Departments’ over-optimistic plans ‘not challenged enough by Treasury and Cabinet Office’

Committee inquiry demands action plan to fill skills gaps and calls for Treasury to set out how public value frameworks will be rolled out in Spending Review

Photo: PA

By Richard Johnstone

08 Feb 2019

MPs have demanded that the Treasury and the Cabinet Office set out an action plan to fill gaps in skills and experience to allow them to better challenge departmental plans after finding over-optimism in government threatens value for money.

A report by the Public Accounts Committee examining the government’s planning and spending framework found that departments are not incentivised to plan for the longer-term and over estimate what they can deliver.

Unless action is taken to correct these issues, the government’s long-standing problems of short-term thinking, sticking-plaster funding and cost-shunting will persist, resulting in poorer quality, less sustainable and less joined-up services, the report concluded.


To address these issues, the PAC is calling on the Treasury and Cabinet Office to set out guidance for this year’s Spending Review requiring departments to show how they will deliver sustainable value for money through single departmental plans and public value frameworks.

This needed to be matched by improved staff planning in the central departments as MPs were “concerned that the Treasury and the Cabinet Office lack the skills and experience they need to challenge over-optimism”, according to the report – which is published today.

Both departments should set out action plans “to fill the gaps in skills, experience and behaviours needed across the Treasury, Cabinet Office, functions and departments” by June. The PAC specifically called on the Treasury to set out plans to reduce staff turnover rates and recruit more people from outside both the department and government.

The HR call comes after warnings from the Institute for Government that staff turnover at the Treasury, which has averaged 23% a year since 2011, could hinder plans for a Spending Review this year.

PAC chair Meg Hillier warned government’s “short-termism, over-optimism and a lack of joined up working all threaten the quality and sustainability of services”.

Although she highlighted that these challenges are not new, she said “progress on improving the government’s planning and spending framework has been slow”.

“If the government is serious about delivering lasting change, it should demonstrate clearly how it intends to do so on a department-by-department basis,” she said. “Parliament and the public must be given the information they need to properly judge the government’s performance.”

The committee said that as Treasury spending teams have an “instrumental role they play in advising ministers, stewarding submissions for new spending and challenging the realism of departments’ plans”, there was a need to improve their skills so they can match the specific work of departments.

“To better inform ministerial decisions the Cabinet Office and the Treasury say that they are building functional capability and experience back into the civil service, but it will take time,” the report stated. “It is vital that the right skills and experience are in place to achieve a culture of challenging objectives, plans and progress.”

There was also a call for the two central departments to set out ahead of this year’s Spending Review what they will do to incentivise cross-departmental plans and delivery, as the committee was “frustrated that the Treasury and the Cabinet Office’s lack of action to prevent departments working in silos has, in some cases, led to cost-shunting and poorer services for the public”.

Glimpse of public value framework pilots

The report also provided an update on the development of public value frameworks across government, following the recommendations of the Whitehall efficiency review by Sir Michael Barber in 2017.

The report by Barber, who led Labour prime minister Tony Blair’s delivery unit from 2001 to 2005, called for departments to sign up to new public value frameworks to measure the effectiveness of departments in using public money to improve outputs and outcomes in peoples’ lives, based on four pillars (set out below).

This would be underpinned by a step-change in the use of performance data that would routinely deliver “marginal gains” for departments when services compared their performance with sector leaders and set the agenda for a dialogue over funding between the Treasury and departments.

Following Barber’s recommendation, the Treasury has been piloting the scheme, and the PAC report today revealed the Treasury has completed some pilots with others under way. It had previously been reported by the National Audit Office that three departments had participated in pilots on a voluntary basis up to September last year, though the departments have not been named.

Findings from the pilots will inform the 2019 Spending Review, the report stated, but it “remains to be seen whether the Treasury’s latest initiative to improve value for money will lead to long-term change”.

In his evidence before PAC members, James Bowler, the Treasury’s director general for public spending, said there had been three main lessons from the pilots so far. These are: that public engagement is under-appreciated in departments; that awareness of the impact policy decisions can have on shunting costs to other departments is underdeveloped; and the lack of innovation in government.

“Michael Barber pushes very much himself [on] to what extent people are looking for innovative solutions,” said Bowler. “I just wonder whether some of our processes don’t incentivise innovation… if you try something and it goes wrong, will you get into trouble? Those are the three interesting areas.”

Bowler added that the Treasury would ask departments as part of the Spending Review process “to assess where they find themselves against the Barber four pillars and to look to see what they could do better under those four pillars”.

In today’s report, the committee asked the Treasury to set out how it plans to use public value frameworks in the Spending Review and embed it in day-to-day decision making by June.

“It should include specifics on which departments or areas of public spending it will prioritise and we are particularly interested to hear about plans for areas covered by the Ministry of Housing, Communities and Local Government and the Department of Health and Social Care,” the committee said.

Responding to the report, a government spokesperson said: “The Treasury and the Cabinet Office have taken action to improve and integrate planning and performance frameworks to strengthen decision-making and improve value for money for the taxpayer.

“This action includes embedding Cabinet Office professional functions across government and introducing Single Departmental Plans as the basis of planning and performance. We always look at how we can do things better, including as part of the Spending Review this year.”

Read the most recent articles written by Richard Johnstone - Building the future: Steven Boyd on making government property work for the civil service

Share this page