After an extraordinary year, Cat Little reflects on how the Treasury and government finance function met the pressures of a pandemic with innovation
Cat Little was not planning to run a Spending Review from her house. The Treasury’s director general of public spending found out she was going to move from her previous role as chief finance officer at the Ministry of Defence in December 2019, with her start date at 1 Horse Guards Road set for the following March, after the Budget.
Little’s predecessor, James Bowler – now a Cabinet Office permanent secretary leading the Covid taskforce – was to cover the Budget. She was to take over the following day and start on the next fiscal event.
“So it all was very clean, but then of course, Covid happened,” Little says. “I think it’s fair to say nobody was really doing what they expected to be doing.”
Little was thrust into the coronavirus response before she could even get to the Spending Review. She had just three days in the office before the first national lockdown, making acclimatising to her new role difficult.
Although there have been some benefits of working from home in her hectic first year in the finance ministry – “I normally have a couple of dogs with me who are causing chaos in the background, they’re always a good distraction when you’re trying to have difficult meetings with minister” – Little acknowledges the strangeness of starting a new job in Covid times.
“As a leader, you work really hard to develop relationships in your first weeks and months, because it matters so much to your ability to get stuff done,” she says. “But it was completely different to what I expected. It really changed a lot of the way in which my teams had to operate.”
She joined the Treasury just after the chancellor, Rishi Sunak, had set out the government’s initial fiscal response to coronavirus in the March 2020 Budget, a £12bn package that was soon overtaken by the scale of the crisis. Just two weeks later, Sunak announced the Coronavirus Job Retention scheme, also known as furlough, which at its peak saw the government pay 80% of the wages of 8.9 million people. To date, it alone has cost £46.4bn. A sister scheme for the self employed has cost £5.4bn to the end of December 2020.
Following the Budget, “it was all about getting money quickly to the right places to tackle the crisis”, says Little. “There’s still a bit of that, but we were all learning on our feet, and huge amounts of money were involved.”
Development of the support schemes happened at an unprecedented pace. The furlough scheme was up and running on 20 April, exactly a month after Sunak announced its creation, and a full 10 days sooner than expected. It was followed by the Self-Employment Income Support Scheme and an expanded sick pay entitlement, which went live on 13 May and 26 May respectively.
Little says that while there has been innovation in how these schemes have been developed, she adds that “I would stress our control frameworks in Managing Public Money [the Treasury’s spending control guidance] and how we approach spending decisions hasn’t in substance changed throughout”.
Indeed, she is pleased with how the Treasury’s guidance has stood up to the pressures of the pandemic, including the increase in ministerial directions sought for elements of the response, such as the hospitality-boosting Eat Out To Help Out Scheme.
“We fully expected to get more directions,” she says. “Partly because of pace, and partly because a lot of the things that we were doing were firsts, and we haven’t got evidence to prove or to fully inform our assessments of value for money, or feasibility. Being able to say very quickly to the public that we think this is the right thing to do but here are the gaps in our ability to prove it to you, has been a really positive thing.”
However, the speed of the response – and the need to develop and implement major schemes with most of the civil service working from home – did change some of the Treasury’s processes, Little says.
“It allowed us to innovate, and think differently about decision making,” she tells CSW. Bringing together the usually-separate ministerial and official approvals for spending and creating bespoke decision-making points were among the more agile processes adopted.
“Normally you’d have officials make a decision, then you’d sequentially go to a minister here in the Treasury, normally the chief secretary, then back to the Cabinet Office, and the Cabinet Office would advise the minister,” Little says. “So we in effect brought together the departmental and the central decision making.”
“It was all about getting money quickly to the right places to tackle the crisis”
Looking beyond Covid, Little is keen to maintain these processes to keep government agile. This forms part of the government’s Project Speed, which is focused on quickening infrastructure delivery and policy implementation.
