Select Committee on Public Administration Minutes of Evidence


Examination of Witnesses(Questions 500-519)

THURSDAY 27 FEBRUARY 2003

PROFESSOR MICHAEL BARBER AND MR NICK MACPHERSON

  500. So there are only one or two inside a government at any one moment?
  (Professor Barber) Yes.

  501. If we go down to level three which also involves the Prime Minister but not quite level four, how many of those do you have?
  (Professor Barber) The Prime Minister—looking at the reports we provided for him looking at an overview of delivery towards the end of last year—has selected roughly eight or nine such things that he is focusing on for this six month period through to July, then we will see whether those problems are solved and possibly refine that list.

  502. What are those kind of things?
  (Professor Barber) For example, things to do with accident and emergency waiting times where the Health Service is making progress but the target is for achievement in December 2004 and there is still a great deal to do. Another example would be primary school literacy where there was great deal of progress between 1997 and 2000 but the level of performance since then has been flat and the Prime Minister would like to see that going in the right direction again. So those are a couple of examples.

  503. When you were reported as having flagged up—indeed it is your job to flag up such things—that there were real problems on the health side in meeting the 2005 target (they were doing all right with the interim targets but were having problems with the real 2005 target) that presumably leaps into high intensity drive, does it?
  (Professor Barber) What I drew attention to were the risks involved in the large sums of money that were being invested by the Treasury in health reforms and the scale of those reforms. In his evidence to your Committee Nigel Crisp accepted that those risks are there and is, indeed, working hard to manage them. I would expect to see some real progress on those health waiting time issues both in the short and medium term as a result of very good work being done by the Department of Health on those reforms.

  504. When the whole PSA system was set up a key component was that if you do not meet the targets you do not get the money. I have the quote here from Gordon Brown more or less saying this. Is that how it works in practice?
  (Mr Macpherson) No, it does not work like that. I think if you look at the quote which you have, it precedes the publication of the first set of PSA's in 1998. I think that that document made clear that there is not a simple formulaic relationship between success against targets and resources. I think that is absolutely right. Clearly the Treasury has an interest in a department's capacity to spend money sensibly, so if a department or agency demonstrates a lack of capacity over time, in spending reviews we would take that into account in terms of the allocations of expenditure. I think that what difficulties against individual targets result in is greater focus from the centre of government in terms of helping them overcome the barriers to delivery.

  505. It is interesting you say that because Gordon Brown in July 1998 which, if I remember correctly, was the time of the first spending review, was quite clear. "Each department has reached a Public Service Agreement with the Treasury, essentially a contract for the renewal of public services. Money will be released only if departments keep to their plans."
  (Mr Macpherson) I have in front of me the first white paper setting out PSA's which was published in December 1998 which says, "Should a target not be met there is no question of money being deducted from the budget for that department, nor will additional funding over and above that already allocated be made available simply because a department is failing to meet its targets. Support and advice will be given." That was published in 1998.

  506. That is interesting. We will not do the textual analysis, but it means that between July and December 1998 this basic building block disappeared.
  (Mr Macpherson) It has always been the case that the PSA framework has evolved and it is evolving. It has not and never has been completely set in stone. I think as time has gone by the framework has developed and has been improved. If you look back at that 1998 white paper there are something like 250 targets; now there are less than 130. Similarly the quality of those targets has improved since then. This framework was starting from a particularly low base because prior to 1998 government departments on the whole did not have targets and this was a big reform. Inevitably, through 1998 the precise framework of PSA's evolved.

Sir Sydney Chapman

  507. Professor Barber, the Delivery Unit was set up immediately after the 2001 general election.
  (Professor Barber) That is correct.

  508. You mentioned earlier on in reply to a question from the chairman, that although there are milestones for achieving targets, the targets are to be achieved by 2005 or 2006.
  (Professor Barber) They are examples, but if you look through the PSA white paper there are a variety of end dates. I am not saying that all the targets are for achievement in 2005 or 2006.

  509. Clearly there is a political motive. I am not saying there should not be, but there is a political motive in meeting targets. It is presumably so that the Government can show the British people that targets have been achieved, almost achieved or not achieved within the life-span of the expected length of a parliament.
  (Professor Barber) The spending review results in targets which are normally around the end of the three year spending period for which the resources have been allocated. Resources allocated in the 2002 spending review will start being spent next month and will come to an end in March 2006. That is why the targets tend to be aimed at 2005 or 2006, although in some services—Health, for example—they go through to 2007 and 2008 because of the five year spending allocation. It is related to the spending allocation rather than the electoral timetable.

  510. The questions I am going to put to you are related to things which have been said to us during our inquiries so far. Mr Macpherson, I think you inferred that there were too many targets and they have been cut back. I think you mentioned 250 targets and you wanted to reduce those to 125.
  (Mr Macpherson) I think the system of targets has evolved. The original number was 250. That came down to about 160 in 2000 and is now down to around 125. That is the way the framework has evolved. I think it may evolve further, but certainly at the current time we think that is about the right number.

