Performance Info, Management &
Budgeting, and PSAs
Zafar Noman
Performance & Efficiency Team
[DRAFT]
26/07/2016
1
Why care about performance
information?
Good performance information:
•
Indicates how well an organisation is performing
against aims/objectives
•
Helps identify which policies and processes work –
and why they work
•
Improves organisational performance
•
Enhances [public] accountability
•
Value for money? – Significant investment in the
public sector – Real terms increases in public
spending of 4.1% (05/06), 2.7% (06/07), 2.8%
(07/08);
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UK in context
To improve the quality and costeffectiveness of public services
whilst maintaining sound public
finances.
•
•
Total Managed Expenditure c. £500 billion (c.
$900 bn)
Around 40% of GDP
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Public sector reform (1998)
Introduction of 3 year plans
Move to resource based accounting and
budgeting
Separate budget for capital spending
Proper asset management
Underpinned by outcome focused
performance targets (through Public
Service Agreements)
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Principles of
Public Service Performance
Clear long-term strategic goals;
2. Independent audit and inspection;
3. Maximum local flexibility and discretion to
innovate;
4. Transparency about what is being
achieved.
1.
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TARGETS AND BUDGETS SET
IN PARALLEL
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The Spending Review Cycle
SR2002
SR2002
plans set
2002-03
Year 1
2003-04
Year 2
Year 3
2004-05
2005-06
SR2004
plans set
Year 1
2006-07
2007-08
Year 2
Year 3
SR2004
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Structure of PSAs
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Public Service Agreement
Efficiency Targets
Accountable
Minister(s)
Aim
Objective
Target
Objective
Key Measures
National
Standards
Target
Target
Technical note
How measured
Efficiency Technical
note
How measured
Note: ETNs and TNs can be revised – but PSAs cannot!
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Why set targets?
•
•
•
•
•
a clear statement of what government is
trying to achieve;
a clear sense of direction;
a focus on delivering results;
a basis for monitoring what is and isn’t
working;
better public accountability.
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Public Service Agreement targets
Examples
• DH: reduce health inequalities by 10% as
measured by infant mortality and life expectancy
at birth.
• CJS: reduce crime by 15% and further in high
crime areas.
• Defra: Eliminate fuel poverty in vulnerable
households in England by 2010 in line with the
Govt’s Fuel Poverty Strategy objective.
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Performance Management
(Through accountability and
transparency)
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Internal monitoring
•
•
•
•
Departmental monitoring;
Delivery and Performance monitoring by
Treasury / Prime Minister’s Delivery Unit;
PSX (Cabinet Committee);
PM stocktakes for key areas.
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Public reporting
•
•
•
Departmental reports provide backward
look of expenditure and performance
APRs provide six-monthly performance
update
Treasury performance portal
(www.hm-treasury.gov.uk/performance)
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Accountability of individuals
•
•
Named Secretaries of State;
Permanent secretaries;
BUT…
• No mechanistic link between performance
and resource allocation in Spending
Review.
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Evolution of the framework
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Inputs, outputs, outcomes
That interact
with services
affecting
results
RESOURCES (£) INPUTS
Resources that
contribute to
delivery such as
labour and
physical assets
Final goods and
services
produced for
delivery to the
consumer
OTHER EXTERNAL
INFLUENCES
OUTPUTS
OUTCOMES
Impact or
consequences of
these activities
for the
community
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Example - health
OTHER EXTERNAL
INFLUENCES
LIFESTYLE CHOICES,
HOUSING, POVERTY
RESOURCES (£)
DEPT OF HEALTH
SPENDING REVIEW
SETTLEMENT
INPUTS
DOCTORS/NURSES,
HOSPITAL
EQUIPMENT
OUTPUTS
OPERATIONS,
CONSULTATIONS
OUTCOMES
LONGER LIFE
EXPECTANCY,
BETTER HEALTH
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Evolution of PSAs
Comprehensive
Spending
Review (1998)
CSR 98
Spending
Review
2000
Spending
Review
2002
SR00
SR02
110 targets
600 targets
First set of
PSAs
published
160 targets
Significant
changes to
CSR model
130 targets
Greater
continuity,
architecture
refined
Increased
consultation
Introduction
of standards
Focus on
outcomes
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Choose the right targets
Not too many…
Real measures of success…
Which are owned by deliverers
Outcome-focussed and SMART…
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SMART targets are…
Specific – avoiding vague targets which might lead
to uncertainty;
Measurable – underpinned by a sensible and
reliable quantitative data source;
Achievable – whilst at the same time setting a
stretch, or step-change in performance;
Relevant – to what the organisation is trying to
achieve;
Timed – with a clear end date, and supported by
timely data.
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Lessons learned
With respect to:
• Taking a top-down approach
• Delivery
• Measurement
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Top-down: Issues & responses