“One of the things I’m really keen to do as part of Project Speed is to work with departments to say: ‘what has this taught us about the pace at which we can make good decisions and add value, and do we want to normalise some of that regardless of Covid?” she explains.
“The sums of money that we’ve had to make decisions about at a very, very fast pace are obviously significant, but I think we’ve made some brilliant fast-paced decisions and crucially got money to where it is needed. Equally, I think we’ve been able to delegate money to departments in different ways that perhaps we would have been reticent to do prior to Covid, so it’s made us really think about how we empower departments and their accounting officers to deploy funds in a crisis moment.”
The hypothesis of Project Speed, says Little, is that the faster government can deliver, the quicker it can have impact, and the less money it’s going to cost. “In order to enable faster delivery of anything in government, you’ve got to have decision making and agile ways of developing business cases and making decisions,” she says. “So we’re using Project Speed to look at our governance – and to be frank, we’re starting to think about how we use it for other policy areas, not just not just infrastructure.”
Even in Covid times, Little acknowledges frustration at the “bureaucracy and layers of decision making” in the Treasury. But she senses an opportunity to unlock quicker delivery that, while a long-standing objective, has only been patchily realised. “You’ve got to have the whole context and environment to want it, and I think you’ve also got to have very clear direction from ministers and from senior officials to do things differently,” she says. “That probably hasn’t always been the case, to be frank.”
But the combination of Covid showing how things can change and buy-in from senior ministers means “the conditions are right”, she says.
“Project Speed is sponsored by the chancellor, and by [joint Treasury and Cabinet Office minister] Lord Agnew, and the chief secretary works very closely with them on this,” she says. “For the first time, the conditions are right, you’ve got ministerial and senior official sponsorship, and a real burning platform staring us in the face.”
Changes was also evident in the process around the 2020 Spending Review, which was initially planned as a full three-year review, but was truncated as the impact of Covid meant it wasn’t possible to go beyond a one-year settlement for 2021-22.
“Almost up until the point of negotiations, we were operating on the basis it would be a multi-year review,” Little recalls. Details of how to submit information for a multi-year settlement were sent to departments in July. It was only in late October that the decision was made for a one-year review – the second successive 12-month round.
“We had departments submit their SR bids on the basis of a multi-year spending review,” Little says, noting that would always be her preferred way of doing the exercise.
The impact of Covid means the 2020 round was a long way from the “star chamber” sessions of previous reviews.
“We did nearly all the negotiations virtually, with our ministers in the Treasury and departments in their buildings or wherever they were located, so that was different,” she says. “And we ended up doing a lot of the publication and the development that happens in decision-making at the end remotely as well.”
Little says “lots and lots of positives” emerged from the process.
“I was able to get experts in a virtual room much quicker and much more efficiently than we would have been able to if we were all physically located at the Treasury, and it helped with a lot of the cross-government interactions,” she says. “We worked very closely with other functions and with the Cabinet Office, and with departmental experts, so it was brilliant to have the flexibility to access all of that in a virtual environment, and it was very fast paced.”
Individual successes include virtual capital appraisal panels for all of the capital investment that went into the Spending Review. Little says they formed a “massive, important part of the evidence base” for the decision to increase capital spending by £27bn to £100bn for 2021-22.
“It was great to be able to run that process seamlessly in a virtual environment,” she says. “I also co-chaired panels on technology, data and automation with [Cabinet Office perm sec and civil service chief operating officer] Alex Chisholm and it was fantastic to be able to get all of our digital experts together to talk about technology investment. I’m sure we would have done it if we’d been physically together, it was just easier to coordinate and probably more efficient [remotely].”
The Treasury’s focus has now begun to move to the 2021 review, and Little says the challenge will be to make sure the work that went into the 2020’s cancelled three-year review doesn’t go to waste.
“I don’t think it will, because government departments – speaking from experience – operate on a multi-year basis. Depending on which department you’re in, you’ll always have a business plan that’s more than one year and you’ll always want to be thinking about the strategic and medium to long-term context,” she says. “So I hope a lot of what departments we’re doing will still bear fruit in the future.”
