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Westminster Hall

Thursday 26 February 2004

[Sir Nicholas Winterton in the Chair]

Government Performance Measurement

[Relevant documents: Fifth Report from the Public Administration Committee, Session 2002–03 HC62–1 and the Government's response thereto, Sixth Report, Session 2002–03 HC1264.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Margaret Moran.]

Mr. Deputy Speaker (Sir Nicholas Winterton): I have great pleasure in calling the Chairman of the Public Administration Committee, Mr. Tony Wright.

Hon. Members : Hear, hear.

2.30 pm

Tony Wright (Cannock Chase) (Lab): Thank you very much, Mr. Deputy Speaker, and colleagues who have showed their approbation in the normal way.

The Committee decided at the beginning of this Parliament that through the course of the Parliament we would try to track the Government's public service reform agenda, and that we would do so in a series of reports that we thought would deal with some of the major themes. We first produced a report on what we call the public service ethos, looking at some of the underlying values. We then produced the report that we are discussing today, about targets and what we call more generally the measurement culture in Government. We are now beginning work on a further inquiry looking at issues of choice and the role of consumers, ranging across the public services in a cross-cutting way.

We hope that those reports together will make an important contribution to parliamentary thinking about the public service agenda. The Public Administration Committee is well placed to do that because, unlike single-subject departmental Committees, we are able to roam widely and consider cross-cutting themes wherever they go. The Government explicitly want to insert some of those themes into their approach to public services. We think that it is right that a Committee such as ours should try to track them.

The report, "On Target? Government By Measurement", is by any test a pivotal report for the examination of the Government's public service reform programme. One always claims that reports in which one is involved have some influence, but in this case the Committee can genuinely claim that its work in the area has had a significant impact on the development of the Government's thinking. Indeed, from the time that we began work, towards the end of 2002 when we were still in the grip of the high tide of targetry, we began to have a constructive dialogue with Government. The nature of the conversation changed considerably over the following months, so that by the time that we came to report in July 2003 the Government were much more minded to think seriously about what we were saying and to find a way of connecting it with what they were saying about their continuing aspirations for the organisation of public services.

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If that was the constructive side, we conducted our report in a climate in which there was another side, which made sensible public discussion of the issues almost impossible. Indeed, the word "target" had almost entered the lexicon alongside terms such as "paedophile", "asylum seekers" and "special advisers"—words that one could hardly utter and hope to gain any kind of sensible discussion. We thought that it was our job to try to do better, but it was extremely difficult to insert some element of rationality and balance into the consideration of the matters, given the salience of the issue at the time. "Target" was a talismanic word because it seemed to represent an approach that was hotly contested politically and in the wider world.

When our report appeared in July 2003, there was a vivid example of how difficult that was. We thought that we had produced a sober, dispassionate, intelligent and balanced account of all these matters, but one would not have thought that that was the case given the media response to it. They alighted on one paragraph that reported what an eye surgeon in Bristol had told us. He said that because of the attention paid to reaching a target on first out-patient appointments, people who needed referrals—or secondary appointments—were being delayed. He said that in a number of cases that had led to serious consequences for the eyesight of some people.

After that had been reported, all our attempts at balance and intelligence went out of the window within 24 hours. I make a public apology now to the medical director of that Bristol eye hospital whose week was ruined by the publication of our report. He appeared on every news bulletin to be pressed on how many poor people he had managed to blind that week. By the time the story had gone round, the figure had grown from tens to hundreds, and when The Sun got it there were thousands of people; the Government were systematically going around seeking to render people blind. Despite all the efforts of myself and others, it became very difficult to wrest the argument back to a more balanced discussion.

David Taylor (North-West Leicestershire) (Lab/Co-op): I congratulate my hon. Friend on chairing a Committee that has produced such a superb report. He is talking about the coincidence of events. Would he be surprised to know that on the day that the Committee produced the report, the University Hospitals of Leicester NHS trust received a star rating that had cascaded down from two to zero on the basis of an administrative error and a very large accident and emergency unit, which unfortunately had a couple of emergency admission rates over the absolute—but not the relative—target? Is he happy that what has been learned since then will lead to that kind of lunacy being avoided in future? The Government's use of targets is generally at a B-plus level. They are approaching key stage 2 in their life—the next general election. I think that the electorate will look back and give them a B plus. That is a pity.

Tony Wright : I am grateful to my hon. Friend for those remarks. We address such issues in our report. In relation to cases of the type that he mentions, we say that it makes no sense to have a star rating reporting system

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for hospitals that rewards hospitals for simply getting people through A and E quickly but takes no account of the quality of what happens to those people when they get into A and E. That is a vivid example of some of the difficulties in this area.

Dr. Evan Harris (Oxford, West and Abingdon) (LD): The hon. Gentleman rued the fact that we do not get balanced media coverage of these issues. The media might be exaggerating when they describe a hospital with no stars as a failing hospital on the basis of nine performance indicators that are based on the ability to jump through hoops and not a single one of which is based on the quality of care, but would he concede that if three people in Bristol and elsewhere suffer because people who reach the maximum waiting time are prioritised ahead of more urgent cases, the media would be right to say that that is a scandal caused by targets?

Tony Wright : I do not dissent for a second from the view that people should report instances of perverse consequences of a target system. I was only suggesting that it is necessary to have a longer discussion about possible remedies and how we can get things right, although I acknowledge that it will be difficult to have that debate.

I have another example of the difficulty of having any sensible discussion on that matter. I will roll it back. Last year there was constant warfare between the Government and the Opposition over the extent to which targets were or were not being met. The Government constantly claimed that a high percentage of targets were being met, and the Opposition constantly claimed that a vast percentage were not. The Government claimed that 85 per cent. of targets under the 1998 public service agreement system set up by the first spending review had been met, and the Opposition claimed that 38 per cent. of those targets had not. There was no way to reconcile those claims. That was good politics, but completely useless as an attempt to have any kind of sensible discussion about those matters.

We undertook a significant exercise. We sought to go through every target from the 1998 PSAs and track every one in departmental reports and autumn performance reports until we got to the bottom of the matter. I invite those who are interested to look at the sections of the report where we list our findings. We give full details in an appendix. We found that we could either say that neither Government nor Opposition were right, or that both Government and Opposition were right, as it depended entirely on how the reporting system was decided upon. It depended on what a target being "partly met" or "not yet met" meant. If it was ordered in one way, one figure was produced; if it was ordered in another way, a different figure was produced.

It was utterly perplexing for people in the outside world who were at the receiving end of the crossfire and it did no one a service. I hope to insert a little sanity. Our work shows our best estimates of the final outturns of the 1998 PSAs.

If we wish to add another story to show how difficult it has become to talk sensibly about those matters, we only have to think of the example of my good friend, my right

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hon. Friend the Minister for the Arts. My colleagues may remember that she had to resign because the Opposition pursued her on the basis of an undertaking that she had given that she would resign if literacy and numeracy targets were not met to the figure given. She did that with honour—but it was an utter nonsense because she was reporting on targets that had substantially been met. She was reporting on the success of a set of literacy and numeracy targets that had carried primary schools forward considerably; but because they had not been absolutely met, to the number, there were demands that she should resign. And she did. That was an utter nonsense.

We took evidence from people in the private sector about their use of targets. We took compelling evidence from Lord Browne of BP, who is often said to be the most successful business man in the country. He talked about the role of targets in BP and said, "Of course we have targets, but we often don't meet them—and it is often very good not to meet them." He went on to say, "It is sometimes very good to fail—if you know why you have failed, and learn from the failure."

Mr. Howard Flight (Arundel and South Downs) (Con): The reference to BP and Lord Browne is particularly important as BP is an old, monopolistic corporate body. Generally, the private sector has completely abandoned target regimes such as that imposed by the Government and has switched to participatory objectives, bringing everyone in on a bottom-up basis to sort out how they can improve delivery. When it comes to a regime of targets set from above, I am afraid that Lord Browne is a business dinosaur if he attaches any serious importance to them in that sort of business.

Tony Wright : The hon. Gentleman must have his own argument with BP and Lord Browne, and I am sure that they will be delighted to hear the way in which he has just described that major British company. I thought that I was making a point that supported what he said, which is that the approach to targets is extremely flexible and they are simply instruments that may or may not be useful in shaping activities. The contrast between that and the way in which they have been used in the public sector and then transferred into the usual political exchanges has made it impossible to use them in the former way.

One needs to ask oneself only whether it is conceivable for a Minister to get up in the House of Commons and say, "I have failed to meet my target, but it is good to fail. It is good to fail because targets are simply a device; they are a learning instrument. We are a better organisation because we failed." Of course it is not; the culture is quite different. The demand would be that heads should roll. Indeed, heads have rolled because of such matters. I do not believe that that is a sensible way to think about the use of targets—in any organisation.

Dr. Evan Harris : Is it not also the case that because of that problem, Ministers are under pressure to set only achievable targets, which they can guarantee meeting, for self-preservation purposes? If the idea is to stretch

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the organisation—I do not accept that definition anyway—that whole culture is self-defeating because targets become a done deal and a charade.

Mr. Deputy Speaker : Order. Before the Chairman of the Select Committee replies, may I try to help? I understand through the usual channels that there will be a Division by 14.53. That will no doubt help hon. Members.

Tony Wright : I agree wholly with what the hon. Member for Oxford, West and Abingdon (Dr. Harris) said. If pressure to set targets that did not stretch us was to be produced, that would undercut the purpose of the enterprise. The more politicians' heads roll because of the failure to meet targets precisely, the more the temptation will be to move back from stretching targets and towards floor targets, so that one is safe anywhere. That will probably not be helpful. I gave those examples because we tried to make the contents of the report useful against that background.

Brian White (Milton Keynes, North-East) (Lab): I want to make a point about the discussion that my hon. Friend is having on the private sector. Does he agree that one of the interesting things that emerged from the evidence that we received was the fact that targets were mixed up with performance data, and that people did not understand the difference between the two? That was one of the crucial factors.

Tony Wright : Indeed it was. I was going to say a little bit about that later. It is important to ensure that we do not confuse measurement with other things. A number of things get conflated once we start talking about the subject. One of the virtues of our report is that we try to separate out some of those issues.

As I was saying, it was against such a background that we tried to be more dispassionate and rational. I shall not point out the core findings of our work exhaustively, but I will run through them briefly. First, the Government have been absolutely right, since coming to office, in saying that if we are going to spend large amounts of public money on public services, we should have expectations of what will happen to that money. There should be some discipline and accountability about such money. We now take that for granted. However, it came as quite a revelation when it was realised that one did not simply spend money on services, but sought to link the money to the outcome of spending it. That is at the core of the PSA system. We take it for granted now, but it is worth saying that it was a major innovation. It was a good development, and we want to build on it. It was the underlying rationale for the direction that we took, and targets came out of it. The Government are right to say that it is so crucial that they will not resile from it in any way.

The second point to come out of the evidence that we took during our inquiry was that virtually no one thought that we should get rid of targets.

Dr. Evan Harris rose—

Tony Wright : I have found someone who does want to get rid of targets.

Dr. Harris : I know that it is not the same as formal evidence giving, but I had a conversation with the hon.

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Gentleman in the Members' Lobby. I cannot see what we gain from having targets as opposed to performance indicators over a range of services. Indeed, they lead to a whole series of distortions simply because they are fixed. The point is not that we must choose between targets and no performance monitoring at all; it is that targets, as I hope to have a chance to say later, are very damaging.

Tony Wright : If I may, I shall continue for a second, because I was just coming to that point.

When we took evidence, we were told almost uniformly, not by people who were simply theorising about the issue, but by those who actually deliver health services, police services and education services on the ground, that targets provided a focus; indeed, that was the word that they repeatedly used. They said that targets provided a focus for activities and told them what those who were providing the money thought the key priorities for their services were.

