Source · Select Committees · Public Accounts Committee
Recommendation 11
11
We asked the Treasury and Cabinet Office what is being done to minimise optimism bias,...
Conclusion
We asked the Treasury and Cabinet Office what is being done to minimise optimism bias, particularly how they can ensure efficiency plans are subject to adequate challenge and properly evidenced.26 The Cabinet Office told us that government functions will help scrutinise efficiency plans, with experienced professionals able to assess project progress and provide challenge. Within the Major Projects Review Group, for example, the Treasury and Cabinet Office work weekly alongside the Infrastructure and Projects Authority (IPA) and functional experts to assess projects, which can help identify and minimise optimism bias as the business case develops.27 More generally, it told us the culture of accountability 19 Q 60 20 Q 61 21 Qq. 62–64 22 Q 65 23 Q65; C&AG’s Report, para 12 24 C&AG’s Report, para 18 25 Committee of Public Accounts, Tenth report of Session 2019–21, Defence capability and Equipment Plan, HC 247, conclusion 6; C&AG’s report, para 25, Figure 5. 26 Q 66 27 Q 66 Efficiency in government 11 within government plays an important role in challenging optimism bias as it incentivises programme leaders to be honest about whether or not they think they can deliver with the resources planned. The Cabinet Office said continuing to test plans for their realism following their implementation is also important, as is learning from past experience.28
Government Response
Not Addressed
HM Government
Not Addressed
3. PAC conclusion: Previous efficiency programmes have over-promised and under- delivered. 3: PAC recommendation: HM Treasury need to ensure plans are subject to adequate challenge, testing the realism of departments’ expected savings, and considering the use of pilots where appropriate. 3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 HM Treasury recognises the need to underpin the planned efficiencies and savings agreed through SR21 with departmental plans for delivery. SR21 confirmed savings of 5% against day-to-day central departmental budgets in 2024-25 from the Efficiency and Savings exercise ahead of Spending Review 21. The Chief Secretary to the Treasury led a process of engagement in summer 2021 to test departmental savings and efficiency proposals to test for deliverability. This process also involved the Government Functions reviewing relevant efficiency proposals to ensure they were realistic and deliverable. 3.3 HM Treasury tests, and reviews business cases and departmental benefits realisation plans in practice through the spending control process led by HM Treasury spending teams. Spending teams use gated approvals such as Major Project Review Groups (MPRG) or Treasury Approval Panels (TAPs) to review departmental projects or programmes to test whether they are suitably designed to deliver the desired outcomes. HM Treasury also works closely with the Cabinet Office to undertake performance stocktakes, jointly reviewing policy and financial performance. Spending teams’ scrutiny is supported by enhanced financial reporting and management information (such as Finance Board Packs) developed by the Government Finance Function and delivered by departmental finance teams. 3.4 HM Treasury and Cabinet Office are also working with departments to develop Outcome Delivery Plans (ODPs) covering 2022-25, that will set out how each UK government department will use its resources to work towards the delivery of the priority outcome agreed at SR21. ODPs will test the deliverability of all of the government’s spending plans, including plans for efficiency and savings. They will be published after the start of the next financial year on gov.uk. 3.5 HM Treasury plans to collaborate with Government Functions to share best practices across the Civil Service. The Government Functions will be encouraged to share departmental best practices to generate further opportunities for efficiencies across government based on these successful pilots in departments.