Select Committee on Treasury Sixth Report

6  Public Service Agreements and beyond

The experience so far

88. As part of the new planning regime introduced in 1998, the Government has sought to link increased resources to improved outcomes. It has sought "to match new resources with reform".[181] One way it has sought to achieve these objectives has been through Public Service Agreements. The original aim of Public Service Agreements was to "bring together in a single document important information on aims and objectives, resources, performance and efficiency targets and related policy initiatives": each Agreement was expected to include an introduction setting out the Minister or Ministers accountable for achievements; the aims and objectives of the department or cross-cutting area; the resources allocated to it in the Spending Review; and key performance targets.[182] The Chief Secretary told us that he thought that

the performance management framework we have had, the arrangement about the PSAs, has been a very, very important contributor to the dramatic improvements we have seen in the outcomes from public services over the last few years: big reductions in waiting lists in health; big improvements in achievement in schools and so on. I would not want anybody to underestimate the value of the framework we have had in place, the contribution that the PSA system has been. Of course, it was a very radical departure in 1997 and a very successful one, but we have wanted to learn from our experience in the period.[183]

89. A number of concerns have been expressed about the operation of Public Service Agreements in evidence to this Committee and our predecessors and in reports on Public Service Agreement targets by the National Audit Office and the Statistics Commission:

  • that the system was too top-down and unwieldy, so that, for example, 14 Public Service Agreement targets for health in England were translated into 206 health targets and measures for NHS Trusts and Primary Care Trusts;[184]
  • that the quality of data measurement and the statistical infrastructure were not sufficient to measure with accuracy the extent to which Public Service Agreement targets had been met;[185]
  • that the long time-lags before data became available, coupled with the different sets of Public Service Agreement targets established under successive Spending Reviews, created confusion and difficulties for those seeking to assess performance against targets;[186] and
  • that particular difficulties arose from targets held jointly between departments and that some issues which involved more than one department were not adequately captured within a framework predominantly composed of departmental Agreements and targets.[187]

The Chief Secretary said that the Government had sought to learn the lessons of previous experience with Public Service Agreements in developing the framework for the 2007 Comprehensive Spending Review.[188]

The new framework

90. The 2006 Pre-Budget Report gave an initial indication of how the Government expected the framework to change. First, there was an indication of a reduction in the number of Public Service Agreements:

A new set of PSAs in the 2007 CSR will express a more focused list of key cross-government priority outcomes. This smaller set of corporate PSAs will reflect genuine choices about priorities for the 2007 CSR period, serving to unite efforts across departmental and organisational boundaries in meeting them.[189]

The Chief Secretary similarly referred to "a refreshed and smaller suite of 'corporate' PSAs which articulate the Government's highest priority outcomes for the period" which were "focused more tightly on the Government's highest priority outcomes".[190] He indicated that the Government would be "significantly reducing" the number of Public Service Agreements.[191] This commitment to reduce the number of Public Service Agreements follows the Government's decision at the time of the 2004 Spending Review to reduce the number of Public Service Agreement targets to 110 from 250 at the time of the 2002 Spending Review.[192] The current total is potentially misleading, both because there is an element of double-counting in targets relating to matters of cross-departmental interest and because some targets are in reality composites containing more than one target.[193]

91. The Government also announced in the 2006 Pre-Budget Report that accountability for performance against Public Service Agreements would be strengthened:

Departments will be required to produce a single, coherent, cross-departmental Delivery Agreement for each PSA, informed by consultation with the delivery chain. Delivery Agreements will clearly set out the level of ambition, strategy for delivery, and the role of each organisation involved … For the first time these Delivery Agreements will be published, both to enhance Government's accountability to the public and to ensure key actors throughout the delivery chain are focused on achieving the priorities.[194]

The Chief Secretary told us that these Delivery Agreements would set out how each corporate Public Service Agreement was to be delivered, which was the lead department, who was responsible for delivery and how the Agreement would be delivered.[195] He indicated that the Delivery Agreements would not be published at the same time as the outcome of the Comprehensive Spending Review, although the Delivery Agreements would be "published in advance of April 2008".[196]