We heard and saw the evidence, and one could make quite a little roll-call of areas in which targets have been beneficial. Unquestionably, the literacy and numeracy revolution in primary schools would not have taken place in the way that it did without the imposition of central targets. Indeed, the chief constable of Thames Valley police put it very forcefully to me that—

Mr. Deputy Speaker : Order. I hesitate to interrupt the hon. Gentleman, but he will be aware that I must suspend the sitting for 15 minutes for a Division in the House. I hope that hon. Members will be back in plenty of time to resume our debate.

2.53 pm

Sitting suspended for a Division in the House.

3.8 pm

On resuming—

Mr. Deputy Speaker : I remind hon. Members that, as a result of breaking for 15 minutes for a Division in the House, we receive extra time in this Chamber. The debate can continue until 5.45 pm. When I suspended the debate, the Chairman of the Committee was on his feet.

Tony Wright : Thank you, Mr. Deputy Speaker.

Before we were interrupted, I was dealing with a point raised by the hon. Member for Oxford, West and Abingdon, who does not like targets. I was trying to persuade him that, in taking evidence from people delivering public services, we discovered that, although they had great reservations about targets, they broadly agreed that, if applied properly, targets could provide an important focus for their work. I was about to refer to the evidence of the chief constable of Thames Valley police, Mr. Peter Neyroud, who, talking about the street crime initiative, said:

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We could trade examples all afternoon, but that was a concrete instance where the effect of a clear target for an area of activity was, as Mr. Neyroud said, to energise the organisation. It is a truism that every kind of organisation in the land, whether it is in the public, private or voluntary sector, tends to use targets in one way or another. Almost every church in the land has a board outside with a thermometer showing a fundraising target. That energises the church around a particular objective, and is a vivid illustration of how targets work.

Of course the same example leads us to think about some of the difficulties and limitations of targets. If all the churches in the land were told that they had to have the same target irrespective of their circumstances, it would make no sense at all. Indeed, if the churches were told by anybody other than God that the target was the purpose of the organisation, it would be seen as absurd; the target can only, if appropriate and at best, serve the organisation's purpose. Even in that humble example there are lessons about how we should think about targets in relation to public organisations.

Dr. Evan Harris : Using the same example, would the hon. Gentleman think it okay for churches that failed to reach the top of the thermometer to be labelled failing churches, for the vicar to lose their job because they were deemed to have failed, or even for God to be forced to resign? That is the situation in the real world when we work with these targets.

Mr. Deputy Speaker : Order. I hope that we will not go too far down this path. Government is powerful, but I did not know that it was all-powerful.

Tony Wright : I am grateful for the reminder. I had already decided to keep the Almighty completely out of my remarks for the rest of the afternoon. If the hon. Gentleman will just listen to me for a second, he will see that what he and I are both trying to say are not a million miles from each other: there can be an underlying point in having a target, but what the target must not do is subvert the real purpose of the organisation.

Mr. Flight : Perhaps the hon. Gentleman has just said this, but the whole issue is surely that targets as an aspiration are one thing, while targets to be met as measurements of performance, which was the whole basis of installing the target regime, are something quite different. It is the latter to which a large number of us object.

Tony Wright : The targets were designed to give a discipline to public sector organisations, and to provide some public accountability for the way in which they used their money. I will seem more congenial to the last two hon. Gentlemen if I now move rapidly on to some of the difficulties in this area, which we talk about in our report at some length and spent some time wrestling with.

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Of course there can be far too many targets. That has been one of the difficulties. If everything is a target, nothing is a target. They are designed to give focus to an organisation, but they can do so only if they are relatively few. If targets serve to diffuse activity because there are too many, the effect achieved is the opposite of the one intended.

Targets can be inappropriate; they can be set for the wrong things in the wrong way. None other than the Cabinet Secretary, Sir Andrew Turnbull, gave a vivid example of that recently. He was talking about how the Government were now reducing the number of targets and taking rather a different approach towards them, and he said:

We can have good fun swapping examples of the absurdity of inappropriately set targets.

Brian White: One of the problems identified was that when targets are reduced to a very small number—in the private sector that is simply to the bottom line—people with particular interest groups, usually Liberal Democrats, say, "Our interest group is not covered by the target—please include it."

Tony Wright : Indeed; that could also be a consequence. Everybody might want a share of the action on the target front. That is probably less common than people wanting a lesser share of that action, but it could happen.

There can be too many targets, inappropriate targets, and perverse consequences of setting targets, leading to unwanted patterns of behaviour, as in the eye hospital example. There can be game playing by organisations around targets, or cheating if targets or reporting on targets would unlock penalties or rewards. In such cases, as we have seen in the health service and some schools, there is a standing incentive to start playing around with reporting against targets, lest there be adverse consequences or lest rewards that would otherwise come do not.

Mr. David Heyes (Ashton-under-Lyne) (Lab): Does my hon. Friend recall the Select Committee's visit to Bristol in December 2002? I have the minutes of the evidence that we took. We invited the junior and middle-ranking employees of the health service and other public services, and they gave some of the most powerful evidence that we gathered. Does he recall the witnesses who told us of the perception in the middle and lower ranks of the health service that the senior people were too afraid to challenge the system? There was an emperor's new clothes syndrome; people were too intimidated to challenge and question.

Tony Wright : Yes, I recall it well; that kind of remark influenced our thinking greatly. On the whole, our work and that of the National Audit Office on what demotivates people in the public sector shows that issues of pay and conditions are not the key factors; those are more to do with pressures felt from external targets and

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associated mechanisms. That is a major reason why, if we are concerned about the development of public services, we must pay attention to the role that such mechanisms play.

As my hon. Friend reminds me, in preparing the report we went to a lot of trouble to talk directly to front-line providers to establish how a targets regime and a broader measurement culture was impacting on their work and what they thought the benefits and problems were.

We thought that a number of things were required. We had to move towards fewer targets than at the beginning of the 1998 PSA round. I am glad to say that the Government have moved in that direction. Targets have been cut substantially, but further work can be done. We felt powerfully that it was crucial that the people engaged in meeting targets had a direct role in setting them. Unless people feel some ownership of targets, they will not properly perform their role but will act as if the target is an external imposition—one that is out of kilter with how the organisation really is and where it sits.

We were seeking to explore a moral; we had far more local target setting, although someone has to have some accountability for the targets. As I said earlier, why would anyone set a stretching target if they could get away with one that was less than stretching? As far as possible, those who are delivering on targets should feel that they own them, but someone must be accountable for the nature of those targets. We thought that far more independent validation of target performance was needed, and I gave the example from the party exchanges about whether targets were being met.

On the general reporting side, although we started thinking about league tables and other performance reporting, we were much more interested in exploring a move away from crude league tables to the use of more sophisticated measures to show whether an organisation was making progress. People really want to know whether public organisations are going in the right direction. We will not often get the answer from crude quantitative measures; they will give only part of the picture. We were far more interested in exploring benchmarking—comparing similar organisations—to obtain a rounded view of how a public body was doing.

I shall make a few final observations. Targets are simply a tool. They are one part of the toolkit. They are not an end but a means. We will get ourselves into trouble if we forget that and make targets the end rather than the purpose of the organisation. That is true of measurement in general. A variety of measurement tools is needed, and good organisations will measure themselves all the time. Whether it is done publicly is a separate question, but if it is done all the time they will know how they are performing. The danger of judging organisations only by what can be measured is that they will often not be judged properly. Many of the most valuable things, such as quality of care or the time taken to do jobs, will not be valued, whereas crude quantitative measures will be. That was one of our general conclusions.

We wanted also to draw attention to the difference between what we call a measurement culture and a performance culture. A measurement culture—it is important that measurements should be made—should

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serve a performance culture, not supplant it. The danger is that it might supplant it if we do not get it right. Public sector organisations of all kinds must be seen as learning organisations whose objective is to improve performance.

We are making some real progress. I welcome the way in which the Government's approach on all such matters is developing and maturing. The current spending review will take us further in that direction. It will give us a real opportunity to get a far more sensible approach to such matters than we have seen in the past; the Government, too, must be a learning organisation. They have to learn from their experience of PSAs and of using a target regime to track the use of public money. There are good developments. We are, for example, moving far more towards what we now call strategic regulation, which is much less interventionist and far more strategic.

Looking back, we can see clearly that the target regime was intended to be a form of shock therapy for the public sector. We can make judgments about the extent to which that was necessary or successful, but that phase has passed. We can now move from shock therapy to gentle massage. If we do that, we are far more likely to make durable improvements to the health and performance of public services.

3.26 pm

Mr. Kelvin Hopkins (Luton, North) (Lab): I am very pleased to speak in the debate and to support the report. I am also pleased to support the splendid introductory speech made by my hon. Friend the Member for Cannock Chase (Tony Wright), the Chairman of the Select Committee. I very much agree with him on the need to achieve a balance between being hostile to targets and adopting a hard-line pro-target position, which would be inappropriate and would not move us forward.

It is as well to look back to where we have come from. I have been concerned for a long time about failures in some of our public services. I will deal briefly with health first. If one looks at the NHS in total and considers what has gone in and what has come out of it over the years, one can see that it has performed remarkably well. It is a very efficient system, which does a wonderful job compared with the American health service, which is grotesquely bloated and inefficient and does not serve a large proportion of the population. The problem with the NHS is resources—I have said that to Ministers many times, but it has not always been very well received. In terms of resources, the NHS in Britain has been given far less than health services in Europe; we have been at the bottom of the league table. The position is improving, and I commend the Government for their decision to put a great deal more into the health service than has been put in in the past.

The Select Committee visited Bristol and talked to people working in the medical field. We spoke to a German consultant who said that Britain's health services were terribly under-resourced. Five years ago, Germany spent 4 per cent. more of its gross domestic product than Britain did—that is about £40 billion, or £60 million per constituency. The health service would be transformed if £60 million more was spent on health every year in every constituency. It is testament to the tremendous work done by people in the health service that the health service is as

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good as it is, given the resources that go into it. However, I am pleased that the position is changing.

I am also concerned about education, of which I have some experience. Some 30 years ago, I taught A-level economics and politics. We found that the A-level students were doing very well, because they were constantly tested and examined, but the rest of the student population, particularly those who did not even have GCEs, were given short shrift. They received a very poor standard of education. That came out in the comparative figures provided by the Organisation for Economic Co-operation and Development, which show that Britain compares well with the rest of the world at the top end of the scale, but at the bottom end we compare very badly indeed: the bottom third, and especially the bottom tenth, of our pupils do poorly. The Government are addressing that problem, and the measurement and target regime is part of that effort. We are making progress, but it will take time. We have had to turn around a supertanker that was going in the wrong direction.

When I was teaching, my department was responsible for testing the English of business studies students. Some were day-release, some were full-time, but they were not as academic as others. Regrettably, some of those students were failed. Their English was not up to the standard required, and colleagues in my department said, "This young man's English is so poor that we cannot possibly pass him—he can't be considered a successful candidate." The head of the business studies department grew annoyed, and in the end blurted out, "His English may not be very good, but he does dress nicely." I wondered what dressing nicely had to do with English. That remark was indicative of view that, for less academic pupils, testing was not to be taken seriously.

I could cite other examples. Twenty-five years ago, a friend who is now retired was a remedial English teacher in a primary school. He used to test pupils' English, and in one class, he found six pupils who could not read, although the teacher said that they were doing well. When he took the matter up with the teacher and said, "Six of your pupils can't read—I'll take them out for special lessons," she said, "Nonsense, you're telling lies." She refused to accept that they could not read. He asked the pupils to read some simple English, and they could not, so he took them out of the class and taught them to read, which was good. My point is that because at that time we were not measuring or testing and not setting even modest targets, we ignored the fact that such things were going on. Something had to be done.

