Examination of Witnesses (Questions 180
TUESDAY 15 JANUARY 2002
MP AND MR
180. I was reading Mr Prescott's introduction.
(Mr Smith) We have supplied already to the Committee
the guidance which we put out. We have not only set out there
the financial information which is required in the tabular form
it is to take, the PSA information and progress which is required
to be reported objectively and, of course, as the reports come
in officials and ultimately I have the responsibility of clearing
that presentation jointly with the department concerned.
181. Given how important the PSAs are in particular
to the whole of Government and given the danger both in Government
and business that when people produce an annual report part of
it is for information and part of it is to persuade their bosses
and others that they are doing a good job and to protect the high
salaries or whatever awards connected with their work happen to
be, is there not a serious argument for taking some of the work
involved in producing the reports and in commenting on performance
against, for example, PSAs and placing that outside the department,
either in the Treasury or in some other auditing body so that
the analysis of the performance, at least in part of the reports,
can be considered to be as objective as possible?
(Mr Smith) Let us remember that a substantial proportion
of the information which is in the reports in fact already meets
the criteria which you have set out because the information is
National Statistics information or because it is audited by the
Comptroller and Auditor General and certainly, as I have said,
Treasury officials are involved in putting this together. On the
broader question of external validation of performance, that is
something, of course, which the Sharman Review examined and I
hope to be in a position to report the Government's response to
the Sharman Review quite soon.
182. The last question on that. I accept that
most of the statistics used will have had some independent validation
and also that some targets which appear in the annual reports
are easily quantifiable and hopefully easily measurable. As you
know, quite a lot of the elements of judging departmental performance,
even though they have statistical information built into them,
require quite some element of judgment. If you look through the
PSAs' resource departments you will find all sorts of ties which
are set in a very broad way, preserving macro economic stability
and things like that, which really require some measure of independent
judgment about whether they are actually being achieved. It is
very easy for departments to tick those off in particular years
if they are monitoring themselves but perhaps somebody else should
be having a look at these things and perhaps it should be their
judgment which appears in the report.
(Mr Smith) Something like macro economic stability
is very objectively measured actually, it is not something you
can fudge very well, as previous governments have discovered.
(Mr Sharples) I would add to that, the Government
does publish for each of its targets a technical note which sets
out in some detail precisely how that target will be measured.
It is possible to track back to that.
183. Can I just ask, I am sorry to have to come
back to that, what is the principal argument against having an
element of external validation of the performance against PSA?
(Mr Smith) I think there are powerful arguments for
an element of external validation. As I say, these are matters
we will be responding to in our response to the Sharman Report.
There are other considerations as well though. Going back to when
I was at the DFEE, I was always struck when I was carrying forward
the New Deal programme at the discontinuity between the management
information that you needed to have to drive a programme forward,
the information that a Job Centre manager needs to have on their
desk to know what they need to do on a Monday morning for that
week to make sure the programme was on track, and the information
that you actually needed to satisfy National Statistics and that
was properly validated which inevitably came in some time later.
If you try to deliver and guide the programme on the basis of
the externally validated pukka statistics, it is a bit like driving
a car on the basis of a film of where you were ten minutes ago.
Let us remember that there are other requirements for information
in departments if programmes are to be successfully delivered.
As far as possible, of course, it is good if you can get a correspondence
between the management information that you need to make a success
of programmes and the information which it is useful to report
to Parliament and to the public on progress. In some cases that
is the case but in others, for reasons of timeliness and the means
by which information has to be gathered, it is not so readily
achievable. I think there is a balance to be struck there but
I do appreciate the importance of the objectivity and public confidence
in the performance measures they are using.
184. Chief Secretary, do you think there is
a case for departments also reporting on some of the issues raised
in the Performance and Innovation Unit issues which are inherently-cross-departmental?
For example, the PIU Report on difficulties with public sector
computing systems which everyone would recognise is a big issue
across Government, do you think there is a case for expecting
that departmental reports would, perhaps not routinely and mechanically
but about significant issues like that, pick up on PIU Reports
and marked progress?
(Mr Smith) Not simply the PIU Reports, of course.