  511. We were told less than three months ago when we visited Bristol that there were 62 targets alone in the NHS. Do you have any comment on that?
  (Mr Macpherson) What the Treasury agrees with departments are the high level Public Service Agreements and I think in the case of the Department of Health—because a lot of targets relate to social services—there are something like twelve targets. How, then, the department translates those high level aspirations into individual targets for particular trusts or other agencies is ultimately a matter for them. My understanding is that even they have been reducing the number of targets over time. It is also worth bearing in mind in the case of the Health Service what a very broad range of activities is covered by the Department of Health. So I am not wholly surprised that there are something like 60 targets, but that is a matter for them in terms of how they choose to achieve their particular Public Service Agreement.

  512. We were told that trying to achieve a particular target sometimes damages the prospects of achieving another target.
  (Mr Macpherson) I think the thing about targets is that you do need to keep them under review. There are good targets and bad targets. You can sometimes have a good target which may, over time, result in perverse incentives. It should not if it is a good target. The more outcome-focused it is, the less likely it is that there will be perverse incentives. The key thing is that you need to learn as you go along with targets. As Michael made clear at the beginning, we are in a learning business here and we do need to continue to look at the effect that targets are having.
  (Professor Barber) The targets are representations of real world outcomes that we want to achieve. I am very familiar with the national literacy strategy target of 80 per cent of children getting level four in literacy. The real world outcome you want is children moving to secondary school able to read and write well. That is what you are after. The target is a representation of that and then your data collection system is the way of monitoring whether that representation is being achieved. But it is the real world outcome you are really interested in, and in the kinds of areas you are talking about you need to monitor for those perverse consequences as well as what is actually happening on the target and take all that data into account when making judgments about how to go forward.

  513. Professor, you were advisor to David Blunkett when he was Secretary of State for Education so that fits in. I will keep to the NHS for the moment. I am not saying that the evidence that we received on the point I am going to make now was widespread, but it was mentioned to us. In setting targets it is quite possible that in meeting them you could distort the quality of the service given to the public or the proper delivery of services. There is a target to increase the number of operations in the NHS. That puts pressure on those carrying out the operations to deal with the easy ones so that you can do more in a day than perhaps the more difficult ones or the more important ones or the more urgent ones or the ones with more priority. That has been put to us quite seriously. Not only that, but consultants are spending less time on examining patients with possible medical conditions. Would you like to comment on that? It is a very sensitive point and that is why I am giving you the opportunity to comment rather than hurling accusations.
  (Mr Macpherson) I think whether or not you have targets there will always be those sort of trade-offs. I am sure that so far as the individual patient is concerned the more attention you get from a consultant the better. Equally, resources are always constrained; you have to manage around that. I do not think targets will necessarily result in perverse outcomes if they are properly specified. I do not doubt that in some circumstances they can. It is very important—and this is fundamental to our philosophy on targets—that the front line is continually consulted about the setting of targets. The Chancellor reaffirmed that in the recent pre-budget report. Target setting should be as much a bottom-up process as a centrally imposed top-down process. If you really do get a framework which is outcome based where the front line is fully involved in determining the targets, you are well on your way to having a pretty robust system.
  (Professor Barber) In my previous answer to you I emphasised the importance of real world outcomes and the targets are a representation of the real world outcomes. It is the real world outcomes that you want, so achieving a target by some means that does not really achieve the real world outcome is not what we are after. You took evidence from Mr Filochowski from Bath who talked about the value of targets in setting clear priorities and using that as a way of galvanising the hospital that he worked in and improving the efficiency of the organisation. As Nick says, those trade-offs exist whether or not you have targets. The targets give clear priorities, clear direction and a sense of mission to the organisations, so they are wholly beneficial as long as you are focused ultimately on the real world outcome that the target represents.

  514. In the light of what you have both said, I must say to you, without any hesitation, visiting a hospital and visiting a school we were told—and my colleagues will correct me if I am wrong—that there was absolutely no consultation before the targets were set. There was no consideration of, for example, the particular conditions of one inner city hospital or of a county hospital elsewhere. The policy may have just changed recently and therefore it has not seeped down yet, but there was a lot of ill-feeling that the people on the ground delivering the sharp end services were not consulted at all; targets were imposed from above.
  (Professor Barber) I read the evidence that, for example, John Bangs from the National Union of Teachers gave to the Committee and he talked about the regular annual consultation that his organisation responds to on the education targets and what is published. He did not say what you have just described. What I would want to emphasise is that we see in the future even further involvement of front line workforces in the setting of targets for their services and I also want to emphasise that the period that I described right at the beginning in my opening statement of radical change, improving standards over a consistent period is going to be demanding for public sector workforces. The benefits will be huge in terms of the investment and the sense of working in a system with a mission and a direction that is increasingly recognised as successful by the public, but it will be demanding and when you go to a school or a hospital—as I do from time to time—you will find people debating and thinking about the process of change and how it can be refined. That is an inevitable part of the change process.