Let us come back to the present day. The hon. Member for Oxford, West and Abingdon (Dr. Harris) referred to failing schools. Four schools in my constituency were made subject to special measures and they have been transformed. New head teachers and extra resources have been put in, and now the schools are rocketing upwards. We tested, measured and set some targets, and they started to perform well. The morale of pupils and teachers is rising and things are starting to hum in schools that were failing. Under the

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old regime, we would not have done that and pupils in some of the poorest parts of my constituency would not now be being better educated. That is an advance.

When testing, we must be careful to measure properly. I studied mathematics, where it is simple: one can check that two plus two equals four, whereas essays and things such as English style are more difficult to measure and mark. As one who was keen on multiple-choice questions, I was regarded as reactionary, authoritarian and even conservative—with a small "c"—by my fellow teachers. My attitude was that it was a good idea to give people five choices and give them a mark if they chose the right one, and not give them one if they did not; after 100 such questions, one would have a fairly good idea of whether the pupil understood economics. But people thought that that was far too intrusive and authoritarian because it was testing and measuring in a direct way.

We have to make sure that the tools we use to measure are accurate and that they work. When I worked in industry many years ago, there was a notice on the wall of some of our laboratories with a picture of "Fred the wheel tapper". In old railway technology, a man would go along tapping the wheels to find out which ones were cracked. The notice said that they changed 265 wheels before they discovered that Fred's hammer was cracked, so we should check our instruments.

We must be accurate when we are measuring. Last year we had a scandal when many examination results were wrong. Hundreds of scripts from schools and colleges in Luton had to be re-marked. Pupils were being told that they had passed when they had failed or that they had failed when they had passed, and the gradings were all over the place. The whole lot had to be re-examined. We must be sure that we are getting this right and that we are not just pretending that somehow examinations are working, markers are doing their job and our instruments are working.

There are obvious dangers in the regime. We are all slightly uncomfortable about having targets, measuring, testing and checking on people. I spent many years working as a researcher in the trade union movement and I still have close connections with it, so I know that many trade unionists are concerned about the target regime. They have not said, "Ban targets, full stop"—they concede that targets have a role, but they want them to be used carefully. The danger of targets and of being too rigorous and exerting too must pressure is that people become demoralised. Demoralising employees—or even Members of Parliament—is a bad thing in any circumstances. One does not get the best out of people by draining their confidence. Some of the measures that have been tried in industry have had a demoralising effect.

Mr. Flight indicated assent.

Mr. Hopkins : The Conservative spokesman, who is nodding, mentioned the oil industry earlier. I know that 10 to 15 years ago, British Aerospace introduced a regime of performance-related pay to raise productivity. In fact, productivity decreased because people were resentful. One must be careful about the targets and measures that one uses to raise performance.

Recently, when standards fund money was put into six-form colleges, it caused problems. The college with which I am associated decided that, if all the teachers

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were doing a good job, they should all have a share, so the money was shared out equally, However, at the same time, the college was concerned that one or two teachers were not performing very well, and it wanted to be proactive and try to improve their performance. However, giving performance-related pay and promotion to some and not to others would have been a recipe for demoralisation. One must be very careful.

Another danger is bullying. Sometimes, managers who have a target to meet start to bully their staff. We must guard against that.

Brian White : Is not one of the problems that not enough training is given in how to use performance data? People have performance data but do not understand them.

Mr. Hopkins : My hon. Friend has a point. One of the results of our rather poor primary education for the less able is that we have not become a very numerate country. Some five years ago, the Moser report revealed, much to our concern, that 50 per cent. of the population did not know what 50 per cent. meant. Poor numeracy is a big problem. If people who are not very numerate are shown a lot of statistics, they cannot assess them—but we will get better at making such assessments because, in time, we will all become more numerate.

The point about bullying is important. One of Britain's great problems is that we have had very poor managers in many spheres. People have perhaps been promoted for the wrong reasons and not because they are good at managing, and some have not been trained for management. I have had a variety of employment experiences and I know the difference between a good and a bad manager. I have seen many bad managers, some of whom were appallingly incompetent, and many of those who were incompetent were the bullies—the ones who felt insecure and bullied their staff to overcome their sense of inadequacy. Such people should not be managers, or if they are poor managers they ought to be retrained.

Mr. Heyes : I mentioned the Committee's trip to Bristol, where we obtained some illuminating evidence. People in the junior ranks in the NHS spoke very convincingly about the culture of bullying. They traced that back to the targetry that dominated their managers' behaviour. The bullying was cascading down through the organisation, but they traced it back to the targetry.

Mr. Hopkins : My hon. Friend makes a strong point. I was going to allude to that a little later on. One of the reasons why that situation arose was lack of resources. In the health service, if one is trying to squeeze blood out of a stone—or whatever the appropriate metaphor is—but the resources are not in place and pressure is being exerted to reach a target, a manager inevitably gets panicky and starts to bully. That has happened in the health service because it has been under-resourced. If the resources are supplied, one can start to expect better performance.

Mr. Graham Stringer (Manchester, Blackley) (Lab): Does my hon. Friend accept that parts of the health service with the same resources have very different performance outputs? Measuring what is going on, and

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comparing and contrasting work practices, are useful ways of assessing whether we are getting best value for taxpayers' money.

Mr. Hopkins : I accept that point entirely. In education, too, we must compare. I do accept that we must look at schools, measure and compare them, and if we find schools that are not doing well, we can then discover the cause, get proactive and get stuck into solving the problems. Simply bashing on the outside—telling schools that they are not meeting targets and have to improve their performance—will not work. We have to look more closely at what is going on. Sometimes, if a school has gone wrong, it is because it does not have a good head teacher, but simply applying external pressure might give the head teacher a nervous breakdown and some of the other teachers serious problems. We need to find out what the problem is.

I know of one school, sufficiently distant in time to allow me to refer to it, that became a failing school. It has now been transformed by a wonderful head teacher. Before, when inspectors came around, the head teacher hid in a cupboard and pretended he was not in the school. An adjacent school, which happened to be a Church school—although that is neither here nor there—was doing brilliantly, drawing its pupil population from the same estate in my constituency. My hon. Friend is right to say that one has to measure and compare, but one has to do it by going inside the school to find out about the problems, rather than by saying, "Meet your targets, or else." Early retirements and moving the right people into the right jobs are the way forward, and that can be done without demoralising people too much.

I like car analogies: to make a car work better, one does not simply put one's foot down on the accelerator. If there is something wrong with the engine, one lifts the bonnet and tries to find out what it is. We have not been doing enough of that in education, and perhaps not in health either, but I am less familiar with the health service. I know about education because I have been involved in it directly and indirectly for a long time. I can walk into a classroom and know what the problem is. Health is more difficult. I know something about cars as well, and when engines go wrong I have sometimes been able to repair them. We need to make schools perform better, and we will not do that simply by putting our foot down.

Morale is crucial. Supporting people, even when there are targets, is of primary importance. Industry has had a bad experience of using performance-related pay and pressurising people. We have learned from that, and we must make progress. The schools in my constituency work under a great deal of pressure and have a lot of bureaucracy, but they are still inspired by education and by the children they teach, and they love success. When their school is appreciated for the job that it is doing, often in difficult circumstances, they do well. The morale of teachers and head teachers in my constituency has risen by leaps and bounds in recent years. Increasing the focus on what they are doing has not damaged their morale, but improved it.

Some of my remarks about measurement and targets may sound a little too enthusiastic. I know that there are dangers. If we applied performance-related pay in a crude way, that would be bad, but we are getting to grips

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with what has been going wrong in education and we are, rightly, setting reasonable targets. I would like to examine value-added measures more closely. We do not expect pupils from non-traditional academic backgrounds to do brilliantly in school, but we can expect them to improve. If we measure where they were when they entered a school, and where they are when they come out, we can get some idea of how well they are doing and how good the school and their education has been, especially when the data are used to compare their school with a neighbouring one drawing from the same population.

The report is balanced and heralds movement in the right direction. Some people will still be hostile to the idea of targets, but I am happy to support the report and the fine speech by my hon. Friend the Member for Cannock Chase, our Chairman.

3.45 pm

Mr. Graham Stringer (Manchester, Blackley) (Lab): Later in my speech I will refer to MANCAT, Manchester College of Art and Technology. I do not know whether it is a declarable interest, but I leased my constituency office on their premises. If that is declarable, then it is declared.

I hope that the debate will finish before I have to leave. Because of the delay that we have suffered, I might have to leave before it ends. I apologise if that happens, but I will try to avoid it.

I congratulate my hon. Friend the Member for Cannock Chase (Tony Wright) and his Committee on producing an excellent report. He described it as a contribution to a debate that started with the "Modernising Government" White Paper, which was produced by my right hon. Friend the Member for Copeland (Dr. Cunningham) in March 1999. The core of that paper was five objectives: to have empirically based policy making; more responsive public services to have better-quality public services; to make better use of IT; to have and to value public services. Apple pie and motherhood, really—who could disagree with that? I have always regarded targets as the nuts and bolts that would help us; to achieve those worthy objectives, which when they were stated stood in a vacuum.

I refer back to a debate that we had when I was a Minister and in which my hon. Friend took part. He made pertinent points about the vacuum in which the debate took place and the changes that were taking place in its nature. It is worth referring back to that discussion to see that prior to 1997–98, the political exchange between the two main parties had been about how much was spent on public services. The view was expressed that, by and large, to spend more was better, without looking at the outcome. Looking at the outcomes and the quality of services was a change.

My hon. Friend pointed out that the public sector world in 1999 was very different from that of 18 years before, when services were provided either by central or by local government. Now, there is a range of non-departmental public bodies, quangos and various other organisations, which makes it more difficult to understand how public services are accountable and to know what is going on. There has been a fragmentation

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of public services. I say that to set the background because, in my conclusions, I intend to refer to the way in which it is sometimes difficult to use targets.

Given the introduction, I am more reluctant than I was when I started to say that I am in favour of targets in the right place and used in the right way. To me, they have never been akin to paedophilia or other nasty things. I should like to give two examples of how they work in my constituency. One example is British Aerospace, coincidentally referred to earlier. My hon. Friend the Member for Ashton-under-Lyne (Mr. Heyes) and other MPs in the area have been concerned for a long time about the viability of the British Aerospace plant in Chadderton, on the edge of my constituency.

I visited the plant one day and saw huge lathes churning out parts of large aeroplanes for both British Aerospace and—surprisingly at that time—Boeing. On those lathes were bar charts that referred to the change in the amount of waste in the machine, productivity, the number of hours that people worked, and the speed with which jobs were done. They were all set against targets over a two-month period—the length of the job. The targets were not arbitrary, and the men to whom I spoke were keen to achieve them: there was real buy-in to both the process and the targets, not only because the factory would close and their jobs would all go if they did not, but because they had been involved in setting up the targets. The system worked and, against all the odds, that factory is still there, 10 years after it was threatened with closure.

That was not surprising, because the people involved were sophisticated engineers, who were good at sums and who knew their measurements. However, I also visited a girls' school about a mile and a half away. It was one of the most quickly improving schools in the north-west—the head, Jean Gledhill, who has now moved on, did an amazing job. As I walked around the classrooms, I noticed exactly the same bar diagrams, but they were about progress being made in attendance and tests, rather than waste metal. There were ticks and bars explaining what was going on. One could almost have taken them from the classroom and moved them to the lathes, and vice versa. That method works. The girls bought in to it, as did the teachers and the head, and the school improved. Those are excellent examples of situations in which the use of targets has worked.

I found chapter 1 and, particularly, chapter 2 of the Select Committee's report to be the most interesting parts. Chapter 1 discusses the clash of cultures between capacity building and targets. I have never thought that such a clash exists—I think that the two can work together if they are done properly. Chapter 2 contains pretty frightening information about perverse consequences in the ambulance service and in eye hospitals in Bristol, and explains how some targets went wrong. Five problem areas are identified, some of which are due to bad target setting. If two organisations need to co-operate to achieve a particular end—reducing drug use, for example—they must be in agreement and pull in the same direction, but, unfortunately, their targets often cause them to work in opposite directions, sometimes for good reasons, sometimes for bad. Some targets have perverse consequences simply because of their nature: for example, suppose there is an NHS target to increase the number of heart operations, but

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expenditure on statins and drugs is increased: that may make the health service much more effective, but not nearly so many heart operations will be performed. That makes the target seem very silly.