One of the things which departments are specifically asked to
include in their reports are points taking up observations and
recommendations which the National Audit Office has made. Certainly
there would be a case for them covering issues which have been
raised by the PIU or other units and I will reflect further how
that might be done. You actually allude to another important area
that it can be a bit tricky to get right and that is how cross-departmental
initiatives are properly reflected in departmental reports. As
you will have seen from the notes of guidance that we circulated
to the Committee, there is provision for how this should be done
in the accounts. We do need to make sure that there are clear
accounts of progress on departmental initiatives in the departmental
reports as well.
185. I am still not quite clear, coming back
to the decision to reduce the core financial tables in each report,
who actually decides? Would it be, for example, that the department
decide they would like to conveniently cut out one of the tables
this year and then the Treasury would be the guardian of the public
interest and say "No, no, we published that last year, we
must go on publishing it"?
(Mr Smith) No.
186. Or could it be that the Treasury might
say "This is all rather embarrassing politically" and
the Department's Permanent Secretary would say "We published
it last year so we must go on publishing it"? Who decides?
(Mr Smith) This is one of the issues over which departments
do not have discretion. In the information we have supplied to
the Committee you can see there the tables which would be required
of the main departmental report, which tables will go into the
Estimates and which tables will go into the supplementary budgetary
information. Those tables follow a common prescribed format and
will be available, therefore, on a consistent basis.
187. It is the Treasury's decision in the end
which of the core financial tables must be retained?
(Mr Smith) In this proposal, yes, and in the guidance
we have given. One thing I would say is that mindful, as I said
earlier, of the incompleteness of consultation with Parliament
on this, obviously if this Select Committee or others have got
particular views about this, either in advance of the presentation
of this year's reports or in the light of the experience of this
year's reports, then I am very concerned that we take this on
board, I am very mindful that these reports are not simply the
property of Government or the Treasury, they are the property
of Parliament and the public as well.
188. One guardian of public interest here is
the Office of National Statistics. Did you take advice from the
Office or the National Statistician when you decided which financial
tables are now going to be left out?
(Mr Smith) Was the Office consulted or represented
on the review group?
(Mr Sharples) No, the Office of National Statistics
was not consulted as part of that process. These tables are essentially
concerned with budgeting information which is not part of National
189. So they are not National Statistics?
(Mr Sharples) The National Audit Office was part of
the group and, in fact, we had a representative from the Chartered
Institute of Public Finance and Accountancy. We did seek to gather
views. The point I would emphasise about the core tables is that
this is simply an issue of where the information is published,
it is not a question of what information is published; though
some tables we think we can make clearer than they have been in
the past, and some tables have become redundant now that we have
moved through the transitional phase. As the Chief Secretary says,
the core tables we feel will give a much clearer statement than
has been possible in the past of how each department is spending
its money. Now the content of those tables is being discussed
extensively with departments to make sure that we have a shared
view of what is the clearest way of presenting the information
but the sum total of the tables in the departmental reports in
the Estimates and the supplementary budgetary information will
cover all the information which was available previously.
(Mr Smith) To be clear, Mr Fallon, in answer to your
question, the tables which are being included in the core report,
they are set out here: the summary, the resource budgets, the
capital budgets, the capital assets, the administration costs,
the staff, these are surely the core tables which, alongside the
progress on the Public Service Agreements, are what you would
expect. As I say, if you have got observations as to what might
be added to that or could be subtracted, I will pleased to hear
190. You have just said, Chief Secretary, these
surely are the core tables. I would expect the National Statistician
to be consulted as to which tables should be in or left out of
the departmental reports. I am surprised at Mr Sharples' suggestion
that budget estimates are not within the scope of National Statistics.
(Mr Sharples) What National Statistics are primarily
concerned about is the public expenditure totals on a national
accounts basis which is something slightly different from the
budgetary totals which are used for administrative purposes within
Government. There are some transitional mechanisms needed to move
from one system to the other system and those appear in the accounting
adjustments that we publish.
191. You have made it clear that the ONS was
(Mr Sharples) Not about the tables in the departmental
reports, no. As I say, that is not something that the Office of
National Statistics has a direct interest in.
192. This question is really to Mr Sharples.
The position, as the Chief Secretary has outlined it earlier,
is quite clear, that the Spring Report is one which subject to
certain reservations about accuracy would enable you to see how
you are doing against the PSA targets. In the guidelines that
were suggested by your working party, Mr Sharples, you referred
to this being as a forward looking report, the Spring Report,
implying that it is setting out departmental plans. Then you referred
to the Autumn Report as the backward looking departmental report
as though that is one that is checking up on how well you have
done. There must have been some change between these proposed
guidelines of your working party and those which have gone out
to departments now, would you like to comment on that?
