Letter from the Permanent Secretary, HM
Treasury to the Chairman
I am writing to you regarding the Treasury's
Public Service Agreements (PSA) and Departmental Strategic Objectives
(DSOs) for the CSR07 period. I am doing so on the understanding
both that these PSAs and DSOs are still in development.
Following discussions, both across central departments
and with other actors in the PSA delivery chain, the structure
of the PSA framework has been altered for the CSR07 period, details
were set out in Chapter 6 of the Budget. A new set of PSAs will
set out the highest priority outcomes for the Government, with
less than a third of the number of PSAs than in the current spending
review period. Recognising that delivery of the Government's highest
priority outcomes requires public services to adopt collaborative
approaches across organisational boundaries, both at Whitehall
and the frontline, these outcome-focussed PSAs will not be constrained
by departmental boundaries but will reflect a government wide
set of priorities, articulating the most important areas for collective
action.
To ensure coherent cross-departmental working
as well as buy-in throughout the delivery chain, each cross-cutting
PSA will be underpinned by a single, published Delivery Agreement
setting out plans for delivery, the growth of each organisation
in the delivery chain, and the indicators that will be used to
measure progress towards the outcome—strengthening accountability
at all levels. Whilst a number of departments will contribute
to Delivery Agreements, one department has been nominated to lead
production of each one.
In this new system, HM Treasury are leading
on the development of the Delivery Agreement for one proposed
PM:
"Halve the number of children in poverty
by 2010, on the way to eradicating child poverty by 2020".
The target to halve child poverty by 2010-11
is part of a wider target to eradicate child poverty by 2020.
The Child Poverty Review was published alongside
Spending Review 2004 and articulated the Government's comprehensive
strategy for reducing and eradicating child poverty. The Review
set out a number of work strands: financial support; increasing
employment tackling material deprivation and improving children's
life chances.
The Delivery Agreement for this proposed PSA
will detail the contribution that Government departments will
make towards reducing child poverty and will focus upon those
policies which will have a quantifiable impact on the 2010 targets
and contribute to our goal of eradicating child poverty by 2020.
In addition to this PSA, we are also involved
in development work on a number of other PSAs that are being considered.
In particular, we are making significant contributions in the
areas of international poverty reduction, employment, productivity,
supporting a strong business environment, regional economic growth
and climate change.
On international poverty reduction, the proposed
PSA focuses on the elimination of poverty in poorer countries
through achievement of the Millennium Development Goals (MDGs).
HM Treasury has a key role in releasing resources for international
development and in influencing a number of international institutions.
We will use these levers as appropriate to support the delivery
of the proposed international poverty reduction PSA. We will also
continue to press for innovative financing development, such as
the International Finance Facility for Immunisation and Advance
Market Commitments, which can help accelerate progress towards
the MDSs by releasing resources for basic services.
On employment, HM Treasury will provide the
platform for achievement of progress by continuing to deliver
stable macroeconomic policy and sound management of public finances.
In addition to working closely with DWP on the development of
welfare to work policies, HM Treasury will continue to contribute
to the Governments long term goal of employment opportunity for
all, through policies that make work pay, improved incentives
and a guaranteed minimum income from work through reform of the
tax and benefit system combined with the National Minimum Wage.
The proposed productivity PSA will seek to deliver
progress on the Government's long-term objectives to raise the
rate of UK productivity growth over the economic cycle, and narrow
the productivity gap with our major industrial competitiors. HM
Treasury is responsible for the overall productivity strategy,
including design and implementation of the productivity framework.
We are also responsible for ensuring macroeconomic stability,
which enables increasing levels of productivity, and have an influencing
role on the activities of other government departments to make
sure that these are supportive of the productivity agenda.
For the proposed PSA on supporting a strong
business environment, the Treasury will contribute to Government
action to ensure that the UK framework for competition is at the
level of the best, and by working with HM Revenue and Customs
and the Better Regulation Executive to ensure the delivery of
a supportive regulatory and business tax administration environment.
On regional economic growth, the Treasury will
contribute by overseeing the implementation of the findings of
the sub-national review and will also look at options for delivering
increased regional flexibility in public sector pay settlements.
Finally, on climate change, the Treasury will
contribute through continuing to promote international understanding
of the economic impact and significance of climate change through
engagement with international finance ministers in G7 and G20
meetings. Domestically, we will continue to use evidence based
policy making to ensure that when designing our economic instruments
the governments emissions reduction and environmental goals are
consistent with maintaining economic growth and achieving our
social objective—specifically through our responsibility
for environment tax policy (including the Climate Change Levy,
Fuel Duty, Vehicle Excise Duty and Air Passenger Duty).
These PSAs and the indicators that will be used
to measure and report on progress are still being developed by
departments across Whitehall, and we are working together to involve
Local Authorities, frontline professionals and service users so
that frontline expertise informs the definition, measurement and
delivery of priorities. PSAs and their Delivery Agreements will
be finalised at the CSR in the autumn.
These top-level cross-government priorities
will be underpinned by a set of DSOs, which each department will
develop and publish at the CSR. These DSOs will cover the Departments
entire business and form the basis for internal performance and
resource management over the CSR07 period.
The Treasury is itself in the process of developing
a set of DSOs for the Treasury Group. Attached to this letter
is a simple graphic illustrating at a high level our two overarching
DSOs:
— maintaining sound public finances;
— ensuring high and sustainable
levels of economic growth; and
Each of these DSOs is underpinned by a series
of outcomes, some of which link to the proposed cross-Government
set of priority PSA (as shown in the graphic). These outcomes
will be defined by a set of indicators which we are currently
developing and which, where relevant, will mirror those underpinning
PSAs. I would be happy to share these indicators with you in due
course.
As one of our key stakeholders, I would be grateful
for your views on the model we are suggesting for our DSOs. To
aid their continuing development, any view you could submit before
the summer recess would be appreciated.
I should stress that these DSOs are still under
development, and may change prior to their publication alongside
the CSR. I am happy to keep you apprised of their development
if you would find that useful.
28 June 2007
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