I have given examples of technical problems, but some problems are due to dishonesty or lack of buy-in. The press has become obsessed with targets, but when professionals and workers—people who spend public money—have cheated the system, the press has said, "Well, isn't this a stupid Government?" The Government have got it wrong occasionally, but that does not excuse the actions of people in the ambulance service or the NHS who have put people's lives at risk by doing silly things, nor does it excuse the submission of untrue reports by people working in health or education bodies. Such people are not fit to be public servants and should be exposed, but somehow the debate has been turned around: targets are blamed for people's dishonesty. That cannot be used as a justification.

My hon. Friend the Member for Luton, North (Mr. Hopkins) said that when targets are in place, some managers bully their staff. I accept that, but does it mean that the targets are wrong, or that a very unpleasant, nasty manager should have been dealt with properly? Such people would probably get better results if they managed the system more effectively to meet the targets.

Mr. Flight : People are only human, and if targets give them a strong incentive to cheat, it is not only the people who cheat who are wrong but the people who gave them the targets. To take a specific example just from the past two months, we have learned that out-patients who are given lockers will not be counted in the targets for out-patient treatment. Officials from the Department of Health have been going round pointing that out to hospitals, deliberately giving them an incentive to cook the figures on A and E treatment. One cannot simply blame those who respond to the incentive to cheat on targets; one must also blame those who gave them that incentive.

Mr. Stringer : I do not think that anything I said disagreed with that statement. I said that people sometimes choose the wrong targets, and that that is their responsibility. I disagree to some extent with my hon. Friend the Member for Cannock Chase, who talked about Secretaries of State sacrificing themselves and resigning because they had failed to meet targets. I have great respect for my right hon. Friend the Minister for the Arts, and I am pleased that she is back in the Government, because she is a decent, honest and hard-working Minister. In most such cases, however, macho, tough Ministers have stood up and said that they would do something, and when senior Cabinet Ministers do that, they should be held to their promises. I accept that some targets have been inappropriate. However, I do not accept dishonest and dangerous behaviour from people paid out of public money. Nothing that I have said contradicts the intervention from the hon. Member for Arundel and South Downs (Mr. Flight).

Dr. Evan Harris : The hon. Gentleman makes an interesting distinction, but what about the dilemma faced by someone who can meet the target by prioritising one patient at the expense of another, sicker patient who falls outside the target? They know that that

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is not in the best clinical interests of the sicker patient so they can either breach the target or pretend to have met it. There is a huge temptation not to dump the hospital in it by missing the target, but to do the right thing and then seek to conceal the fact. People throughout the country face that dilemma. That does not mean that they are evil or malicious.

Mr. Stringer : The hon. Gentleman is repeating the same point in more detail, although he helps me to move on to the next issue, which was omitted from the second chapter of the report. We underestimate at our peril not the dilemma caused by inappropriate targets—everyone accepts that they are sometimes set—but the sheer professional and establishment resistance to change, even where the change is intended to improve the quality of public services.

Members of the Labour party are brought up on the fact that consultants, although not evil, strongly resisted the national health service that Aneurin Bevan wanted to create. They did so in their own interests, and not necessarily in the interests of patients. It should come as no surprise to us that in many areas there is at best inertia, and sometimes professional resistance, which is to the detriment of public services paid for out of public money. The new Labour philosophy of trying to triangulate everything is not good at dealing with professional resistance at its worst.

I mentioned consultants, and there is still resistance to change among them, but I can give another, small example from my experience as the leader of a local authority. It took me a long time to realise that professionals—whether planners, engineers, landscape architects or architects—were deeply resentful of politicians trying to change their professional views. I will give one example of the hundreds possible. Planners like privacy distances—that is how they produce a plan. The fact that houses built with the privacy distances that planners like do not replicate any successful urban housing there has ever been is a problem. As it is what planners are taught in universities, they dislike intensely being told by councillors, as the clients, that they should not have those privacy distances. I could give hundreds of other examples from my experience in local government, but I will not.

Let me give an example from education. I had some experience in local government, but when I was a Cabinet Office Minister with some responsibility for the "Modernising Government" White Paper, I spent a long time talking to front-line deliverers of services, once or twice every week. I talked to police officers in police stations all over the country, to GPs, to VAT people, to Customs and Excise officers, to tax people and to teachers, and I learned a lot. I am not sure it contributed vastly to the improvement of public services, but I was a much more knowledgeable person at the end of it.

I will relate one of those experiences. I was sitting in an extremely good comprehensive school in Plymouth talking to the teachers, who, to a person, hated and despised Ofsted and all the measurements and inspections that came with it. I asked them a simple question: how has this school improved over the past five or six years if it is not to do with Ofsted? Is the improvement a coincidence, or an example of cause and effect? I found the answer desperately depressing: to a person, they said it was coincidence. When I asked what

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then had caused the improvement, they said, "That lot who came before us, those other teachers, were not very good, but we are." What was depressing was their denial that the targets and the Ofsted inspection regime—with its faults—had helped their improvement. There was a real difficulty that that had not been accepted as part of the process.

The core of public accountability is that where public money is spent, we should know what the money is being spent on, what it is trying to achieve and whether it is achieving that. There should be inspections to discover that information. They should be sensitive and humane and not lead to teachers having nervous breakdowns, but there should be consequences if there are failures. I do not like what is happening with the changes introduced by Mr. Bell, the chief inspector of schools. There are a number of things happening with targets, including a huge political debate, with people like the hon. Member for Oxford, West and Abingdon (Dr. Harris) and The Sun hating targets and trying to say that they are genuinely evil. None of us really likes being accountable, none of us likes having to say whether we have done the work we are supposed to, but I fear that the combination of professional resistance, resistance to accountability and the pressure from tabloid newspapers has meant that the Government have backed down on some targets.

Mr. Hopkins : My hon. Friend appears to be suggesting that Ofsted inspections are rather like examinations. We do not like exams, but we know that they are necessary. By the same token, some said, and may still say, that if we got rid of exams, education would improve. I suspect that would not be the case. Will my hon. Friend comment?

Mr. Stringer : I agree completely—that is a bit of a no-brainer. When we are talking about how targets can contribute to a very good agenda of improving public services, it is not helpful of the chief inspector of schools to say that he is investigating "capacity to improve". I defy anyone doing any exam paper anywhere to define that, as opposed to finding out whether children can read and write, whether lessons are intelligent and interesting and whether there is genuine improvement in the school. I doubt that "capacity to improve" can be measured, even with a no-notice inspection carried out within 24 hours, which is a shame.

Unfortunately, that view is backed up the Minister for School Standards, who says that the system will provide intelligent accountability. I do not believe that that can be the case when there is to be no parental information in the new reports. I am afraid that I disagree with my hon. Friend when he says that we are moving from shock therapy—some of it was shock therapy at the beginning—to a more gentle improvement. I think that some of the progress that targets were helping us to make has been abandoned.

Talking about MANCAT will bring me to my conclusion, but to get there I would like to describe the educational situation and targets in my constituency. One national target should be a priority: reducing the functional illiteracy rate in this country. I do not know how many hon. Members know that that rate—in so far

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as anyone has measured it in the past 100 years—has stayed at about one in four people. That is a shocking figure. My right hon. Friend the Member for Manchester, Withington (Mr. Bradley) asked the Secretary of State about it recently, and got the answer that the rate was about 23 per cent. That rate has been constant, and although I accept that the literacy and numeracy of the other 75 per cent. or so of children have improved, that tough quarter remains functionally illiterate. I mention that, because it would be an excellent subject of a national target.

A school in my constituency was receiving children from a certain primary school 50 per cent. of whom were functionally illiterate—a staggering, shocking and dreadful figure. The secondary school did a good job of improving their achievement. In 1997, the proportion of 16-year-olds going into full-time education in my constituency was about 25 per cent., and the proportion of post-18s going into further education was about 18 to 20 per cent.—a very low figure. MANCAT, by using educational maintenance allowance and many innovative schemes to target children from different ethnic backgrounds and young people with no real educational support or experience at home, has changed those figures, ward by ward, so that now 62 to 70 per cent. of children stay on post-16. That is an achievement for which I am proud to praise MANCAT.

No one can achieve that kind of improvement in performance without one-to-one relationships. It cannot be achieved by putting a standard further education lecturer in front of a class of not very motivated young people and saying, "Stay there", because they will not. MANCAT has done it by paying people less money—by employing youth workers and other non-lecturers, who eventually get the young people into the classroom and get them qualifications.

MANCAT is funded by the Greater Manchester learning and skills council. The learning and skills council has a series of policies, which it quite properly audits. However, because MANCAT is working in an innovative way, albeit one that is effective and successful, it is not complying with the rules about employing full-time lecturers; as a result, the college is being penalised £300,000 because what it does does not fit in with what the national Learning and Skills Council and the Greater Manchester LSC want it to do.

I wrote to the chief executive of the latter, Liz Davis. She replied:

That is one of the most extraordinary sentences that I have ever read in a political lifetime of receiving letters from official people. She continues:

Basically, she is saying that it is more important to conform to the LSC's targets, priorities and policies than to provide money for a system that has been more successful. That is where target systems go wrong. There are other problems with the Greater Manchester LSC—for example, it has made a mess of spending European social fund money—but I will not go into them now.

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I have talked about professional resistance, which is something that the report is light on. I would be delighted if the Committee followed up its conclusion in paragraph 143 of the fifth report, that

I know that the Committee has done work on quangos and other bodies, but I hope that it does work on this area too, because it is fundamental to some of the other reasons for resistance to efforts to improve the quality of public services. We need a proper balance with central Government. Some of the things that have gone wrong—in health, education, the police service and elsewhere—have been to do with centrally determined targets that take no account of experience on the ground. If professional resistance is to be overcome, people have to believe that what is being done is not only right for the public, but can be achieved; they have to buy into it.

There is a role for central Government setting central targets. I gave the example of literacy: the Government have not been successful in that area so far, and I hope that they make a push to be so. After 100 years, we should be improving those figures. However, a lot of other targets are within the remit of those who are accountable locally, and that means that local democracy must be refreshed. Some quangos work, so I would not get rid of all of them, but local authorities surrounded by quangos find it much more difficult to deliver on objectives and to get buy-in across the range of organisations. I am not saying that everything that Manchester city council did in further education 20 years ago was perfect, but it would never have had a perverse target that said, in effect, "You are achieving more with difficult young people than has ever been achieved before, and we will penalise you for doing so." We must get the balance right between local democracy and central Government. Democratic accountability has to be part of the process of improving public services.

Mr. Deputy Speaker : Order several hon. Members rose—Before I call the hon. Member for Milton Keynes, North-East (Brian White), I wish to point out that we have just over an hour and a half left. I say to the Front-Bench spokesmen for the Liberal Democrats and Her Majesty's Opposition that this is an important debate and we want the Minister to have adequate time to reply. However, we are not pressed for time if the hon. Member for Ashton-under-Lyne (Mr. Heyes) does not wish to speak.

4.14 pm

Brian White (Milton Keynes, North-East) (Lab): I am pleased to follow my hon. Friend the Member for Manchester, Blackley (Mr. Stringer), whose work on "Modernising Government" should be recognised, and my conservative and authoritarian friend, my hon. Friend the Member for Luton, North (Mr. Hopkins).

Targets have become an important feature of public services. They began as an aid to improving performance but the debate has highlighted the fact that there are now a number of problems with them. They

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have started to hinder progress in some areas. The evidence contained in the report that we are discussing did a good job in examining the pros and cons of government by measurement. My hon. Friend the Member for Manchester, Blackley was right to refer back to the "Modernising Government" White Paper. It is a key document on how the Government's performance should be measured and the Public Administration Committee is currently looking at it.

