Examination of Witnesses (Questions 580
THURSDAY 14 DECEMBER 2000
580. How can we improve it?
(Sir Andrew Turnbull) There are issues of resourcing,
the resourcing of support you get. Where do you get your advisers
from, are they picked up here and picked up there?
581. So you would welcome a large increase in
resources for Parliament to be able to scrutinise the Treasury?
(Sir Andrew Turnbull) That is not for me to decide.
582. It is a logical implication of what you
have just said.
(Sir Andrew Turnbull) You look at other legislatures
and you see that this whole process of scrutiny is organised differently
and resourced at a different level. Also, ours is a very complicated
constitution in the sense that people have party loyalties as
well as being Members of the legislature scrutinising the Executive.
There is an ambiguity in the role of Select Committees which is
always difficult to cope with.
583. Professor Likierman, I know you were on
the other side of the fence many years ago, you were advising
this Committee or its predecessor. If you could take yourself
back to those days, what would you like to have had as someone
advising MPs to scrutinise the Treasury? What extra resource or
procedures would you like to have seen?
(Professor Likierman) If I can turn the point round.
At the time my concern was whether MPs themselves gave the time
which the subject sometimes warranted. MPs are busy people and
even with additional support, sometimes they are not able to give
the amount of time and attention to the subjects which are covered
by Select Committees. I cannot comment on the question of whether
absolutely resources would be better but I know they have to go
together with close attention by MPs themselves. You asked me
to speak as a former adviser to this Committee and I am speaking
in that role.
584. You favour some system of incentives and
obligations on MPs to try to get involved in scrutinising the
Budget and the Treasury?
(Professor Likierman) The question of incentives is
an important one. Why people should give time and attention to
Select Committee matters is obviously a question of relative priorities
for those MPs. Again, it is very much for parliament to decide
what the incentives should be for MPs to spend time on Select
585. I will finish on a slightly easier question
for John Gieve, if that is all right. You are developing the PSA
framework and certainly it has been a moving target, a new area
of policy. When do you think it will be more or less settled so
that the Treasury will feel self-confident enough to allow the
performance on PSA targets it sets to be externally monitored?
(Mr Gieve) I think we made a huge stride with this
spending review. I think in most areas of government, we have
got the right targets, we have set the right priorities, they
do match the government's key priorities and they do capture what
the electorate expect from government and they are focused on
outcomes. There is still room for improvement but I think we made
a quantum leap forward this time round. In terms of monitoring
the results and so on, the PSA process is an open process, that
is the point of it. It is getting government to say explicitly
what it is aiming to do which enables people outside government
to judge whether they are achieving it or not. We are intending
to establish an open website in which there will be quarterly
reports on how we are doing against these targets. In that sense,
the more parliamentary scrutiny and public scrutiny the better.
That is the point of having the framework.
586. Your budget and your departmental accounts
are audited independently externally by a creature of parliament
named the NAO. Why should the PSA be so monitored and audited
if they are a fundamental part of the budget as the Treasury claims?
(Mr Gieve) Can I answer that in two halves. First
of all, what we have done, we published last week and this week
technical notes to the PSAs which set out all the definitions
and measures which we will use. They have been published on departmental
websites over the last few days. They were a product of a process
of examination by a group which we led but involving the National
Audit Office, the Audit Commission, the Office of National Statistics,
the Cabinet Office. There was a joint review committee which went
through those technical notes to try to ensure they were of good
quality. In many cases, and this includes many of the Treasury's
own objectives, for example, the actual measures are themselves
independently verified. They are either national statistics or
they are produced by some of the auditing bodies.
587. What proportion?
(Mr Gieve) I think there is a lot of external validation
involved already. The question of whether you set up a separate
process of formal audit is one that we are open minded on. As
you know, the Sharman Review is looking at this amongst other
things and we have suggested a similar group, that is involving
not just the National Audit Office but the Audit Commission, the
Office of National Statistics, the Treasury, Cabinet Office, should
get together and review what sort of external validation would
make sense and where it is necessary and so on. Our mind is not
closed on going further but actually there is an awful lot of
published, independently validated measurement information already.