Lack of consultation – 2007
Comprehensive Spending Review
Too command & control – Increasing
focus on outcomes address this criticism;
Too many targets – Less than 1 PSA target
for every £5billion of expenditure;
Distortion – increased use of evidence and
consultation.
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Delivery: What’s the connection
with Performance Information?
•
•
•
If you can’t measure how you are doing
(or the lags are too large), you can’t get
delivery better
A weak delivery plan and low
understanding of delivery chain may signal
low understanding of data system
Highlights importance of rigorous delivery
planning & reporting
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Delivery issues - education
CSR (1998)
..an increase in the proportion of of those aged 11
meeting the standard of literacy for that age
(level 4 in key stage 2) from 63% to 80% by
2002
..an increase in the proportion of of those aged 11
meeting the standard of numeracy for that age
(level 4 in key stage 2) from 62% to 75% by
2002
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Delivery issues - education
85
80
Targets set
75
Eng tgt
70
Mth tgt
65
English
Maths
60
55
50
1996
1997
1998
1999
2000
2001
2002
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Delivery issues - education
85
80
75
Eng tgt
70
Mth tgt
65
English
Maths
60
55
50
1996
1997
1998
1999
2000
2001
2002
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Delivery issues - education
85
80
75
Eng tgt
70
Mth tgt
65
English
Maths
60
55
50
1996
1997
1998
1999
2000
2001
2002
Necessity of timely performance information for management intervention
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Measurement
•
•
Consider measurement issues when
attempting to link perf. Info w/
management & budgeting
Systematically assess data quality risks

•
•
Consider carefully potential for ‘gaming’
Perverse incentives / Distortion of activity
Cascading

Kent County Council
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Data systems validation
How did we do?
SR2002 targets: “77% of data systems
provided a broadly appropriate basis for
measuring progress”
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How did we do?
PSA 2003-06 Validation Ratings
Not fit for
purpose
12%
Not
established
7%
Fit for purpose
30%
Broadly
appropriate,
but systems
need
strengthening
30%
Broadly
appropriate,
but disclosure
needs
strengthening
21%
Note: for 5% of systems it was too early to form a view
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Further Issues to Consider
•
•
•
•
•
•
Performance management should reflect local
priorities;
Key agents: Consultation and ownership;
What will the effect be on the frontline
Should be informed by evidence and analysis at
the outset (performance evaluations);
X-organisation co-operation
Performance information should permit
decentralised decisions (measure outcomes)
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2007 Comprehensive Spending
Review - I
“a fundamental review of the balance and pattern of
public expenditure” informed by:
•
Reviews of the long-term challenges
•
Consultation with public, experts & front-line
•
Identifying efficiencies
•
Zero-based reviews of department’s baseline
expenditure
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2007 Comprehensive Spending
Review - II
?
(Performance framework; SR process and use of
information for budgeting; reform)
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Useful websites
PERFORMANCE WEBSITE:
http://www.hm-treasury.gov.uk/performance/
“On Target? Government by Measurement”
(Public Administration Select Committee, 22 July 2003)
http://www.publications.parliament.uk/pa/cm200203/cmselect/cmpubadm/62/6202
.htm
“2006 Survey Report - PSA targets: Performance Information”
http://www.nao.org.uk/publications/nao_reports/0506/Acting_on_Information.pdf
“Second Validation Compendium Report: 2003-2006 data systems”
http://www.nao.org.uk/pn/05-06/0506985.htm
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www.hm-treasury.gov.uk/fabric
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www.hm-treasury.gov.uk/agencytargets
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Performance Info, Management &
Budgeting, and PSAs
Zafar Noman
Performance & Efficiency Team
zafar.noman@hm-treasury.gov.uk
26/07/2016
38