Although elements of that culture require reform, targets provide a means of measuring progress and success. It is clear from the evidence that a good target will transform an organisation. I have a background as a systems analyst designing computer systems. A clear objective transforms organisations. A good target that is clearly set, builds on successes, provides clear goals and is measurable will fundamentally transform an organisation. That is what it is designed to do. We should be seeking a transformation of that culture.

On the other hand, as is evident from a number of earlier comments, a bad target can frustrate that change, be detrimental and contribute to performance failures. Some people who wish to focus on the negative do not want to look at the facts of the matter. That is a problem. They are happy to pander to prejudices and do not want to look at the facts. Looking at the facts—rather than simply listening to prejudices—is something that the Committee has done well.

What is a good target? It is one that provides a clear focus in delivering results. It provides direction. When there is a clear direction, individual measurements are not as important as knowing the direction in which the organisation is moving. One of the key issues in public services is the lack of a clear direction. When there is a clear direction, it is possible to transform a failing school, hospital or other public service.

We have evidence from the Staffordshire ambulance service, whose chief executive set a clear direction for the organisation and transformed it. Targets should be specific, measurable, achievable, relevant and timely. It is important that we consider that when setting targets. If any of those elements fail, the target becomes a problem. There were 252 targets in 1998—far too many. That is one of the problems that has caused many of the frustrations that have been evident in today's debate.

We have already discussed educational standards. The targets that were set were good for setting a strategic direction, but they were not a good measurement for comparison between individual schools, because of their different circumstances. People have tended to use the results of those in inappropriate ways and do not compare the circumstances under which people are operating; that should be borne in mind when people make comparisons. As my hon. Friend the Member for Luton, North said, it is not an excuse for doing nothing, but a way of understanding the barriers to further progress. We need to focus on moving those barriers forward.

Timeliness is another factor. The e-government target to have all government online by 2005 is a good example of a target that has galvanised public sector organisations into change. But that target is no longer relevant. We have not met it in full, but we have reached a point where we should change it and look at qualities

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and other issues. None of the changes would have happened had that target not been set, but it has reached the end of its shelf life. We are not very good at changing targets. I am sure that the hon. Member for Oxford, West and Abingdon (Dr. Harris) will—in his usual Liberal Democrat way—say, "You haven't reached the targets, you've totally failed and everybody should resign." The key point is that if we do not recognise that targets may change over time or reach the end of their shelf life, and that we therefore need new targets, we will have all sorts of problems. One of the questions highlighted by the report is how to move forward even if the existing target has not been completely achieved, as with the move to online government. The latter is in the programme and we have not fully achieved it, but we should move on to the next set of targets. That is only one example, but there are many others.

Dr. Evan Harris : I am not sure what caused the hon. Gentleman to unleash that allegation. He will hear in a moment that I am concerned about targets; but although I have been tempted, I have never called for a Minister's resignation on the matter of targets—or anything else, probably. My argument is over the setting of targets, because I disagree with them. For instance, I offered not to criticise Ministers over waiting list targets if they would agree that they were an error and phase them out. The hon. Gentleman labels me wrongly; my position is the opposite of that which he ascribes to me.

Brian White : I was referring to the hon. Gentleman's earlier intervention, when he said that he was against targets, whereas most of the evidence that the Committee received was that targets have a role. I was asking him to put his prejudices to one side and look at the evidence. It is perfectly reasonable that he should not like targets, but he should look at the evidence.

There are problems with targets. For instance, the national service framework plan for the health service uses cancer as a key target for health improvement. However, multiple sclerosis campaigners feel that, because they have no part in those key targets, the resources allocated to the problem are reduced. The health service could have as many as 2,000 targets, one of which was tackling MS; but if we want to transform the culture of the organisation, we should have only a few targets. The dilemma is how to deal with the many valid demands made on a target that is intended to transform the culture of an organisation. Such complex situations are a dilemma that the Government need to resolve.

Milton Keynes hospital has a problem with resources. The Commission for Health Improvement investigated and said that the hospital was under-resourced; it could not find a single way to improve the efficiency of the area, and considered it to be under-resourced by £6 million. However, that does not stop the hospital having to meet every target. That is when targets start to clash with other Government policies. It is important that targets, which are often used as a substitute for market forces in public services, are seen in context.

It is easy in the private sector; one promotes the bottom line—end of story. The public sector, however, has no bottom line. We need to understand local

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circumstances when setting targets. The report does a good job in trying to reconcile the top-down approach with the need to appreciate specific local constraints. In his recent speech, the Prime Minister accepted the need for local knowledge, pointing out that the man in Whitehall is no longer the best person to set targets. Indeed, it would be a useful step forward for the public to set individual targets.

That brings us to performance measurement. How can we use decentralised performance measurements? How can we involve people in local target setting? How can that happen in a multi-layered system of government? It is not just about local councils, but about the privatised delivery mechanisms of councils, regional government and agencies. It is not as simple as it was 40 or 50 years ago, when we had only central and local government. It is now a more complex, multi-layered system.

I should like to draw the Minister's attention to the issue of cross-cutting targets, which relates directly to the Chief Secretary to the Treasury's report to the Committee in the past few days, in which he identified progress on targets. When my right hon. Friend the Member for Copeland (Dr. Cunningham) and the pioneers of "Modernising Government" pushed the White Paper, there were an awful lot of attempts to remove the silos in government. I fear that we have retreated from that position. The fact that the Treasury report is on targets in a single Department is quite worrying. I fear that, because the focus of targets goes along departmental lines, they do not tackle the cross-cutting nature of public services or how they interact. I highlight those issues, although I appreciate that there is no easy answer. I hope that the Minister takes the problem on board, because when we examined many of the targets, we found that that aspect was not the strongest part of the Government's response. The same applies to the way in which Parliament allocates departmental resources to, rather than across, Departments.

I do not know how this confession will be taken, but I suppose that I should admit that I was sad enough to read every public service agreement. I appreciate that that is a rather shameful admission and I suspect that I belong to a small, select group of people who have done likewise. Having done so, however, I believe that changes are needed to PSA targets. We need to move away from headline targets, focus more on how things work and aim towards the transformation of culture within and across Departments. I was disappointed by the Government's response to the Committee's useful suggestions on how we monitor and report the performance of public services. I should like to ask the Government to think again about how the PSAs are reported, particularly across Departments. The Prime Minister's speech on Tuesday took us down that route.

Service providers who use public funds should be held accountable, but the way in which information is used does not help that accountability. In the private sector, meeting 80 per cent. of targets is generally said to be pretty good and a reasonable benchmark. If one met 80 per cent. of one's targets in the public sector, however, one would be accused of failing to meet the other 20 per cent. That is a fundamental issue that influences our consideration of the reporting of public service performance.

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The National Audit Office should be used to validate the way in which performance targets are used. The Government's response could have been stronger on that issue. The independent validation of targets would help to secure public confidence in the use of targets and tackle some of the problems with bullying and public services that cheat, which my hon. Friends mentioned. That issue needs to be taken on board.

There is a myth that the private sector is wonderful. I know of a company that now has the best mortgage system in the country, but it took four attempts to achieve it. The previous three attempts did not meet the targets that that company had set. In the public sector, those targets would have been scrutinised by the Public Accounts Committee and the public services in question would have been slated, as would a failing computing system.

We should remember that the way in which accountability operates does not always help, because of the way that performance information is used. The information has three audiences. First, the information is provided to help the people doing the work to know how to improve their performance. Secondly, it is provided to allow senior managers to tackle the barriers talked about by my hon. Friend the Member for Luton, North and to know how they change the organisation. Thirdly, as my hon. Friend the Member for Manchester, Blackley mentioned, it is provided so that the public can make valid comparisons and informed choices. The same information goes to each of those three audiences and can be interpreted in different ways. There is an issue where the data and the analysis of those data are not being understood.

The report and today's debate are very useful. I particularly welcome the fact that the Government took on many of our recommendations. However, they could now make a sea change and take the debate forward. They have the opportunity to do it now and I urge them to do so.

4.30 pm

Dr. Evan Harris (Oxford, West and Abingdon) (LD): First, I apologise for the absence of my hon. Friend the Member for Mid-Dorset and North Poole (Mrs. Brooke), who is a member of the Public Administration Committee. Her Front-Bench duties have taken her elsewhere. I have not been press-ganged; I asked to speak as I have had a long-standing interest in targets and the target culture. This is almost certainly the first time I have lobbied actively to be in Westminster Hall on a Thursday afternoon.

I have a number of concerns to raise about targets. I do not know whether it is appropriate to agree a target with the Minister as to how many of those points he will address—perhaps three? If I highlight three, he will perhaps agree that that is not too bad. I notice that there is an hour and a quarter to go, and I will aim to keep my remarks nearer to 15 or 20 minutes in order to leave at least as much time for the Conservative spokesman, and more for the Minister.

I was delighted to hear the introduction to the debate by the Chairman of the Public Administration Committee. I think that he touched on all the key areas in this wide-ranging subject. I commend the Committee's report. The way in which he set out the

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issues in his introduction has helped me to try to respond to them—and, I hope, to challenge him and the Minister on some of them.

I was struck by the Chairman of the Committee's reference to the Minister for the Arts, the right hon. Member for Birmingham, Yardley (Estelle Morris), the former Secretary of State for Education and Skills, and the promise—as he put it—that she made to resign if she had not met the targets. My understanding is that if she did indeed resign for not meeting targets, she did so on the basis of a promise made by her predecessor, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), the present Home Secretary. I may be wrong, but if that were true it would simply show how wrong it was as a basis for resignation. I understand that other reasons have been given, but the right hon. Lady is greatly missed in her post. I hope that she was not another casualty of targets, as I believe patients have been the casualties of targets in the health service.

I agree with much of what the report says about the general direction of policy. Too many targets and too many measurements are imposed on the public sector, and they are too top-down and centralised. I was pleased to see that the report called for decentralisation in public services—something for which my party and I have called. The same applies to the monitoring of performance.

Although I oppose targets, it must be stressed time and again that opposing targets does not mean that one is opposed to performance measurement in public services. I am specifically opposed to measurement through the imposition of targets—in effect by asking, "Have you met your target or have you not met your target?" However, one can monitor performance on a sliding scale. Indeed, if we are going to use league tables—an idea about which I have concerns—it is sensible to base them on a variable outcome. If they were compiled on the basis of "met target" or "not met target", that would mean that there would be only two categories in the league table—the yes section and the no section.

Brian White : Is the hon. Gentleman saying that it is wrong for a Department to say that its key objective is X, Y and Z, when that is the direction in which Ministers want to go, and that is what they want to be held to account for?

Dr. Harris : No, it is not wrong. That is an excellent question, which brings me to my second point. I am also not against priority setting for strategic direction or prioritisation. That is always done. However, I am opposed to the measuring of public sector organisations' performance on the basis of whether they have met a specific target. If anything, for reasons that I shall give, that can lead to less measurement and less control of performance, and it has all the drawbacks of targets that I am going to explain.

The Chairman of the Committee, in his very clear introduction, made two broad defences of targets—one of which was in response, so he had it off pat. First, the public sector needs to be accountable. I agree 100 per cent., but that can be brought about through various methods of performance monitoring, not just by targets, so that in itself is not a defence of targets. Secondly, he

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felt that it brought a "discipline" and a "focus" to public sector organisations—I think these were two sides of the same coin—but the same can be achieved by careful and close monitoring, without the need for targets. I hope it is understood that to oppose targets is not to oppose performance monitoring.