Mr Davey: Thank you. Can I apologise I have
588. Can I just try and probe this one step
further than Mr Davey has done on this question of parliamentary
accountability. Sir Andrew, from the Treasury point of view, are
there any gaps in parliamentary procedure, Budget procedure which
would improve matters from the Treasury point of view? Do you
think it would be useful from the Treasury point of view to have
better and closer analysis of the Budget?
(Sir Andrew Turnbull) We have gone back to a two stage
process which a lot of people argued for. It is not a green Budget,
but the PBR is a major change. You can even find people saying
"Well even before PBR is published should there be consultation
before that?" There is a tremendous amount of material which
is put into the public debate in the autumn and that is an opportunity
which parliament, the media and other analysts can take up. In
a sense we have made an important change here. There are a host
of measures, 20 odd measures in this PBR which we have indicated
an interest in pursuing in the next Budget. We are still adhering
to the view basically that we want to take this decision once
a year where you can bring the arithmetic of public finance together
and not take them piecemeal through the year. We have put out
this material and it creates an important opportunity. Also, we
are moving to a world of resource accounting and budgeting. Will
that present more information and present different information?
We have tried, also, to move Treasury to a more strategic view
vis a vis the spending of departments. We have tried, also,
and I have to say unsuccessfully, to get that reflected in the
extent of the detail which was presented to parliament. We were
stopped in this by the PAC who said "No, we want you to carry
on with quite low thresholds, reporting on gifts and write-offs
and so on". I think there is some move which parliament can
make which reflects the fact that the Treasury is trying to look
at policies at the strategic level and leave departments greater
freedom over the details of their delivery.
589. I realise that talking to Parliament is
never going to be like phoning a friend, but nevertheless would
it not help the Treasury if Parliament had a greater understanding
of the Treasury's perspective on expenditure and the view that
it was just a penny pinching or negative department might be modified
if Parliament was brought more into the Treasury's confidence?
(Sir Andrew Turnbull) The other change is that we
have moved away from an annual process of public expenditure rounds.
There are very good reasons for this. It puts an end to the kind
of annual game playing, people saying "I will settle for
the figures for one year hence but I make no commitments to the
next year because I know within a few months I can be back arguing
again". I think that has been a big improvement. Again, that
is an opportunity for Parliament to also change the time horizon
of its focus and look at these settlements over the same kind
of three year horizon and in the same way now there are two-sided
settlements. We are explicit not only about the money but we are
now explicit about the outputs that are to be achieved and this
Committee and all the other departmental committees ought to be
able to use that material and follow it up in a fairly systematic
590. Could I go back to the PSAs. You had the
system that was initiated in 1998 and is now being renewed or
amended. What lessons have you learned from that initial experience
of the 1998 targets and system?
(Sir Andrew Turnbull) The first thing is that we do
not in any way regret 1998. Some people have said the fact that
we have changed it means there was something wrong.
591. That was not the implication I was making.
(Sir Andrew Turnbull) It is like saying when Microsoft
produced Windows 1998 that Windows 1995 was a mistake. It is a
development. We do not see what we have done in 2000 as being
the end of this process either. The whole issue of validation
is clearly to be developed further. 1998 was itself a development
of things that had gone before. The whole idea of setting money
and outputs was something we had applied at the agency level for
a number of years and the innovation was to apply that at the
departmental level. We will go on producing this. I think we recognised
that having an undifferentiated, non-hierarchical set of objectives
meant that what you were trying to achieve in terms of the real
outcomes you wanted to deliver was mixed up with the how, the
processes, the delivery mechanisms, the management changes. Separating
those two out has produced a great deal of clarity as to what
is the status of each of these divisions.
