Managing government spending and performance Contents


1.Government has made some progress in the way it plans and manages its business. But much more work is needed before the system can ensure long-term value for money at a cross-government level. Government has taken an important step forward in developing Single Departmental Plans, the first time it has attempted to bring together all of a department’s activities and commitments into one document. HM Treasury has increased early engagement with departments on the Spending Review, to get their input into the process and to better understand their models and forecasts. However, we have yet to see how Single Departmental Plans will integrate with existing processes such as the Spending Review to form a coherent and enduring approach which can support value for money decisions over the whole of government and into the longer term. These processes also need to develop significantly if they are to tackle the issues HM Treasury itself has identified: intelligent management of performance; linking the work of arm’s-length bodies to their sponsoring department; dealing with issues that cut across departmental responsibilities; and improving transparency.

2.Government makes plans with a poor understanding of current performance, of the outcomes it is seeking, and of the link between outcomes and associated funding. The Government has struggled for many years to make significant progress with joining up spending, objectives and performance. HM Treasury’s Financial Management Review in 2013 planned various initiatives for costing and understanding the value of service delivery, but these were not ready for the 2015 Spending Review, and are still under development now. While the SDPs represent an improvement in ambition, there is still a long way to go before either the Government or the taxpayer can see what money has been spent on a given objective and what value has been delivered. Information is spread across a number of different documents, including SDPs, Annual Reports, and Supply Estimates, which are all prepared on different bases and cannot usefully be combined. We accept that bringing this together is a significant challenge, but it is a crucial one for government to prioritise.

3.Many of government’s key objectives cut across more than one department and involve multiple organisations delivering services. But, while we recognise there are some positive examples, there is not enough joined-up planning across government. The Government has shown its commitment to working across organisational boundaries by setting up Cabinet Implementation Taskforces to monitor and drive delivery of cross-cutting priorities such as housing and digital inclusion. But these taskforces have not yet had an impact in actual planning and performance monitoring. We have seen a number of examples where expenditure in one area would lead to savings in others, for example on mental health, but in our experience the Government’s approach to planning and management does not encourage a joined up response. We heard of a number of examples of departments working together, for example the Departments for Education and for Business Innovation and Skills had set up a joint unit on apprenticeships. But these working practices rarely led to formal funding or accountability arrangements, and only two formal joint bids were received by HM Treasury as part of the 2015 Spending Review. Within departmental groups, a quarter of arm’s-length bodies surveyed by the NAO were at best only partially clear about their sponsor department’s objectives, which indicates additional weaknesses in joined-up planning through the delivery chain. We recognise that accountability structures are currently based around separate departments, rather than reflecting the evolving ways in which government is actually working, but there are some good practice examples which show this need not be a barrier to working together.

4.We are yet to be convinced that SDPs will be able to deal with significant changes in priorities within and beyond this Parliament (for example Brexit). We welcome the Treasury’s agreement that the centre of government should aim “to devise a system which is so useful and so valuable in planning public spending that it’s completely robust to any change of government and can accommodate changes of policy priorities within that”. However with SDPs still in their infancy we have yet to see this happen in action. Brexit will be a good test of whether the approach is fit for purpose in allowing government to assess its priorities and make changes to objectives and the related funding as needed. SDPs must be living documents that allow government as a whole to respond realistically to changes when they arise, including if necessary dropping objectives. They must also support a view of outcomes over a longer term than just this Parliament. We recognise that fully taking into account the implications of Brexit will take some time. However, it is not encouraging that SDPs have not yet been updated to show basic information such as new ministers, let alone to reflect all the recent changes in departmental responsibilities, such as the creation of the Departments for Business, Energy & Industrial Strategy and International Trade, or to set out changes in plans as a result of Brexit.

5.There is significant variation in the maturity of planning across individual government departments, and no shared approach to encourage continuous improvement. HM Treasury was clear that it would use the quality of a department’s SDP as an indicator of that department’s competence in planning. The Cabinet Office pointed to some examples of good practice, such as HM Revenue & Customs’ work on integration of performance information systems across the department. However, the Cabinet Office itself accepts that there is more to be done across government “to understand what planning means”. We are concerned that without a concerted and co-ordinated effort, government will only be able to move forward at the pace of the slowest department. Neither the Treasury nor the Cabinet Office, when challenged, could provide a single example of where a department had dropped or changed a commitment as a result of the supposedly improved planning processes and overview provided by SDPs: suggesting that prioritisation remains a real challenge for government.

6.The SDPs do not enable taxpayers or Parliament to understand government’s plans and how it is performing, and therefore have not enhanced their ability to hold government to account for its spending. Good quality information on performance and spending by objective is one of the essentials of accountability, but has been a longstanding area of weakness for government and a serious concern to this Committee. The SDPs were published with a commitment that they would “bring together inputs (especially funding) with outputs” but seven out of seventeen departments do not publicly assign any budgets to their objectives. They are also supposed to “enable the public to see how government is delivering on its commitments”, but there are significant areas within some objectives where no indicators to measure progress are published. We are concerned that while the internal plans have more detail, this detail is not available to taxpayers or Parliament. HM Treasury agreed that it needed to improve public reporting. However there is a considerable way to go before the taxpayer will be able to see in detail what their money is being spent on and how well it is being spent.

21 November 2016