Mr. Hopkins : I am slightly puzzled about the idea of separating measurement from targets. Once one starts to measure in any detailed numerical way, inevitably comparisons are going to be made. With one school's results next to another's, an education authority will say, "This school seems to be doing less well than another school for no apparent reason, but we have a target to bring it up to the level of the other school." Even when informally comparing A-level performances between different teachers, targets are implicit as soon as we start to measure numerically.

Dr. Harris : The Hansard transcript of what the hon. Gentleman has just said will show that he used the word "target" where he could have used "desire", "policy", or even "drive". "Target" is the wrong term because it is much more specific. Nothing he said required a yes/no target.

The hon. Gentleman is quite right—we should not tolerate under-performance. The first thing is to agree the outcomes to be measured, and then we put in place the policies to do that. None of that requires targets to be either met or failed. There is some talk in the report of refining the categories with "approaching", "nearly made", "on track" and so on. That is better, because at least it gives a few more variables and not just a yes/no answer—but the target-based approach hides key factors and is less than revealing.

The hon. Member for Milton Keynes, North-East (Brian White) asked me to look at the evidence, and that is exactly what I shall do. I am going to talk a lot about the evidence, and clearly I will need to measure that I have done so.

Tony Wright : I am trying to follow the hon. Gentleman's argument, and I cannot help but think that he wants it both ways. We are all in favour of performance measurement, but my question is: measurement in relation to what? The answer is: to certain objectives.

When we were measuring performance in schools we found real problems with literacy and numeracy. We inserted as a national target an objective to do better, which had a galvanising effect on schools; the support was put in to enable them to meet it, and the outcome was delivered. What on earth is wrong with that? It combines performance measurement with a very clear target.

Dr. Harris : I do not believe that the target was required.

Let me give an example, which pre-empts what I was going to say later, in respect of NHS waiting times. The sensible measure of that performance is not the maximum waiting time. By definition, that is the time spent waiting by the least urgent patients in the system,

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because they are the outliers and a low priority. If one measures only maximum waiting times, one is measuring hospital performance only according to how quickly they treat the least urgent cases. Clearly it is more sensible to consider the matter holistically and look at the average waiting time for comparable case mixes, which will be important, because it will include not only the least urgent but the most urgent cases. The worst thing one can do is to make urgent cases wait longer and shift them to the right in the curve of waiting times in order to bring in the tail of people who are least ill.

The target, which is that cut-off point, has destroyed the faith of health care professionals in any action on waiting times. So yes, we could have a performance measure of average waiting times; we could even have a league table if we had to, and that would be a better, fairer and less distorting system than having a single target.

I am responding to the education comparator of the hon. Member for Cannock Chase (Tony Wright) with a health service comparator, and I hope that we can find common ground. At least he can see where I am coming from. I do not necessarily expect him to agree, but my aim is to allow him to understand that there is at least a legitimate alternative, even if it is not his or the Government's preference.

When discussing targets we have to make sure that we define what we are talking about. Whenever I have tried to put pressure on Ministers about whether a target is sensible, they say that it is not a target but an aspiration. Now they have developed a new language, particularly for accident and emergency departments under pressure due to distortions, and say that the target is not a target but a benchmark. That is playing with words. I am talking about an attempt to assist, using targets by which people are measured on their achievement. This might apply to benchmarking as well.

Many of the targets imposed on the health service are called must-do targets or "P45" targets. That is a sad situation, given the criticism that I am going to make of targets per se. As the report says, if we are going to measure whether a target is achieved we have to have an agreed baseline. When I tabled a question to ask what the baseline figure and date were for the target the Government had set to get more people into treatment for drug and alcohol addiction, I was both shocked and amused by the response, "We haven't decided yet." That is nonsense, and would not pass muster with any scientific scrutiny or peer review because it is meaningless to have the target of a 40 per cent. increase without saying what the baseline is. I still am not sure that it has been established, which is ridiculous.

While we are talking philosophically about targets—I have recently spent much of my time on the Back Benches thinking about them more philosophically than politically—a final point to make by way of preamble is: is it sensible for people to set targets where they have no power over the outcome? It may sound good, but it is grandstanding.

Let us take the asylum figures; I am keen to get off the subject of health, however briefly. The Prime Minister set a target of reducing the number of asylum applications to this country, which I found scary. I accept that the number of asylum applications received

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is largely outside the control of the Government, which is why I have not criticised them. It depends on war and persecution, and on regimes and situations in other parts of the world. However, if the Prime Minister felt that he had the power to reduce the number of applications—not successful applications, which are sometimes called "genuine"—but the total number of applications before any considerations are made, that would be worrying in terms of our human rights responsibilities and treaty obligations. We have a duty to offer refuge and enable people to make claims. I thought that perhaps the Prime Minister knew what was going to happen, and he was saying that the policies he had set in place had deterred people—some of whom have legitimate claims—from coming here to claim, which would be unlawful.

It is bizarre that the Prime Minister at the Labour party conference, and the Health Secretary since then, have claimed credit for the present reduction in the number of deaths from cancer. There are two problems with that. It is well established in the mind of anyone with a modicum of public health knowledge that the significant changes in cancer death rates have been caused by lifestyle changes 20 to 30 years ago. I do not think that the Conservatives should be credited with changes in smoking habits 30 years ago, but they are more able to claim the credit than those who are in the Government at the time when people die from the effects of smoking—fewer of them are dying, because there was a change in male smoking patterns so long ago. The same goes for heart disease. I accept that there have been improvements in treatment, but they are small compared with the huge changes in public health policy and in public health behaviour 20 to 30 years ago.

Mr. Hopkins : When we are talking about targets relating to cancer, and about claiming credit for reducing death rates or increasing survival rates, surely a good and legitimate strategy is to look at comparable countries such as France or Germany to see the survival rates for different sorts of cancer. That is a good measure, and that is what we should aim for.

Dr. Harris : That is a performance indicator, which might contain merit so long as we compare like with like. However, unless we all change to Mediterranean diets or change our smoking habits at the same rate as France, it would measure only what it is measuring, and not the performance of Governments. I have never taken the view that the Government should be blamed for things that are going the other way either. I try to be fair; I do not say that the increase in male suicide rates, which is much less likely to be related to something that happened 20 to 30 years ago, is the Government's fault. People in government should be wary of claiming credit for figures that are going down, for fear that they might be blamed for figures that are going up.

Let us deal with the problems with targets. We have already talked about baselines and the fact that if someone is going to claim credit for changes, those changes must be something over which they have power. We should not set targets that are going to be easily met. The targets that the Government have set for deaths from heart disease are lower than the figures for 1997. However, the graph of heart disease deaths started falling 20 years ago, and if we extrapolate, the number

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of deaths expected would fall well below the target that the Government have set. It is not honest to set targets for things over which one has no power, and which are bound to be met unless something catastrophic happens.

Targets distort in three ways. First, they distort measurement and reporting practices—that is the gaming, or cheating. That is particularly relevant to "P45" targets, because those are targets upon which, in the case of the health service, a hospital manager might lose his job, which will then be franchised, or the hospital might lose money or status because it will be labelled as failing. Hospital staff do everything they can within the rules to distort the way in which they measure things, and they sometimes stray beyond the rules. That is a huge waste of intellect and talent.

However—this may be controversial—I would rather see a hospital manager fiddle the figures than allow patients to die unnecessarily because he is doing the target stuff. It would be better if managers did not allow patients to suffer, did not fiddle the figures and just confessed to the problem. However, if there were a choice between the three, I would rather the patients did not suffer, even at the price of dodgy reporting.

The second type of distortion, which is more general and more key, is the distortion of resource allocation. That does not apply only to targets, but to any performance measurement. It is a risk that, by definition, we will end up switching resources into target-rich, measurement-rich or measurable outcome-rich areas. In health care, for example, there has been a switch of resources in cash and management time into elective surgery and away from care of the elderly and mental health, where it is hard to measure outcomes in Daily Mail or league table terms. There is only one target for mental health—suicide rates—whereas there is a whole load of targets for elective surgery. Clearly, hospitals and public services will switch resources into those target areas, but not just because they are Government priorities; after all, the Government have rightly said that mental health is a health care priority. However, the Government only—or generally—put the measurements where measurements can be made. That is a real problem.

That point has been made twice by the hon. Member for Milton Keynes, North-East. People with multiple sclerosis or asthma feel hard done by; the national service frameworks that are target-rich—although I concede that those targets, or standards as they are called, are slightly better than some league table targets—have garnered resources away from other areas that have not yet been chosen for standards or targets, or that are not target-rich. That is a real problem; it applies to performance measurement as well, but it is exacerbated by targets.

The third type of distortion is that of clinical priorities, and splits into two forms. There is distortion in relation to users of public services who perform around the target level—peri-target pupils, for example. When there is a target for 70 per cent. of pupils to get an A to C grade at GCSE, and the only thing that teachers are measured on is whether they meet that target, they will concentrate on students who could reach it. They give up on students who would never help the school to achieve that target—which is rational from the point of

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view of meeting it—although such students would probably benefit more from greater attention than the others. That has been recognised.

Brian White : Teachers used to give up on a whole range of people, but they now bring more people up to those targets than were reaching them before. It is the targets, rather than the distortion that the hon. Gentleman talks about, that have brought the standards up.

Dr. Harris : The efforts of teachers and pupils have brought standards up, but the hon. Gentleman should provide evidence, as he invited me to, to counter the point of principle that I make and to refute it in logic. Take the example of teachers being measured on whether they achieve the difficult target of a 70 per cent. pass rate. They may reach 68 per cent., and with a lot of effort another 2 per cent. could be squeezed out of certain pupils. Teachers would concentrate on them, and not on the other pupils who were either nowhere near reaching the target or doing brilliantly.

The people around the target get all the attention. That is a problem because there is a binary choice: meet the target or not. If the performance measurement were smooth, and measured, for example, how well each student had improved on average, that would obliterate the distortion. That would be a performance measurement, a target of improvement for each child, but it would not be the blunt instrument that is so divisive and distorting.

The second form of type 3 distortion is the direct distortion of priorities between individuals who are never subject to a target and those who are. One can give all sorts of examples; the example of trolley waits is a good one. Accident and emergency departments are measured only on how long someone is in the department, not on how quickly people are treated. Let us leave the four-hour issue and talk about a 12-hour trolley wait. There could be a drunk person with a head injury. As long as their vital signs were stable, staff would have to wait until they had slept off the drink before conducting neurological tests to establish whether anything further needed to be done. Drunk people fall over, and one cannot tell whether they have intercranial pathology until they are sober. Rather than disturb a ward with a rowdy person, doctors used to allow such a person to sleep it off in A and E.

Now, however, a bed has to be found within 11 hours. Doctors now spend all their time finding beds when time is running out rather than treating urgent cases. That is not a sensible system—and that brings me back to the problem about maximum waiting time targets for operations. The most urgent patient in the hospital system, given the target that we have now, is the one who has waited for 11 months and 29 days, not the patient who needs to be treated very soon.

One can see the effect of the maximum waiting time with heart disease. We used to operate on patients with main vessel disease or unstable angina straight away, or at least very quickly. Now, they are sent home to wait seven days or seven weeks—no target will be missed, as there is no target—while we create operating sessions for

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the long waiters, who, even with heart disease, are the most stable. The people who die while waiting are the patients who have waited a short time, which has then been lengthened, and not those who are stable and who would be waiting 15 months. I am not in favour of anyone waiting longer than they need to; I am in favour of bringing down waiting times—of course I am. Unlike some, I voted for the resources that the Government have introduced to help to do that, but it should be done equally and not with this ridiculous maximum waiting time target.

The two-week wait for cancer is another good example of how distorting targets can be. That is my best example of evidence-based target setting, which does not exist in the health service. It was well known from studies, such as that by the Sainsbury's group in Leeds, that the current waiting time of around six to eight or nine weeks for out-patients did not damage them in terms of their outcome, despite the notional six to nine-week delay in their being seen.

