much remains unresolved. The recent Treasurypublication "The Government's Measures of Success" confirmsthe constitutional centrality of OPAs; they "provide thebasis for the Government to report its performance to Parliamentand the public annually". But this "work in progress"still resembles a large shopping bag of diverse outputs (specificand abstract) or codes. It begs questions about the need for robustprinciples for operation and control, about the precise "read-across"to the financial data and about the validation process.
6. We should beware, too, of tendenciesto concentrate on programmes that seem more obviously measurable.As in the closely associated "electronic government"initiative, "progress" is mainly made in agency businessapplications (where the management criteria seem relatively clear)or in the field of personal transfers (where delivery principlesappear to raise no conceptual problems). The danger here is ofcreating a serious imbalance in the overall corporate response.It can lead to a progressive loss of the core competencies fordealing with the great mass of governmental business where decision-makingis more subjective and inherently complex.
7. Any important new system of public accountabilityshould respect these complexities. The limits of a purely technicalapproach will also become clearer when judging the impact of governmentpolicies on local or semi-autonomous levels of government andthose that are directly electedas well on private sectorindustrial and commercial interests. In general, therefore, onemust conclude that a very robust validation process is requiredas an integral part of the OPA methodology. We now turn to thissolution.
8. Customisation means disaggregating expendituresto the point of delivery so that the continuous feedback of localor sectoral impacts becomes an integral part of the measurementexercise. This "continuous assessment process" is efficientand flexibleand both are essential requirements of modernmacro management. But the greatest merit of this approach is itscompatibility with positive scrutiny styles of government andthe necessarily subjective nature of the political process.
9. It is already normal practice in theretail market. Of course the private sector analogy breaks downif you push it too far; the word "customer" cannot possiblyencompass the great variety of relationships between governmentand the public. What cannot be denied, however, is the relevanceof the model for combining sensitive communication and effectiveactionand that seems to be the whole ethos of the new PublicService Agreements.
10. Of course it is "transparency"which distances the public sector model from the private sectormodel. Fortunately the technology which can now facilitate thedisaggregation and feedback of data can also, simultaneously,facilitate the widespread dissemination of this information. Thisthen opens up OPAs to a framework of debate in a very objectiveand informed way. It is worth repeating these objectives as aprinciple for the operation of OPAs: The framework of debate isjust as important as the measurements used and successful validationdepends on this interaction. This is where IT now offers us alla truly "customised" solution.
11. Does the innovation imply significantadditional costs? In the first place modern information technologyhas made the process a fairly simple operationas we foundin a voluntary pilot project over a decade ago.Secondly it is difficult to see how individual departments willbe able to devise a better way of testing results rather thanvalidating existing bureaucracies. Thirdly any marginal extracosts in dissemination and in feedback will be progressively reducedwith the inevitable adoption of Electronic Data Exchange at alllevels of the public sector.
12. Other important benefits follow. Automatedsystems which disaggregate expenditures to the point of deliverycan just as easily aggregate or disaggregate them by function.This is a godsend for "joined up government". Governmentsdo need a capacity to co-ordinate action when and where co-ordinationis absolutely necessary and the machinery to decide when thatis the case. The Cabinet Office has taken the lead in this butthe provisional answer still seems to be new special purpose unitsor quangos (eg, SEU, RDAs). The danger is that to co-ordinatefor one thing is to unco-ordinate for another. But the above principlesensure effective staff work across jurisdictional or territorialboundaries whenever that is required.
13. These principles were tested in a pilotproject between 1983 and 1986 which disaggregated the then SupplyEstimates (England). This gave a unique picture of overall publicservices for any one area. User-friendly interactive programswere also devised whereby any lay-person could access informationin their local area or in comparison with other areas across thecountry. Anyone could cross geographical and departmental boundariesat will and this was such an exceptional facility that it wasalso accessed by numerous public and private sector agenciesincludingyour House of Commons Library.
14. New rules imposing a departmental dutyto seek the maximum financial return on official data put an endto voluntary efforts to cover a wide range of national programmes.But the experience generated useful insights on the potentialfor official initiatives. Since then there have been many examplesof local community networks, resource centres and local community-basedIT projects. But they all lack a national framework. They arehandicapped because local government and community based informationprojects rarely have access to the data of central governmentdepartments (or their appointed agencies). Yet it is the centralgovernment which controls most public action and all "life-chance"services.
15. OPAs should provide this national framework.If and when they do then both Parliament and the public will beable to enjoy user-friendly access throughout the system. Recentlythe Chief Secretary referred to the great importance of publicparticipation in this venture and he specifically mentioned "citizen'sjuries".The citizen's juriesand the "Peoples' Panel"willhave their uses. But the first obligation of "external validation"is for Parliamentary scrutiny and for innovations commensuratewith a major constitutional reform.
25 April 1999
5 Treasury OPA Guidance, December 1997, para 3.2. Back
6 The parellel loss of core competencies in pursuit of "electronicgovernment" is well detailed in "Information Technologyin Government", Helen Margetts, Routledge 1999. Back
7 "Connect: Area Information" (AIS) was funded by theMSC & Rowntree Charitable Trust under the charitable umbrellaof Charities Aid Foundation. Back
8 The "Modernising Government" WP usefully extends thearbitrary 25 per cent target for the introduction of electronicgovernment. In 1986 AIS disaggregated to LA district only but,for example, by 1992 the DES (now DfEE) was using EDI for thetransmission of teachers' individual school records to the ministryusing Dialnet. AIS coverage of financial data could now similarlybe extended to individual schools, housing associations, etc. Back
9 AIS was a small voluntary project but disaggregation of nationalprogrammes across the board encouraged access by diverse agenciesincluding Government departments, Audit Commission, AMA and localauthorities, the Housing Corporations and associations, HC Libraryand the media. A one year coverage of NI was also completed beforethe Whitehall charging policy halted ongoing access to officialdata. Back
10 The importance of national information framework is highlightedin my evidence in Third Report from the Public Adminstration Committee,Session 1997-98, HC 398-II, pp 150-152. Back
11 The Rt Hon Alan Milburn, Speech to the TUC (IPPR), 3 March 1999. Back