National Audit Office call for the Government to prioritise value for taxpayers' money
Earlier this week, the National Audit Office (NAO) released a report analysing how the Government can better deliver value for money over the medium-to longer-term, and turn objectives into outcomes, whilst managing the fiscal position the Government currently finds itself in.
You can read the full report here.
This report marks an important read following the Autumn Budget and ahead of the Government's next fiscal event in Spring 2025. As noted in the report, for the Government, the approach to spending reviews is crucial and shapes incentives and behaviors in daily business planning and financial management throughout Government departments, ultimately impacting value for taxpayers' money.
As HM Treasury noted when feeding into the report, spending reviews should be a predictable component of a well-organised system that transforms spending into public value, aligned with clear priorities. This will be especially important following the Government's Autumn Budget announcements around changed fiscal rules to ramp up public sector investment.
What is the purpose of this report?
The report centres around the need for the Government to strategically plan and prioritise spend and activities, with a sustainable long term plan and framework, to achieve its objective of better public sector productivity. This includes monitoring and managing costs and the value delivered, evaluating outcomes, making necessary adjustments, and reporting to Parliament on the use of taxpayers' money.
The NAO note that this was written to provide insights as officials and Ministers look to make changes to the planning and spending framework, including the approach to the upcoming Spending Review 2025 (SR2025).
Key recommendations from the NAO include:
Ahead of SR2025, the Government should inform Parliament what changes it will make to achieve this from 2025-26 onwards, which should include:
- Publishing departmental Outcome Delivery Plans and cross-cutting mission boards’ plans at least annually.
- Publishing, after each spending review, a summary of the spending choices the government has made and providing data that are granular enough to show the effect on allocations by department, priority outcome and strategic programme
- Ensuring that all completed government evaluations are publicly accessible and searchable by April 2025.
According to the NAO, HM Treasury and the Cabinet Office should create an action plan to address the lessons and rebalance behaviour and decision-making in Government towards long-term value for money. The action plan should:
- Be supported by an evidence-based understanding of what will affect lasting change.
- Have suitable senior ministerial and administrative leadership.
- Have evaluation of progress built in.
Key themes that address the lessons for government on planning and spending revolve around:
- Joined up planning and governance
- Prioritisation
- Data and evidence
- Monitoring and evaluation
- Longer term decision making
- Funding commitment
- Realism and transparency
Across the key themes, notable points include the following:
On joined up planning and governance, HM Treasury fed into the report that they optimistic that the new Government's strategic approach based on cross-cutting 'missions' with delivery boards for each that has the potential to facilitate greater co-operation across Government.
On prioritisation, the new Government has declared its intention to prioritise five missions and use these to guide its approach to Spending Review 2025 (SR2025). It has developed mission boards, which include ministers and permanent secretaries from relevant departments. Feeding into this, HM Treasury noted that mission boards will be involved in agreeing departments’ submissions in SR2025, and that it expects the role of mission boards to strengthen over time.
On data and evidence, point to pervasive problems with data quality, standardisation and sharing across government. The completion of business cases for new spending is often seen as a bureaucratic hurdle. As an example of best practice, the report points to the Netherlands who typically carry out between three and seven 'special studies' as part of the annual budget cycle. These studies review broad policy areas, specific ministerial themes, or cross-cutting topics and recommend how spending could be allocated more effectively and efficiently. The regularity of these reviews increases the availability of performance data and strengthens the evidence base to inform future funding allocation decisions.
On longer term decision making, the report points to Canada as a country in which spending reviews have moved away from the pursuit of short term savings and towards a greater emphasis on outcomes. For phase one of SR 2025, HM Treasury have asked departments for longer-term forecasts of capital needs so that it can consider those needs.
On funding commitments, the report points to Australia as an example of notable practice in terms of capital and infrastructure budgeting. Infrastructure Australia, an independent advisory body, advises the Government on the investments and reforms needed to deliver infrastructure programmes. Of note, it develops 15-year rolling infrastructure plans covering transport, energy, water and telecommunications, making recommendations which contribute to national and state priorities. On this, we expect a 10-year infrastructure strategy to be published alongside Phase 2 of the Spending Review next year. Alongside this, HM Treasury are working towards a multi-year local government finance settlement from April 2026 to align with the wider multi-year approach to SR2025.
On transparency, since the election of this Government in July 2024, HM Treasury announced reforms to the spending framework and improving the transparency of the information Treasury shares with the OBR (Office for Budget Responsibility). Further steps on publication of ODPs (Outcome Delivery Plans) and transparency for Parliament and the public about spending choices likely come in Autumn Budget announcements. More on this can be found in the Chancellor's Autumn Budget this week.
To achieve the Government's growth targets, and central mission to secure the highest sustained growth in the G7, it will be vital for the Government to ensure long-term capital investment genuinley offers value for money. The new Office for Value for Money, led by David Goldstone CBE, will be a central part of the cycle of basic government planning and spending (figure 1 within the report).
Following the Autumn Budget, techUK look forward to continuing to work with the Government to inform the spending review. On behalf of our members, techUK are currently feeding into key areas of phase 2 of SR2025, including the Industrial Strategy Green Paper consultation and 10 year health plan.
Mia Haffety
Mia joined techUK in September 2023.