The Government then brought in a two-week wait, with no evidence that that would improve outcomes, except in the sense that people would have to wait less time with a worrying symptom. That was partly funded by reducing other budgets, such as the treatment budget for people who had already been seen and were waiting for cancer treatment. They cut money from the treatment of people with cancer to reduce the waiting time for no known benefit, when it was known that people waiting for cancer treatment did suffer when they had to wait an extra month for radiotherapy for breast cancer, or for surgery.

A sensible measurement would have been the time between presentation and treatment. However, destructively and distortingly, the target was chosen to be the time between presentation of a symptom and becoming an out-patient. Of course, 90 per cent. of those patients do not have cancer—thank goodness—but 100 per cent. of the other patients, who are forced to wait longer for treatment, are disadvantaged.

Brian White : The hon. Gentleman seems to be arguing that the targets about which he is complaining are bad because they do not match the criteria for targets that we set out in the report. He is saying that if there were good targets, there would be a way forward. He is arguing that the individual examples that he has given are bad targets because they have not been appropriately chosen. Is he not criticising bad targets, rather than targets per se?

Dr. Harris : I am saying two things. If we are going to measure performance, we have to measure the right performance outcomes, otherwise we would be measuring silly things, and doing that in the health service means that people will suffer—this may be less important for other areas of Government. Over and above that, it is still better to measure performance without targets. Let us say that there was a sensible measurement, such as that between presentation and final treatment. I still would not criticise as failing a hospital that had managed to reduce that time from 20 months to 13 instead of to 12, or laud a hospital with more resources because of historical funding reasons for reducing the time from 15 months to 11. A target hides more than it rewards. I think that there is a measure of

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agreement between hon. Members. We must measure performance sensibly, and that involves not having a one-off cut-off target, but measuring sensible evidence-based outcomes.

Mr. Hopkins : My hon. Friend the Member for Milton Keynes, North-East (Brian White) made the point that I would have made: the target was wrong. We can make criticisms of particular targets and we can change them. We are churning up waiting lists to measure them differently and try to make them look better, when the real problem is a resource constraint. The resource constraints are different for different hospital areas. In my area, we have a shortage of radiological treatment machines, and the ones that we have are old and overworked, and there are not enough of them.

Dr. Harris rose—

Mr. Deputy Speaker : Order. I hope that before the hon. Gentleman replies he will note the time. So far, he has spoken for 28 minutes.

Tony Wright rose—

Dr. Harris : I have taken interventions, Mr. Deputy Speaker, and before I conclude I will take one more.

Tony Wright : I would like to ask the same question in a slightly different way. The hon. Gentleman is making a good case against bad, inappropriate and over-rigidly applied targets. However, that is not a case against targets themselves. He might even be making a good case against externally imposed targets or targets that have certain characteristics. Surely, he is not arguing that organisations setting their own targets, against which they can measure performance in relation to objectives, is a silly thing to do.

Dr. Harris : I ask you to recognise, Mr. Deputy Speaker, that I have spoken for 28 minutes, only because I was not responsible for the interventions—and that last one was a good one. In concluding, I will deal with the point made by both the hon. Members for Luton, North and for Cannock Chase, because I want to be clear.

Yes, there are two factors. Performance measures need not only to be evidence based and consulted on, but to be defended with a document that details the evidence that demonstrates why such measures are sensible. I am still of the view that unless there are many targets all the way along a performance measurement, a target means that for any measure there is a one-off question: has the target been met or not? It is more descriptive, and less demoralising, if performance along that scale is recognised and applauded when it is improved, wherever it is, rather than just at a single point. In the same way, poor performance should be criticised, and something must be done, even if someone meets what would otherwise be a single target. I hope that there has been some measure of agreement, and I look forward to the Minister responding to at least three of those points.

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5.1 pm

Mr. Howard Flight (Arundel and South Downs) (Con): I commend hon. Members on their valuable contributions to the debates on what we mean by targets and what their role is, and, more fundamentally, their remarks on how to improve delivery in public services.

We have got bogged down in the semantics of the word "target". We are really talking about the particular target regime that the Government have introduced. It is clear that Ofsted inspections are inspections of schools to see whether they are doing well or badly. They pre-date the target regime and are intrinsically not about a target performance regime. Targets, as a general aspiration for an organisation or a country, have been around for a long time. They are a perfectly valid concept, whether one calls them targets, broad national objectives or organisational objectives. They are rather like organisational mission statements.

The specific regime has been modelled on something that was called management by objectives, and was used extensively by the private sector in the 1970s and 1980s. In the main, it has been given up and replaced by an involvement approach. The common sense has been perceived that dictating to people from on high a load of things that they are supposed to do, without discussing with them how they can contribute, inevitably results in the sort of demotivation that we have heard about, in misallocation of resources, in distortions and in cheating. Sensible companies take a common-sense approach. Not in a top-down but in a bottom-up manner, they discuss among the key people how the organisation might work better and how things can be done more efficiently. Out of that are born objectives. That system works, whereas targets dictated from on high do not. They never did work, and they tend to produce the problems that we have just discussed.

Brian White : Will the hon. Gentleman give way?

Mr. Flight : If the hon. Gentleman does not mind, I will not, because my time has been cut short. Have another go if I speed up.

I had to review William Keegan's book on the Chancellor, which was written just before Christmas. It was an interesting read. I thought that it was going to be rather tedious, but I commend it to hon. Members. It sets out why the Chancellor introduced his targets regime. As he embarked on a massive increase in public spending, he was deeply concerned that the public would perceive that it was not working and that the money was being wasted. He thought that there was a need to introduce a framework to demonstrate that the Government had set targets and were measuring what money was being spent and that it was having the effect that it was supposed to have. That framework has manifestly not been successful. The public are not convinced that it is working and, as the Committee's excellent report demonstrates, it has not worked in the sense of being a management by objectives tool.

The Office for National Statistics has demonstrated that only 15 per cent. of the increase in expenditure has gone to delivering more. The rest has gone to cover public sector inflation, which has risen from 1.6 per cent. to 8.5 per cent. and, more recently, a 5 per cent. fall in productivity.

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This whole territory is central to politics in Britain today—and to politics in all mature economies. It is about how to make the public sector more effective, and how to motivate it. Do we try to run it tightly from the centre or do we devolve power completely—in which case, at least on paper, the accountability can never be as good? Do we empower citizens by allowing them to use the money that they have paid in taxes to go where they want via a tariff or passport regime? That is a central question of our times.

The Select Committee report identifies five failings in the Government's attempt to manage public services from Whitehall through centrally set targets. First, it points out that there is a lack of clarity about what the Government are trying to achieve. It found:

In other words, to think back to semantics, is this about targets in the sense of aspiration or is it about the management regime, which is what has come to pass?

Secondly, the report mentions:


The targets regime has sometimes served to demotivate public sector employees.

Thirdly, the report states that targets do not necessarily deliver results and, fourthly, that there have been failures in reporting and monitoring. The Committee notes that there is an

Fifthly, it identifies confused accountability:

My Conservative colleagues and I have argued for some time that it is not possible to run our hospitals, schools or police forces by centrally dictated targets and management from Whitehall. Teachers, doctors, nurses and the police are intrinsically better placed to know how to get on with things; parents and pupils are intrinsically better judges of which schools to choose; individuals are better at choosing with their doctors which hospital to attend.

I want to say a little more about the second and third failures that the Committee focuses on. Through the culture of targets, the Government are failing to communicate with staff and are damaging morale and generating disillusionment. It is becoming increasingly clear that targets have not delivered the results that the Government hoped for.

The Committee found:

It adds that central Departments often do not understand what life is like for those who deliver services. Even the right hon. Member for Birmingham,

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Yardley (Estelle Morris), when she was Secretary of State, conceded that the biggest problem was that professionals felt no ownership of the targets.

Such admissions ring true. The chief constable of Thames Valley police claimed that the Home Office targets for reducing robbery and burglary

He added that

In my constituency, there is a lot of agricultural crime. There are, however, no targets for agricultural crime reduction, so the police do no work relating to agricultural crime.

More worryingly, reporters for a BBC "Panorama" programme said that when they began to investigate the impact that the targets regime was having on the NHS, they discovered a public service in which many people had become secretive and scared. As we just heard, the reality can be even worse. Little wonder that in his last speech as chairman of the British Medical Association, Dr. Ian Bogle commented on the creeping morale-sapping erosion of doctors' clinical autonomy, brought about by Whitehall micro-management, and on the suffocation of professional responsibility by target setting and production-line values that leave little room for the professional judgment of doctors or the needs of patients.

The pressure that targets have placed on public servants is leading to the manipulation of figures and the distortion of priorities. That is in addition to the fact that the Government are failing to meet a significant proportion of their own targets. The Committee discovered that targets and results were different things. In some cases, creativity is being directed more to ensuring that the figures are right than to improving services, sometimes at the cost of distorting priorities.

Instances in which figures have been manipulated in order to meet targets are becoming legion. The NHS is the richest source of such data. Again, the "Panorama" programme revealed that ambulance crews were being forced to wait with patients for up to five hours before they were admitted to the hospital, so that the hospitals could meet the maximum four-hour accident and emergency waiting time targets. This, in turn, made it impossible for the ambulance service to meet its eight-minute response time target, so ambulance crews were told to leave their patients in the most humane way possible and go. It has now been reported that ambulance trusts are setting up temporary holding areas in tents outside A and E departments. As I said, every time I speak to directors of major hospital trusts, they have another disreputable story to tell about how targets are leading to such distortions and fiddling.

"Panorama" reported the special preparation at Homerton university hospital for the week in which the A and E waiting times would be assessed. According to a nurse manager:

According to a BMA survey, two thirds of A and E hospitals put in place such special arrangements for the monitoring week. This does not help to improve the delivery of the health service. It is a joke and a scandal that time and energy is being wasted on something as important as health in such a charade.

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Again, an emergency nurse consultant told "Panorama":

Examples were given of not counting patients on beds in A and E because they had, in effect, been admitted; putting up doors or walls around patients or trolleys and calling the area an observation unit; sending patients for scans and not counting the time that they spent waiting; bringing patients in for operations even when the consultant was known to be on holiday; and discharging people and then treating them as out-patients to prevent waiting times from rising. There are allegations that the wrong figures have been collected and that the number of cancelled operations in one case was written in as zero even though it was 28. Of course we should criticise anyone who gets up to such things, but the fundamental point is that they are the result of the regime that has been put in place. It is a wholly inappropriate means of encouraging the right performance among hospitals.

The manipulation of figures is happening not only in the NHS. The Committee cites the recent case of a primary school head teacher who helped pupils to cheat in SATs to avoid a poor placing for the school. Most farcical of all, Network Rail has called for train journey times to be lengthened so that trains appear more punctual. The distortion of priorities is particularly worrying. Farce is one thing, but jeopardising the well-being of patients is quite another. Sadly, that is what targets often lead to, because they are put ahead of clinical need, with the result that clinical priorities are often inverted.

The Select Committee commented on the Bristol eye hospital. "Panorama" also revealed that follow-up appointments for patients with pituitary tumours at the Oxford Radcliffe Hospitals NHS trust were delayed so that new patients could be seen and targets were not breached. In another instance, patients who were about to breach the targets were treated ahead of patients who urgently needed operations to repair fractures. Candidly, that is nonsense, and even the aspirational nature of targets is no excuse for running a health service with such distortions.

Conservative Members have argued against the target regime for some time, and we welcome the fact that the report supports many of our arguments. My shadow Cabinet colleagues and I have made no secret of our plans to reform the departmental target systems for which we have Front-Bench responsibility. We have called for the hospital star rating system to be scrapped because it encourages health care professionals to meet centrally set targets ahead of everything else. We recognise that the micro-management embodied in the top-down control of public services by a Whitehall that is obsessed with targets and the cost of monitoring them will never work. If we are to create sustainable, widespread excellence, we must hand control down to those in the delivery units so that they can get on and run them successfully.