The plan, when Little speaks to CSW in December, is that 2021 will be a multi-year review, but after the tumult of 2020, this isn’t yet a certainty.
Whatever the length of the next review is, Little says her Treasury leadership will be informed, as the 2020 review was, by her experience on the departmental side of the table – for both the MoD and, before that, the Ministry of Justice.
“I’ve led spending reviews from a departmental perspective,” she says. “I’ve seen what a really good effective, open, trusted, evidence-based relationship looks like, and the positive impact that can have on frontline services in the public sector.
“So when I took on this job, and when we launched the Spending Review, we very much set out the ambition of having very transparent, clear priorities right from the start. The way in which I expect my spending teams and the Treasury to work with departments is all about how we can help things to get done.”
“One of the things I’m really keen to do is say: ‘what has this taught us about the pace at which we can make good decisions and add value?’”
Little says departments “want to be heard and to have straight and honest conversations” with the Treasury.
“I really hope that the way in which we engaged, communicated, and worked in partnership with departments reflected that,” says Little, who also chaired weekly Spending Review discussions with the finance leadership group of departmental and arm’s-length body finance chiefs. “We were really open about where we were in the decision-making process: we asked them to tell us what they thought about the move to a one-year review, ahead of decisions being taken.
“I think people want an honest, timely engagement, and I really hope that the way in which we engaged and communicated, with departments reflected that.”
In addition to her Treasury role, Little is also the head of the government finance function, having taken over from Mike Driver when he became interim permanent secretary at the MoJ.
Little says she is “humbled” to combine the two roles into what she says is her dream job. “I’ve dedicated my whole career to public finance, so being in this role at this moment in time is an absolute privilege,” she says.
She is committed to the function’s strategy, which was published in 2019, and wants to “harness the collective talent and the coalition of leadership” across government to implement it.
“We have a team of directors general who lead as chief finance officers and chief operating officers across departments, and it matters deeply to me that every single one of these people feel that the vision and the strategy is equally owned. And that leaders right through the finance function feel as passionate about it as we do so.”
It is this “deep passion” for public finances that first brought Little into the civil service. A relatively late joiner, she describes herself as the “classic consultant who has joined a client”, having previously been the external auditor to HM Prison Service and the HM Courts and Tribunals Service, and the internal auditor to the Legal Aid Agency.
“I got to know the Ministry of Justice pretty well, along with all of their financial issues,” she says. “It was it was a matter of coincidence [that in 2013] a job was coming up, and I was at a stage in my career when I thought actually having the opportunity to get my sleeves rolled up and stuck in rather than being the consultant on the sidelines was a great opportunity.”
Even though she was moving to work with a client she had previous experience of, she says that the working environment was “massively different” from consultancy firms.
“I remember someone explaining to me the box system, and just thinking that is bonkers,” she recalls. “I’d come from PwC where everything is incredibly slick and agile, and then someone was explaining to me that we make decisions through paper going in boxes and boxes being locked.
“It’s just very, very different. And I’m a historian by training so I really enjoyed the tradition and the culture and the ethos, and learnt very quickly to celebrate those differences and to embrace them, but equally to use that private sector perspective, to innovate and challenge constructively where needed.”
Despite that initial reaction, Little says she soon began to appreciate how the system helps ministers with civil service advice.
“It really does work,” she says. “A minister who’s diligent with their box and makes decisions quickly [makes it] a really slick decision-making process.”
It is, though, another part of government that has been affected by the pandemic. “I think Covid has changed boxes,” says Little. “Ministers are much more IT savvy and much more technologically driven so you’ve kind of got virtual boxes and physical boxes.”
It is yet another decision-making tweak in a year packed full of them. As Little’s dogs, bemused by a year of public spending decisions in their house, would surely attest if they could.