(Mr Sharples) You are quite right, there has been
a change. What you are quoting there is the old proposal that
we should move to split reporting with a forward looking report
in the spring and a backward looking report in the autumn. That
was the old proposal. What is being proposed now is that we have
a comprehensive report in the spring which looks forward and sets
out forward budgets and forward targets but also sets that in
the context of performance so far. So it is both forward looking
and backward looking. The argument put forward is that having
a comprehensive report will give readers a much better view of
the departments' activities as a whole. What is proposed under
the new proposals is that there should also be in the autumn a
supplementary performance report. So we are not moving away completely
from the idea of spring and autumn reporting; we are simply changing
the emphasis a bit so that in the spring there is still a comprehensive
(Mr Smith) That is what I was referring to, Chairman,
when I said earlier that had we stuck rigidly to the original
RAB proposals there would have been what I think Parliament and
the public would have found an unacceptable gap in reporting information
because under the original RAB proposals there would have been
no backward looking information in this coming Spring Report and
if the autumn performance information was delayed to wait for
the accounts, we might in the case of some departments have had
a gap as long as from March 2001 through to February 2003, which
I do not think people would put up with.
193. Could I just ask a couple of final housekeeping
questions. The Core Requirements make clear that departments are
not obliged to use The Stationery Office for printing, but failure
to do so will prejudice the production by The Stationery Office
of the reduced-cost full sets of reports (of which over 150 were
sold last year). Have any departments changed publishers for 2002
and, if so, will the Treasury seek to make other arrangements
to secure the continued availability of boxed sets at a discounted
price? I am thinking here of university libraries, schools and
community libraries and the not inconsiderable cost of these reports.
I believe to buy the reports individually costs about £492
and the boxed reports will be much cheaper.
(Mr Smith) I will ask Adam to answer on whether the
Treasury is aware that any department is not using the TSO but
I will give a commitment that we will examine, in the event of
any department doing so, what could be done to retain the boxed
sets at a discounted price. I take your point.
(Mr Sharples) As far as I know, all departments have
used The Stationery Office as their publishers for the 2001 reports
and intend to do so for the 2002 reports. Some departments do
use other printers but then pass it on to The Stationery Office
to publish. We also attach great importance to the availability
of a full set of reports at a discounted price so this is something
that would concern us as well if some departments were moving
away from that.
194. Finally, Chief Secretary, last year there
were 22 departmental reports but the review recommended that the
smaller departments should go ahead and publish their own reports.
Can I ask how many reports there will be in 2002 and how many
departments will be publishing their own reports?
(Mr Smith) The smaller departments will be doing their
own reports under the guidance of the parent department, if you
like, which will include such information as is necessary and
relevant to the fulfilment of their PSAs but not clutter up the
report with superfluous information, if that information will
be better in the agency's or small department's own report. I
do not know the answer on the exact number but, obviously, I can
let you have that.
195. If you could give us a note on that for
the record it would help very much.
(Mr Sharples) I do not think that we will be able
to give an exact figure at this stage because discussions are
still continuing between departments and the smaller departments
in some cases.
196. Could I thank you and Mr Sharples for your
attendance today and as you indicated at some stage during your
evidence that you are willing to work along with the Select Committee,
we would be very grateful for that because already I have written
to other select committees asking for their comments on their
view of departmental reports and it is an issue which could be
(Mr Smith) Thank you very much for that, Chairman
and I thank the Committee for its questions and deliberations.
There is a further point I might ask you to reflect upon. I do
appreciate that you are doing a wide-ranging inquiry and it will
take time to conclude that. It is obviously a matter for you but
you may want to look at the final shape that the reports take
this forthcoming spring. I wonder if I might ask if on the basis
of your deliberations so far there are any pressing observations
you would like to make in relation to immediately forthcoming
reportsand obviously they are going down the slipway and
some changes can be made but some it will be harder to makeif
we had some interim observations, obviously without prejudice
to the final conclusions the Committee is going to come to, if
you wanted to do that, we would be pleased to receive them, but
it would need to be as soon as possible.
Chairman: We are conscious of time here
and, indeed, we have discussed this issue and we plan an interim
report in February. We will get that information to you and we
are mindful of the comments you have made. Thank you very much
for your evidence this afternoon.