Benefits and risks of targets
8. In assessing PSA targets, there is a commonly
used formula, expressed through the acronym of SMART: criteria
that are Specific, Measurable, Accurate, Relevant and Timely.
A different acronym has been recommended by HM Treasury in relation
to performance measures: FABRIC denoting the six criteria of Focused,
Appropriate, Balanced, Robust, Integrated and Cost-effective.[4]
Both sets of criteria embody an attempt to make targets effective
whilst avoiding the pitfalls associated with them.
9. We have explored with the Home Office what it
considers to be the benefits and risks of target-setting. The
Home Office assesses the benefits as follows:
Our PSA targets set out the key outcomes we plan
to achieve over the Spending Review period, and provide a measure
of whether or not we have achieved these outcomes. They provide
a clear set of priorities for our delivery services, and the overall
context within which their own performance is to be managed and
measured. Targets have been effective in driving up performance
across our services: whether in reducing burglary and vehicle
crime, tackling asylum intake or increasing the number of black
and ethnic minority recruits to key services.[5]
10. The Home Office thus emphasises three main benefits.
First, targets are, in principle, valuable in terms of accountability,
not least in assisting Parliament and the public to judge the
performance of a Department. Second, PSA targets in particular
are intended to set a strategic direction for a Department,
ensuring that it has a clear focus and set of priorities. Third,
if used properly, targets can be useful as a public management
tool, with the potential to improve performance in particular
areas, to identify areas of weakness and to motivate staff through
incentives for good performance.
11. In principle, therefore, well-designed targets
ought to make a contribution towards each of these three benefits
of accountability, strategic direction and performance management.
It is important, however, to recognise that these benefits do
not accrue automatically from the setting of targets. Benefits
cannot just be assumed; they have to be attained. We will return
to this point in considering the Home Office's current approach
to PSA targets.
12. It should be admitted also that these three benefits,
and therefore aims, of targets can conflict. A change of strategic
direction may be judged essential and reflected in changes in
data used for performance management purposes. But this may make
effective scrutiny more difficult. Similarly, accountability may
(although this is by no means clear) be aided by having a lot
of targets; however, this dilutes their ability to generate a
sense of priority and strategic direction.
13. In its written submission, the Home Office also
listed three central risks associated with target-setting:
The key risk in target setting is incentivising the
wrong kind of activity. Targets must be designed to ensure that
they focus on the right outcome, that they will work as intended,
and that they can be properly measured. …
Another risk lies in dis-incentivising activities
which fall outside the scope of specific targets. We recognise
that not all of our business can sensibly be captured through
the PSA framework, particularly as this focuses on very high level
outcomes. Our delivery plans will therefore be supported by an
effective framework of performance management arrangements covering
all our activities.
Finally, there are clearly risks in the transition
from one set of targets to another in 2005-06, when both sets
of targets will overlap.[6]
14. We would add two further risks to this list,
on the basis that they are ones upon which the Government has
itself recognised and acted. This is the risk that there will
be a tension between national targets and perceived local priorities.
We note that the Public Administration Select Committee has drawn
attention to "widespread suspicion and misunderstanding of
the Government's targets policy among the people who matter most—those
who use and provide services at the 'front line'".[7]
The second risk is that the act of setting targets reduces the
ability of service providers to respond quickly to changing conditions
on the ground. The Government's decision to move away from using
SDAs can be explained, in part, as a response to these unintended
effects of target-setting.
15. In summary, the benefits and risks associated
with the use of formal targets are as follows:
Recent developments
16. In 2002 the Public Administration Select Committee
published a report on the Government's system of targets.[8]
Whilst the report concluded that targets have an important role
to play in public service improvement and that "the increase
in accountability and transparency which targets have brought
with them has been valuable", it also made a number of criticisms.
Its recommendations included the following:
i. there should be fewer targets, with greater
decentralisation of performance measurement so that service providers
could be given greater autonomy on target-setting (at paragraph
112);
ii. there should be a shift in emphasis in Government
policy from absolute targets to measures of progress in performance
(paragraph 124);
iii. the system for reporting progress against
PSA targets should be made more consistent and comprehensive,
with common reporting categories so that it is clear whether a
target has been judged as met, not met, partly met, or if there
is insufficient data to make an assessment (paragraph 129); and
iv. as part of a wider programme of consultation
on target-setting, targets in draft form should be referred to
the relevant departmental select committees for comment and proposed
revision (paragraph 142).
17. The Government accepted several of the recommendations
in the Public Administration Committee report. In particular,
it supported the proposition that there should be fewer PSA targets
with greater decentralisation, and agreed that measures of progress
in performance would often be preferable to absolute targets.
In relation to the recommendation for more consistent reporting
of achievement, the Government drew attention to recent guidance
issued by HM Treasury aimed at securing this. However, it rejected
the recommendation that departmental select committees should
play a formal role in scrutinising draft targets, arguing that
"targets are set as part of the Spending Review negotiations
and as such reflect the Government's priorities"—though
the Government did undertake to "improve the target setting
process through the 2004 Spending Review to ensure better buy-in
from delivery agents and other stakeholders, including Parliament".[9]
18. We turn now to the new approach of the Home Office
towards PSA targets, which reflects both the Government's general
change of policy and lessons learnt from the Home Office's own
experience of targets to date. We establish the key elements of
the changes in approach since the 2002 Spending Review, and assess
their implications.
2 HC Deb, 14 July 1998, Col 187 Back
3
The Police Performance Assessment Framework (PPAF) and National
Drugs Strategy Performance Management Framework. See Ev 51. Back
4
HM Treasury et al (2001), Choosing the Right Fabric: A framework
for performance information Back
5
Ev 2 Back
6
Ev 2 Back
7
Public Administration Select Committee, Sixth Report of Session
2002-03, On Target? Government by Measurement: The Government's
Response to the Committee's Fifth Report (HC 1264), published
on 11 November 2003, p 3 Back
8
Public Administration Select Committee, Fifth Report of Session
2002-03, On Target? Government by Measurement (HC 62-I),
published on 22 July 2003 Back
9
HC 1264, Session 2002-03, p 9 Back
