Improving Government planning and spending Contents

2Joining up planning and spending, with clear accountability

Bringing together the management of planning and spending

16.In 2016 the previous Committee recommended that the Treasury and Cabinet Office work together to set out a vision of how the overall approach to how government plans and manages its business will ensure value for money in time for the next spending review.47 We asked what progress the Treasury and the Cabinet Office had made in developing such a joint planning and spending framework. The Treasury told us that it works very closely and much more jointly than before with the Cabinet Office. It explained that while SDPs were not in place at the last spending review, they would be a key input to Spending Review 2019, and would provide the baseline against which to assess departments’ performance, finance and delivery.48

17.We asked what was the biggest challenge to bringing planning together with spending given the weakness we see in departments aligning short, medium and long-term plans with spending to deliver outcomes. The Treasury explained the challenge was to move from focusing on how much money will be spent to what is being delivered for that money.49 The Cabinet Office reflected that the initial focus of SDPs had been to bring together the funding available to a department – as agreed with the Treasury – with the activity it aimed to deliver with that funding.50 It told us that the improvements to SDPs since they were introduced meant that the trade-offs being made in the next spending review would be more explicit.51

18.Despite improvements in business planning, one of the challenges is prioritisation - there is a tendency for departments’ plans to be over-optimistic about what they can deliver. Departments follow the lead of the Treasury and the Cabinet Office and, as such, they have an impact on how departments prioritise.52 In 2018, departments’ SDPs contained 9% more objectives and sub-objectives than in 2017. Only 53% of staff said their department accurately aligned planned deliverables with capacity and capability.53 The Treasury acknowledged the tendency for over-optimistic plans and the challenge of successfully getting Ministers to prioritise. It noted that efficiencies promised in the last spending review to pay for other things were not delivered. The Cabinet Office stressed the importance of examining the promises made alongside the resources available, to identify pressure points.54

19.The Treasury and the Cabinet Office explained they were putting in place a structure to support better judgements about whether the portfolio of departmental activity is deliverable. Specifically, the Cabinet Office cited the increase in delivery, commercial and technical expertise in the civil service as helping them to get better at testing deliverability. In Spending Review 2019, the Treasury explained, there will be a big push on testing the deliverability of big projects, on which the Infrastructure and Projects Authority will lead. In addition, the Treasury said departments will have to make the case for all projects, including ongoing ones, so that the best can be prioritised.55

20.Another key challenge of bringing planning and spending together is managing the impact that central government decisions have on local services. For example, the government had to introduce a range of additional short-term funding measures to support the local government sector starting in the first year of the last spending review and still lacks a long-term funding plan for local authorities. We asked how the Treasury spending teams assess the impact of decisions made on local government. The Treasury explained that it does this through its strong relationship with departments, particularly the Ministry of Housing, Communities and Local Government, as well as the LGA.56 However, our recent work on local government shows that while the Ministry of Housing, Communities and Local Government asserts that it has improved its understanding of the sector and its insight into the pressures it is under, it has not explained the basis for its assessment that the sector is financially sustainable as we recommended in July 2018. In the LGA’s view, the complex landscape of local government funding often leads individual departments to disregard the overall context of council funding. The LGA is keen to engage with officials from across several departments so that government, as a whole, has a better understanding of how spending review decisions affect councils, including their financial sustainability.57

Limitations of publicly available Single Departmental Plans

21.In 2016, the previous Committee concluded that the public 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. It recommended that departments should publish the same up to date information about performance that they use for monitoring themselves, subject to any national security or similar essential restrictions.58 All departments produced a public plan for 2018–19 in May 2018. However, those plans contain only high-level summary information on activities and performance, and nothing on changes in spending or priorities.59 The Cabinet Office told us that the public plans are not as good as they should be, but said they are getting better and that it will continue to work with departments to improve them. It highlighted areas that need to improve so that the plans are “more digestible for the public”, including putting in key performance indicators and better articulation of the risks.60

22.We challenged the Cabinet Office on what it is trying to achieve with the public SDPs. The Cabinet Office told us that for each department a reader should be able to understand its high-level objective and a range of sub-objectives. We reviewed the public short-form SDPs for three departments and found them very high-level, general and unhelpful. These departments’ plans stated some fairly broad objectives and some aspirations, but nothing about how they would be delivered or how they would be measured.61 For example, in the Department of Health & Social Care’s plan we could not see information on how objectives such as reducing childhood obesity would be delivered nor the link to resources needed to deliver them or the timescale for delivery.62 We also looked at the Ministry of Housing, Communities and Local Government’s plan and found it far from clear what the Department is trying to achieve.63 The Cabinet Office told us that in the good quality internal SDPs there is more detail on what resources are allocated to department objectives, although this is not the case for all departments.64 Yet we note some departments were not able to produce financial and workforce plans for the medium term, or integrate these with the outputs and outcomes they propose to deliver.65