  515. In the Prime Minister's second monthly press conference last July when he introduced you and you gave your slide show to the assembled media, his official spokesman talking about improvements that had been made, said for example that 300,000 more operations a year were now taking place. There were now 39,000 more nurses and 5,000 more specialists. This is the perpetual song in politics. I can remember when my party was in government, so long ago now, and we were boasting so many thousand more nurses under the conservatives and expenditure on the NHS was going up and so on and so forth. The point I want to make is this: are the targets set necessarily meaningful and the right ones rather than political ones? For example, if a government thinks it can increase the number of nurses by 50,000, does it then say it will make the target 40,000 so it is a triumph? Is there any independent, non-political input before the targets are set? You are boasting—quite rightly—that we are spending more and more on this and more and more on that, but surely the public are entitled to say that therefore it not a boast to have a few thousand more nurses or a few thousand more operations. There ought to be really tight and strict challenging targets made that will show the public that it is right for us to spend more money on the National Health Service or on education because if we do not do that they might suggest that perhaps the structure of our education system or the structure of the NHS is wrong.
  (Mr Macpherson) I think you are absolutely right. It is important to focus on what the money delivers rather than inputs. Inputs are important; they can have symbolic significance and there may also be input milestones. If you think that actually to achieve your waiting time targets you need x thousand more doctors and y thousand more nurses, then it is almost certainly sensible to trumpet your achievement of those inputs. What we have been trying to focus on increasingly in terms of the target system—because this is what I think matters to the tax payer—is what we are getting in exchange for the taxes you are paying. It is nice to know that there are a lot of committed public sector workers out there, but actually the bottom line is: are you treated on time, are you treated well and efficiently, do you have to wait a long time in A&E, are your prospects of life-expectancy and so on improved? It is those things that matter. I think also another interesting area which we are exploring increasingly as well is the whole question of consumer satisfaction because I suppose there is always the slight risk that you achieve the outcomes but it still does not feel that great from a consumer's point of view. I think it is important to track consumer satisfaction. Certainly as far as the Treasury is concerned, resources do matter, they do demonstrate commitment, but it is not the resources so much as what you are getting with them.
  (Professor Barber) Can I just add to that. You referred to the press conference from July and to what the journalists described as a bewildering array of slides that I showed. I just wanted to say that I thought they were very simple and straightforward. If anyone from the press would like them clarified I am very happy to do that! More importantly, the targets in the PSA document are very outcome-focused. The targets in here are not about more nurses or more doctors. That is only part of the Treasury reform of the targets. In setting a target obviously you are looking at the historic trends and the data and you are making judgements about the degree of ambition. You are also making judgments about the floor targets, about the degree to which you want to level up through your target-setting process. In all of those are judgments you use the available evidence but then make a judgment about the future and where you can get to. Where the targets are ambitious, as in health or secondary education to take two examples, those targets will require the services to get involved in structural reform. They are not targets that can be achieved simply by doing more of the same. That is why, parallel with moving towards the targets for 2008 set out here for the Health Service, there are a series of very important structural reforms taking place because those will enable the achievement of the targets. They will not be able to achieve those targets simply by doing what they have been doing in the past.

Kevin Brennan

  516. I was interested in something that Nick Macpherson said in answering questions from Sir Sydney when you said that there are good targets, there are bad targets and in some circumstances they can result in perverse outcomes. I wonder if that is something that you agree with, Professor Barber?
  (Professor Barber) As a point of principle there can be good targets and bad targets, yes.

  517. Can you give us some examples?
  (Professor Barber) I could give you a couple of examples where targets have been improved over time. There was one in the first Treasury white paper that Nick quoted a few minutes ago from December 1998 where the target was—I am not quoting exactly—that the department which was then the DETR should consult with local government about how local government should consult with business to get business more involved with local government and services, or something along those lines. Nick has probably got the text there. It is not clear where the outcome is from that process. It has two levels of consultation. It is not clear how you would measure progress towards it. There is no such target now. If you take another example where there has been refinement of what was quite a good target to make it an improved target, the national literacy strategy target which I think was always very clear and specific had a floor target element which was the minimum standard that should be achieved by each local education authority in literacy. Indeed, in the 2002 spending review that was refined so that it addresses not the minimum standard achieved by a given LEA but by a given group of schools, so it is making it more specific, more school related, whereas the previous target would have allowed the LEA to achieve it but you could have had some schools within that LEA achieving well below the floor target. Those are two examples.

  518. Do you think the original waiting lists targets were good targets?
  (Professor Barber) I think that was a perfectly good target for the period of time that it applied, but obviously we have moved on and we now have waiting times targets.

  519. What was different about that period of time that made it a good target then but not such a good target now?
  (Professor Barber) There was a lot of focus and interest in the waiting list and it was important to demonstrate that the waiting list could be reduced by a given number. Once that was done it was right to move on to waiting times which obviously have greater salience to the consumers of the Health Service.


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2003
Prepared 28 March 2003