Recommendation 6

Model producers and users do not adequately assess the range of plausible outcomes and are overly reliant on central estimates that do not reflect inherent uncertainty. All modelled information is uncertain, and decision-makers need information on the possible range of outcomes to plan well, manage risks and make better decisions. However, model producers do not routinely evaluate or communicate the uncertainty in their models. There is only limited evidence of departments using uncertainty analysis or developing contingency plans. Departments usually provide HM Treasury with a single central estimate and do not provide a range of uncertainty around it. HM Treasury does not check every model that departments develop. It does request further uncertainty analysis from departments on a case- by-case basis for those models it uses to make policy decisions or to agree additional spending. HM Treasury agrees that dealing with uncertainty properly is central to quality modelling and that it is important to improve standards in this area. Recommendations: As a key user of outputs from models, HM Treasury should routinely require departments to present the range of plausible outcomes. In its self-assessment tool, the Finance Function, under the responsibility of HM Treasury, should include consideration of how analysis and modelling are applied, including expectations on how accountants should analyse, manage and communicate uncertainty. 8 Use of evaluation and modelling in government 1 The centre of government’s role in improving evaluation and monitoring