Performance Info, Management

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Performance Info, Management Budgeting, and PSAs

• Zafar Noman
• Performance Efficiency Team
• DRAFT

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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 cost-effectiveness 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

1. 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.

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• TARGETS AND BUDGETS SET IN PARALLEL

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The Spending Review Cycle
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• Structure of PSAs

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Public Service Agreement
Accountable Minister(s)
Aim
Objective
Objective
Target
Target
National Standards
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 isnt 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
  Govts 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 Ministers 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
RESOURCES ()
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Example - health
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
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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 Whats the connection with Performance
Information?

• If you cant measure how you are doing (or the
  lags are too large), you cant 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
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Delivery issues - education
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Delivery issues - education
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
Broadly
purpose
appropriate,
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but systems
need
Not
strengthening
established
30
7
Broadly
appropriate,
but disclosure
needs
Fit for purpose
strengthening
30
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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 departments 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/05-
  06/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_at_hm-treasury.gov.uk