We must remove the swathe of targets, intrusive bureaucracy and central micro-management and let the professionals get on with things. We must empower

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parents by giving them far greater choice over where their children go to school. We must empower patients and their doctors to put natural pressure on hospitals so that they run themselves better. We can do that under the tariff regime and our passporting regime by giving patients greater choice over which acute hospitals they go to.

I am afraid that the centrally run target management regime is not improving delivery in our public sector, as the Select Committee said. Targets are fine for general national objectives, but they are no mechanism for running schools or a health service.

Mr. Deputy Speaker : I thank the hon. Gentleman for his co-operation. I now call the Minister to reply to this important debate.

5.19 pm

The Economic Secretary to the Treasury (John Healey) : I profoundly welcome this debate, and the thorough and detailed report from the Public Administration Committee on which it is based. I pay tribute to the members of the Committee, and in particular to my hon. Friend the Member for Cannock Chase (Tony Wright) in his chairmanship.

My hon. Friend started his speech by explaining that the Committee set out to track the performance on public services throughout this Parliament. The Committee has indeed provided a consistent, cumulative and cross-cutting scrutiny of what he termed our public service agenda—and it has had a significant impact on Government thinking, as he said. This is why the Committee's report contains a number of recommendations that are very well aligned with the Government's view of, and approach to, targets.

What has been clear throughout the debate this afternoon is the theme that this is a developing discipline. My hon. Friend said at one point that he believed that the Government were making real progress. My hon. Friend the Member for North-West Leicestershire (David Taylor), who unfortunately is no longer with us, said that he was prepared to award the Government's performance on targets a B-plus. I welcome that, and will settle for it for the moment.

My hon. Friend the Member for Manchester, Blackley (Mr. Stringer) reminded us how crude the methods of assessment and the terms of debate were in 1997–98. The principal terms of debate were how much would each party invest in a particular area of public services. It was soon after that, in the comprehensive spending review of 1998, that public service agreements and the architecture was first introduced, alongside a much wider set of fundamental reforms in the public sector, such as the introduction of three-year spending plans, coupled with end-of-year flexibilities for budgets, to prevent the end-of-year spending surge that we had often seen and to encourage the longer-term planning that we had not often seen. The reforms also included the introduction of separate budgets for capital spending in order to ensure that investment was not crowded out by short-term spending pressures, the move to resource accounting and budgeting to

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encourage proper asset management and better financial planning, and the introduction of outcome-focused performance targets for the key areas of Government.

My hon. Friend the Member for Cannock Chase described that set of changes as a major innovation. It is easy to overlook just how radical these reforms were just five years ago. The 1998 CSR was only the first step in the framework of performance management for government that has evolved since then. In the spending review of 2000 the public spending agreement framework was strengthened, with fewer targets for a smaller number of key Departments, coupled with greater focus on outcomes. That evolution continued through the spending review of 2002, and the current PSA framework contains only about 130 targets—on average, fewer than seven per Department.

Although we have further development to undertake, we are now properly trying to capture the few clear, high-level outcome-based national priorities for each Department. As the Committee's report confirms, they provide a focus.

Brian White : My hon. Friend said there were a number of key targets for each Department, but is not one of the issues the fact that there are targets that go across Departments, and it is that area that needs a clearer focus?

John Healey : I was going to come on to the point that my hon. Friend made about that in his speech, but I can give him the response now. In the current set of PSA targets, about one in five is the property of more than one Department. In many of the other areas, successfully pursuing those targets depends on the co-operation and joined-up efforts of other Departments.

As a couple of my hon. Friends have said this afternoon, there is no question but that the revolution that we have seen in some of the public services would not have taken place without this approach. The introduction of PSAs, alongside a period of sustained investment in public services—a point made by my hon. Friend the Member for Luton, North (Mr. Hopkins)—has resulted in several major achievements. By that, I mean increases in numeracy and literacy among 11-year-olds, smaller class sizes, an increase in free nursery places, reductions in mortality rates from cancer and coronary heart disease, a reduction in crime accompanied by a record number of serving police officers and the lowest unemployment rate in the G7 countries.

The impact, and in some cases a profound change, in such areas, is what matters to people who need or use such services. The PSAs have helped to drive such transformations and, while the public may still want more, it is less important to the people who need and use such public services that the precise percentage improvement in literacy levels for 11-year-olds has been met than that a noticeable change and transformation can be seen from day to day in schools.

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Targets are a tool. We make a mistake if they become an end in themselves. In many ways, that is the root of several of the problems in policy and the delivery of management to which contributors to this afternoon's debate have referred. The hon. Member for Arundel and South Downs (Mr. Flight) rejects targets. He also rejected management by objectives. The "involvement approach" for which he argued may be an important element, but in a complex system of public service delivery led by an elected Government with a popular mandate, that surely cannot be sufficient.

I was glad that the hon. Member for Oxford, West and Abingdon (Dr. Harris) declared that he would make only three points—but I counted three points in his preamble alone, and probably double that in his interventions on my hon. Friends. He also set out his objections to targets, but not to performance measurement and reporting. In some senses he gave the game, or the explanation, away in response to an intervention from my hon. Friend the Member for Luton, North when he said that "target" was the wrong term. I fear that part of his contribution meant that we became tied up in a terminology debate, which the hon. Member for Arundel and South Downs described as becoming bogged down in semantics.

I am sure that the hon. Member for Oxford, West and Abingdon has seen the pre-Budget report, because he is an assiduous hon. Member. However, in case he has not yet studied it, I can tell him that it sets out the Government's thinking on targets and performance management—his area of concern. It states that a more devolving approach will require the continuing evolution towards fewer nationally set targets, reflecting only the Government's key priorities and with greater scope for local flexibility to determine outcomes and methods of delivery, including use of local performance indicators.

It is surely right that a Government who were elected with a popular mandate should set out their key priorities, for sake of the greater understanding of the public and their ability to judge us on delivering the promises that we make in a manifesto. We are tackling the difficult area of developing further in the devolved decision-making review, to which I shall refer more fully in a moment—but first I shall deal with the other point made by the hon. Members for Arundel and South Downs and for Oxford, West and Abingdon. They argued that targets distort priorities, resources and practice, and often leading to gaming—a temptation to prioritise people to meet targets for waiting times, for example.

In all honesty, I must say that it is inevitable that there will be a few cases of malpractice, but it is worth remembering that the Audit Commission report on waiting time accuracy found that cases of misreporting were few in relation to the size of the NHS. Beyond the system of targets, the hon. Gentleman will know only too well that clear guidance is issued throughout the NHS stating that clinical priority must be the main determinant of when patients are either seen as out-patients or admitted as in-patients. The Government have repeatedly made it clear that the patients in greatest need should continue to be treated first.

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My hon. Friends raised a number of well made, pertinent cautionary points. My hon. Friend the Member for Luton, North urged us to use the right measures. I was very taken with Fred the wheeltapper, and the tale that led him to assert that we need to check whether the instruments work. Another theme of my hon. Friend's contribution was the need to pitch targets at the right level so as to stretch and not demoralise. My hon. Friend the Member for Manchester, Blackley urged us to watch out for poor target-setting and perverse consequences. My hon. Friend the hon. Member for Milton Keynes, North-East (Brian White) made the point that we need to work hard to identify good targets. He used the example of the Government target for e-transaction and e-services, but he also said that the Government should be better at changing targets when they have served their purpose, or when circumstances have changed and require us to further develop or change targets.

My hon. Friend the Member for Manchester, Blackley ended on a subject of concern that I, as a former Under-Secretary of State with responsibility for adult skills, entirely share. There is a target for functional literacy, and I would argue that it is one of the toughest in the whole education and skills area. It is to improve the basic skills of 1.5 million adults between the launch of the skills for life strategy in 2001, and 2007. There is also an intermediate target or milestone of improving the skills of 750,000 people by 2004. We are not just talking about people signing up to or completing a course; there will have to be tested improvement in skills by a whole level in order for the improvement to qualify as contributing towards that target.

My hon. Friend ended with a point about the Greater Manchester learning and skills council. He argued for reform and greater flexibility in the funding and management systems; there was not a problem with the target per se. It is precisely the challenge that my hon. Friend mentioned that has led the Government to announce the abolition of service delivery agreements. We did that to avoid prescribing intermediate inputs and processes, so that, rather than our dictating the method of delivery for key targets, Departments, agencies and front-line delivery bodies can have greater flexibility to determine how best to deliver key priorities in the light of local circumstances.

We must also ensure that local service providers have the flexibility to determine priorities at a local level—for example, through innovations such as the local public service agreements. We must also develop better ways of involving those responsible for meeting targets in setting them, and examine ways to cut back the large number of measures and indicators that are not related to PSAs, as those often add to the burdens and pressures felt by front-line deliverers.

Several hon. Members made the point about the pressure on the front line, and the fact that in target setting, we sometimes fail to take account of the views of the front line. There is a balance to be struck, and we may have a difference of view about where that balance lies. However, although it is legitimate for the Government of the day to set out their ambitions for public services, they also need to respect the knowledge and expertise of the front-line service provider.

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That is why, in the 2003 Budget, my right hon. Friend the Chancellor announced the devolved decision-making review. He has said that the review was to examine

The review will continue to feed in to the 2004 spending review, and it is working to develop a clear rationale for the devolution of decision making and improvements in setting and delivering targets to improve public services.

Soon after the PAC published its report, the Audit Commission published a report that focused on the connection between local organisations and the Government in setting targets. It recommended that the Government continue to set national standards and aspirations, but that targets need to be based on a dialogue between the centre and the localities to ensure a greater degree of local ownership. Crucially, the Audit Commission recommended that local organisations recognise national legitimacy when setting minimum standards and aspirations, although that should not be taken to mean nationally set targets in all areas. The Government are therefore pleased that the broad conclusions of the Public Administration Committee and the Audit Commission are in line with our review of more devolved decision making.

In 2002, the Government introduced the autumn performance reports, which supplemented the traditional departmental reports published in the spring. They ensured that each Department published progress reports twice a year. In 2003, the framework was further enhanced by the introduction of the public service agreement performance website, which brought together the latest performance data on all PSAs in one place. I must tell my hon. Friend the Member for Milton Keynes, North-East that that is a better way of providing a degree of reporting to allow the required scrutiny than an annual report that tries to pull everything together. In response to Lord Sharman's report on audit and accountability in central Government, we invited the NAO to validate the data systems that underpin the PSA targets.

Those reforms, taken with other developments such as the evolution of the national statistics framework, provide a comprehensive and detailed system of public accountability. Indeed, in discussions that our officials had with a wide range of officials from other Governments around the world, and in discussions with other Finance Ministers, it was suggested that those developments put the United Kingdom at the forefront of international best practice in accountability and transparency.

Following another of the Committee's recommendations, the Treasury has strengthened its guidance to Departments on performance reporting, particularly on the use of such phrases as "met" or "not met" when assessing final progress towards targets. I hope that that will improve the consistency and clarity of reporting and therefore help the process of serious scrutiny of public service delivery. However, it is important to stress that although the Treasury is playing a lead role, Departments remain responsible and accountable for their performance reporting.

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In conclusion, what my hon. Friend the Member for Cannock Chase called the most recent phase of the continuing work of scrutinising the performance of public services has been reflected in the report and in the debate. We have considered the latest phase of that work today, and I welcome the fact that the Committee will turn its attention to examining the role of the citizen as the consumer of public services. It must be a key part of the continuing reform of public services that they should be more individualised and better personalised to the pupil, the patient and the passenger, as well as

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fitting the needs of the wider general public. I look forward to the time when the report is published and the inquiry is completed, and to a debate similar to the one that we have had this afternoon.

Mr. Deputy Speaker : Before I put the Question, I congratulate all the hon. Members who have participated today—including those who have done so by intervention—on a well informed, excellent debate of high quality.

Question put and agreed to.

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