23.The Cabinet Office declined our request to see a couple of the departments’ internal SDPs on the basis that it “didn’t think it was appropriate for them to be in the public domain.”66 We asked the Cabinet Office the reason for this decision.67 The Cabinet Office argued that “if you do all your planning and discussions in public, it becomes a less fruitful exercise”, claiming that some of the SDPs’ content might be quite sensitive, such as projected workforce losses, so could have a negative impact if published.68 The Treasury told us that the system could be better at focusing on outcomes and objectives, and that it would like to have a better, more public performance regime both as part of the SDP process and going into the next spending review.69

Understanding ‘public value’

24.In November 2017, the Treasury published Delivering better outcomes for citizens: practical steps for unlocking public value, a report it had commissioned from Sir Michael Barber about how government understands and measures the public value that is delivered with public spending (the Barber Review). In the report’s preface, the Chief Secretary to the Treasury recognised a need to track how public money is turned into results for citizens; understand the impact of each pound spent; and prioritise to ensure that resources are allocated to where they will be most effective. Sir Michael Barber recommended a ‘Public Value’ Framework (the Framework) to improve policy outcomes for citizens and measure the likelihood that public spending will produce results that improve people’s lives. The report defined ‘Public Value’ as the value created when public money is translated into outputs and outcomes which improve people’s lives and economic wellbeing.70 The Treasury thought there was merit in the Framework and its four pillars of public value: how you set your goals; how you set your inputs; how you engage with users and taxpayers; and whether you have the systems and capability to deliver. The Cabinet Office viewed the four pillars as a sensible framework that it should be using, and said that it would be a very powerful tool if it could align it with the objectives in SDPs.71

25.Since spring 2018 the Treasury has been developing and piloting the Framework, but work is at an early stage. By September 2018 only three departments had participated in voluntary pilots. The Treasury is now considering how it will use the pilot work in future and how it can better embed the concept of public value into its scrutiny. The Treasury confirmed that findings from the pilots would inform the 2019 Spending Review and told us that other pilots are still underway.72 The Treasury explained that so far there are lessons coming through from the pilots in three areas: under-appreciation by departments of the importance of engagement with users and taxpayers; under-developed understanding of cost-shunting; and a question about whether the government properly incentivises innovative solutions. We asked the Treasury what it is doing to improve public engagement. It told us that it intends to ask departments to self-assess against all four pillars of the Framework, and would push departments on their capability to understand and assess people’s experiences of public services.73

26.Nevertheless, there are similarities between the Framework and former initiatives: the previous Committee reported that the 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.74 Both the Treasury and the Cabinet Office have led initiatives to improve aspects of the efficiency and effectiveness of public spending, but these have not added up to a sustained programme of improvement. For example, the Treasury asked departments in early 2016 to create ‘value maps’ to demonstrate the value delivered and scope for efficiencies in key areas of spending. The Treasury discontinued the work because it considered the self-reporting approach as too subjective and departments were not always open about gaps in their understanding.75

47 Qq 16, 20; Committee of Public Accounts, Managing government spending and performance, Twenty-Seventh Report of Session 2016–17, HC 710, November 2016

48 Q 16

49 Qq 22, 23

50 Q 17

51 Q 23

52 Qq 20, 35

53 Q 35; C&AG’s Report, paras 2.14, 4.17

54 Qq 35, 36

55 Qq 35, 36

56 Q 49; Committee of Public Accounts, Financial sustainability of local authorities, Fiftieth Report of Session 2017–19, HC 970, July 2018

57 Committee of Public Accounts, Local Government Spending, Seventy-Sixth Report of Session 2017–19, HC 1775, January 2019; Local Government Association (DVP0001)

58 Committee of Public Accounts, Managing government spending and performance, Twenty-Seventh Report of Session 2016–17, HC 710, November 2016

59 C&AG’s Report, paras 2.4, 4.17

60 Qq 50, 52, 73

61 Qq 59, 60

62 Qq 60, 66

63 Q 60

64 Qq 81, 62

65 C&AG’s Report, para 17

66 Qq 50–54

67 Q 50

68 Qq 50–54

69 Q 81

70 C&AG’s Report, paras 8, 1.11, Figure 4

71 Q 25

72 Q 105; C&AG’s Report, paras 8, 13, 1.11, Figure 4

73 Qq 105–107

74 Committee of Public Accounts, Managing government spending and performance, Twenty-Seventh Report of Session 2016–17, HC 710, November 2016

75 C&AG’s Report, paras 1,9, 1.10, Figure 4

Published: 8 February 2019