Source · Select Committees · Public Accounts Committee
Recommendation 7
7
In the past, we have seen how departments failing to consider the full effects of...
Conclusion
In the past, we have seen how departments failing to consider the full effects of their plans to improve efficiency have led to increased costs elsewhere in government, or have led to reductions in service quality which were costly to fix.15 For example, the National Audit Office found that the Ministry of Justice’s reforms to civil legal aid unexpectedly increased the number of ‘litigants in person’, which raised the cost of processing cases and led to more legal problems down the line, with estimated costs of £3 million per year to HM Courts & Tribunals Service (an agency of the Ministry) as well as direct costs to the Ministry of approximately £400,000.16 The National Audit Office has also reported on how reforms implemented by HM Revenue & Customs assumed customers would switch to online services, failing to account for what the users of its personal tax affairs service valued, and thereby causing a deterioration in performance measures that saw customer waiting times triple.17
Government Response
Not Addressed
HM Government
Not Addressed
2. PAC conclusion: Past experience shows that attempts to improve efficiency can inadvertently reduce the quality of services or increase costs elsewhere – what this Committee has called cost shunting. 2: PAC recommendation: HM Treasury should ensure that, in their efficiency plans, departments consider what the potential impact might be on service users, and that data around user behaviour and sentiment is tracked as programmes are implemented. 2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 HM Treasury published at Spending Review 2021 (SR21) an updated set of Priority Outcomes and Metrics. The outcomes capture the real-world impacts for public service users that departments have committed to achieve with their SR21 settlements. Agreed metrics are being used to track these impacts and include metrics that measure user sentiment with public services. Departments are required to report on their progress against these metrics, which enables Ministers and officials to identify outcomes at risk of not being achieved and take prompt action to improve performance. 2.3 Treasury guidance also requires departments to consider the impact of their plans on the wider economy and service users. For example, the Green Book (2.3) requires departments to appraise social value, also known as public value, based on welfare economics principles and ideas and concerns overall social welfare efficiency, not simply economic market efficiency. Therefore, social or public value includes all significant costs and benefits that affect the welfare and well-being of the population (eg, carbon impacts), not just market effects. 2.4 The Green Book (2.12) also guides users to run stakeholder workshops to consider the longlist analysis and selection of the shortlist, including key experts and stakeholders. This method brings together the results of research, advice of experts, and knowledge of stakeholders 2.5 In addition, the Magenta Book (1.1) instructs users to include an evaluation that is useful, credible, robust, proportionate and tailored to the needs of various stakeholders, such as decision-makers, users, implementers and the public. The outputs should be usable and valuable by responding to potential users' needs. 2.6 And in its recent Efficiency and Savings exercise, HM Treasury required departments to demonstrate that their savings and efficiencies proposals were credible and deliverable. Starting before the formal launch of the Spending Review, HM Treasury commissioned departments to identify efficiencies and savings in line with Green Book principles. The proposals were then reviewed, where appropriate, by the Government functions. 2.7 The Chief Secretary to the Treasury led a process of engagement in summer 2021 to test departmental savings and efficiency proposals to test whether proposals were deliverable. This process also involved the Government Functions reviewing relevant efficiency proposals to ensure they were realistic and deliverable. These sessions agreed steps for departments, Government Functions and HM Treasury to further develop plans before being agreed at the Spending Review.