92. Alongside the smaller and tauter set of Public Service Agreements, "the broader business of Government will be covered by Departmental Strategic Objectives … These will be defined in the CSR and, building on the emerging findings from capability reviews, the CSR will ensure that they are effectively linked to the focused set of PSAs."[197]

93. In the 2006 Pre-Budget Report, the Government indicated a commitment to consultation on the content of the new framework:

In the 2007 CSR systematic engagement and collaboration with public service professionals early in the process will inform the way PSA outcomes are defined, measured and delivered. This will ensure that the Government sets robust indicators, which do not distort operational priorities or create perverse incentives, and that effective plans for delivery are in place from the outset.[198]

The Chief Secretary envisaged consultation taking place with "front-line professionals, service users and broader stakeholders".[199] He also welcomed the suggestions made by the Statistics Commission and the National Audit Office about data quality and validation, agreeing that "the effective use of data for monitoring improved outcome does need to be a cornerstone of the revised framework we will be putting in place".[200]

94. It remains unclear what function the new Public Service Agreement targets are intended to perform. There are two areas of uncertainty. First, Public Service Agreements have been seen as a form of quasi-contract, specifying the performance expected from departments (or cross-departmental programmes) in exchange for the public spending invested in them. Given that a number of departments have agreed Comprehensive Spending Review spending plans without apparently agreeing Public Service Agreement targets at the same time, it is unclear what part Public Service Agreement targets play in spending settlements. Secondly, the advent of Delivery Plans and Departmental Strategic Objectives raises issues about how these three sets of plans and targets fit together.


95. We welcome signs that the Government is seeking to learn lessons from the operation of the framework of Public Service Agreements in the years since 1998. In particular, we welcome the commitment to fewer, but better Public Service Agreements. The proposed reduction must be genuine; its value would be undermined if new Agreements simply brought together diverse topics within a single Public Service Agreement or if a reduction in the number of Public Service Agreements did not lead to a matching reduction in targets down the delivery chain. We are also concerned that some of the data measurement issues relating to targets seem unresolved, and we recommend that, in finalising Public Service Agreements, the Government has regard to the importance of ensuring that targets are measurable, that there is clarity about the methods of measurement and that data used for measurement is of adequate quality. We further recommend that the Government set out, in a single document, a public statement of how the Public Service Agreements, the Delivery Agreements and the Departmental Strategic Objectives fit together and form a coherent framework for enhancing the performance of Government departments and of public services.

181   Budget 2002, para 6.40, p 122 Back

182   HM Treasury, Public Services for the Future: Modernisation, Reform, Accountability, Cm 4181, December 1998, p 5 Back

183   Q 146 Back

184   HC (2003-04) 906-i and ii, Ev 49; Ev 25 Back

185   National Audit Office, Third Validation Compendium Report: Volume I, December 2006, HC (2006-07) 127-I, Executive Summary, para 2.3 and Summary, para 10; Statistics Commission, Report No. 29: PSA Targets: The Devil in the Detail, p viii Back

186   HC (2001-02) 1092-i and ii, Q 31; HC (2003-04) 906-i and ii, Q 159; The Devil in the Detail, p ix Back

187   National Audit Office, Joint Targets, October 2005, HC (2005-06) 453, pp 1-3; Ev 27-28 Back

188   Q 146 Back

189   Pre-Budget Report 2006, para 6.55, p 150 Back

190   Ev 121 Back

191   Q 130 Back

192   HM Treasury, 2004 Spending Review: Public Service Agreements 2005-2008, July 2004, Cm 6238, para 1.1, p 1 Back

193   The Devil in the Detail, p 2; HC (2003-04) 906-i and ii, Ev 50 Back

194   Pre-Budget Report 2006, para 6.57, p 150 Back

195   Q 140 Back

196   Qq 130-131 Back

197   Ev 121 Back

198   Pre-Budget Report 2006, para 6.56, p 150 Back

199   Ev 121  Back

200   Q 148 Back

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