(Mr Gieve) If I could add something to that. We had
too many measures in the first set and too many targets and, as
Andrew said, they covered everything from how quickly we answered
Parliamentary Questions to whether we reduced congestion on the
roads. The purpose of the new set has been to separate out the
real political priorities. The second set of PSAs are more focused
on outcomes, the things on which politicians and the Government
will actually be judged. They are more outcome based and a better
attempt to specify real top level business and political priorities.
That was one of the things we learned. I think the process was
the other thing we learned. The first time round the final negotiation
on PSAs happened after the end of the Spending Review, this time
we reversed that order and the first half of the Spending Review
was all about discussions about what were the key priorities,
how should we define success for each of the departments. That
was a co-operative process although there is a necessary tension,
if you like, at all times between the Treasury and departments
over spending. It was a-co-operative process with departments
and with the other central departments, like the Cabinet Office
and the Policy Unit, at the beginning of the process to say what
would count as success in this area. We have got the order right
592. Have you done any performance analysis
of the different departments on the basis of that original PSA,
(Mr Gieve) Which ones are hitting their targets or
who did this process better?
(Mr Gieve) We do collect quarterly information on
whether people are hitting them. These are the original targets,
the ones set in 1998. We publish the results at the time of the
departmental reports in March, so we published them last March
and we will publish them again this March.
594. Against the original set of targets?
(Mr Gieve) Against the original set. As I say, for
the new PSA targets we are hoping to go one stage further and
have a sort of central score card available publicly for those.
595. How long are you going to keep the original
(Mr Gieve) There is always a problem here about when
you change trains. We will continue to monitor the original ones,
at least up until the end of the three years for which they were
set, so to the end of next year.
596. Those are the main lessons that have come
out of the original exercise. Are there any others on the way
things are monitored and the relationships between you and the
(Mr Gieve) I would say one lesson is that it has been
a helpful development in relations between us and the department
to get an explicit agreement between both politicians and officials
in departments but also between the centre of Government and the
individual services on what are the priorities. I think departments
would have said in the past that one of the problems in managing
their service was having their elbow jogged by the centre of Government
which would say "we think that the focus should switch to
X or to Y". Having an explicit agreement between the centre
of Government and the individual departments on what is important
and what they should be aiming at has clarified and been a helpful
step in relations.
597. Could you explain why you feel that now
you have got to a better combination of SDAs and the technical
aspects of this? What is the difference about the way you are
doing it now which gives you more confidence?
(Mr Gieve) As I say, I think there are a number of
things. Firstly, the process of agreement came at the right stage
of the Spending Review. Secondly, we learned from the first set
that there were too many targets and we have now got a better
set of priorities. Thirdly, we have concentrated on outcomes and
we have separated out, if you like, the main business objectives
and PSAs and how to do it in the SDAs and I think that is a step
forward in clarity. Finally, I suppose looking through the departments
one by one we feel that the current set, so far as they have changed,
and there is quite a lot of overlap, is actually an improvement,
they are smarter and clearer and they capture better the true
purpose of Government. I suppose another thing is we have done
more this time to try to pick up the cross-departmental objectives
and priorities of Government. We did a little bit of that in the
original Spending Review in 1998 but we had 15 cross-departmental
reviews in the last Spending Review and we did much more to ensure
that, for example, the Department for Education and the Department
of Health had targets which reflected the contributions they were
making, not just to health but to crime reduction or the reduction
of deprivation in certain neighbourhoods. So 30 of our 160 targets
this time are cross-departmental targets, or joint targets, and
I think we have made a big improvement on that front.
598. Could you explain the concept of the SDA,
its content and where it fits in now it has been separated out
from the PSA?
(Mr Gieve) The concept is that at a high level this
explains how departments are going about achieving their main
business objectives, and in particular it picks up what I call
the personnel Cabinet Office agenda on such aspects as diversity,
equality of opportunity and so on, a number of things that are
very important across the whole of Government and are to do with
how Government organises itself but are not themselves, if you
like, top level service objectives. So that is the split.
599. Which will you be monitoring, PSA or SDA?
(Mr Gieve) Both.