1.2 Key messages
5. Overall, departments appear to recognise the
importance of the DARs as a means of communicating their future
priorities and providing accountability against their past performance.
To this end, a number of departments have adopted innovative
techniques, particularly the use of summary tables and the systematic
approach to describing performance against targets. Information
deficiencies continue to undermine many of the DARs, however,
especially in terms of relating expenditure to performance. It
is hoped that by identifying these deficiencies this review will
encourage improvement.
6. Financial tables presented in the annexes
of reports would benefit from accompanying notes explaining activity.
More importantly, there is insufficient linking of expenditure
to departments' objectives and targets. Without this, it is impossible
to determine whether targets are being met at acceptable levels
of cost.
7. Specific programmes and initiatives described
in departmental reports would also benefit from further information
relating to costs and outcomes, so that the reader can ascertain
to what extent they are supporting the department's strategic
priorities. Departments are currently working towards producing
closer reconciliations between resources and outcomes: these should
be completed as quickly as possible.
8. The level of detail provided in relation to
departments' efficiency programmes is frequently insufficient,
with summaries failing to provide the reader with a picture of
how targets are going to be reached and what the impact on service
provision is likely to be. In addition, little attempt is made
to link achievements and future plans to associated Efficiency
Technical Notes (ETNs). It is important that future departmental
reports include more comprehensive information, making clear the
areas expected to account for the bulk of savings and whether
or not these will result in improvements in services.
9. The National Audit Office's (NAO) study of
64 data systems covering the 2003-06 Public Service Agreement
(PSA) targets identified problems with around one half. Such
data limitations are not always obvious but departments have consistently
failed to declare the reliability of data in their reports. It
is vital that departments work towards improving these data systems
as a matter of urgency and ensure they describe the quality of
the data when presenting assessments, so as to allow the reader
to have confidence in the conclusions they reach.
10. Whatever the quality of the data, it is difficult
to follow the logic of some of the assessments presented in annual
reports. Targets which appear to be slipping are confidently
predicted to be "on course", as are targets for which
the current assessment is "too early to say". In some
instances, departments admit to taking account of information
which is not specified in the associated technical notes.
11. Departments would benefit from adopting a
more consistent and systematic approach to presenting their assessments,
ensuring that sufficient information is provided for the reader
to determine how a conclusion has been arrived at. The Sharman
report on accountability in central government envisaged the external
validation of departmental information systems as a "first
step" towards validating key published data.[2]
It might therefore be logical that the next step involves external
and independent verification of departmental assessments, by a
body such as the NAO.
12. Not enough space is given to discussion of
past performance in some of the reports, particularly where a
target is assessed as being subject to "slippage".
Without such information the reader cannot determine what problems
have been encountered and to what extent these are within the
responsibility of the department. Similarly, some departments
fail to provide any details of future initiatives designed to
rectify this position.
13. Although there was a shift towards outcome-based
directional PSA targets under SR04, many input-focussed and absolute
ones remain. While it is not for this report to comment on the
relative merits of differently designed targets, it is clear that
the inconsistency which is inherent in such a mixed approach risks
creating confused messages about the Government's priorities.
14. The failure to provide any explanation in
annual reports of how targets have been decided upon means that
the reader can only guess at departments' thinking. It remains
difficult in many instances to map targets to objectives, and
to reconcile objectives over time. Provision of fuller information
regarding target setting and the use of summary reconciliation
tables would help reduce such problems.
1.3 The way forward
15. Going forward, departments should, as a minimum,
ensure that they are fully compliant with Treasury guidance on
the content and presentation of annual reports. Beyond this,
it is important that each department produces annual reports which
provide Parliament and the public with sufficiently full and accessible
information to determine how the department is progressing against
its strategic objectives, what action it is taking to further
improve performance and how much these processes are costing.
Only armed with these details can the reader hope to assess the
economy, efficiency and effectiveness of the department.
16. Having considered the full range of published
DARs and identified weaknesses and strengths, the Scrutiny Unit
believes future DARs could and should include:
- Notes accompanying core financial tables to explain
trends and unusual movements;
- Direct linking of expenditure/resources to targets/outcomes,
both at objective level and in relation to individual initiatives;
- Comprehensive discussion of progress on efficiency
programmes, including explanation of where major savings are anticipated
and the likely impact on services;
- Full information regarding the quality of data
used in assessing targets, with limitations clearly set out;
- Consistently expressed assessments which follow
logically from the information provided;
- Details of any information which is outside of
measures described in PSA technical notes;
- Full commentary on past performance, with explanations
for failures to meet targets, and discussion of future initiatives
designed to improve performance; and
- Some form of reconciliation of current objectives
and targets, and of targets over time.
17. Many of these improvements simply require
departments to rethink the design of their DARs and take more
account of readers' requirements. To this end, we suggest
that those select committees publishing reports on this year's
DARs make reference to the findings in this report and draw departments'
attention to examples of best practice.
18. Other improvements are more likely to flow
if the Treasury reforms parts of its guidance in relation to DARs.
The Scrutiny Unit will be liaising with the Treasury to seek
improvements to the guidance produced for departments. We
are proposing two key changes:
- First, reporting resources by objective should
be made mandatory in the core tables, so as to prevent departments
interpreting the existing requirement to explain what the department
is spending its money on in differing ways;
- Second, each DAR should be required to include
a summary table which details total delivered efficiencies and
reconciles these with the planned savings set out in the Efficiency
Technical Note.
1 HMT, Public Expenditure System: Guidance for the
Spring 2005 Departmental Reports, PES (2004) 19, 30 November
2004 Back
2
Lord Sharman of Redlynch, Holding to Account: The Review of
Audit and Accountability for Central Government, February
2001, para 8 Back
