Whitehall warned of 'cycle of over-optimism' around spending

28 November 2018

The government needs to adopt a more integrated planning and spending framework to ensure its plans are deliverable and affordable, a report by the National Audit Office (NAO) has warned.

The NAO said in its report Improving government’s planning and spending framework that unless the changes were made “the cycle of over-optimism, short-termism and silo decision-making will continue” and would cost taxpayers.

While HM Treasury has begun to focus more on longer-term measures by providing guaranteed funding to support 10-year plans in some sectors and focusing on long-term risks to public finances, this has yet to make a difference to the way it monitors departments’ performance.

The NAO said the approach was not supported by a good understanding of the long-term value for money being delivered.

“HM Treasury recognises this and is developing a new approach to understanding value, but this is at an early stage,” said the report.

“It will need to be supported by new success measures for HM Treasury itself, which balance spending control and long-term value, and by enhanced skills and capacity.”

It said that since 2015 the Cabinet Office has required departments to prepare Single Departmental Plans (SDPs) to set out how they will implement their objectives, deliver services and track performance.

While this approach is helping departments improve business planning, SDPs are still not central to decision-making in all departments, fail to fully match delivery plans to resources, and are weak at measuring success.

“This creates a risk of unachievable commitments being made and departments failing to see when they are off-track,” said the report.

According to the NAO departments have had to plan to deliver more with less. And several are having to deliver complex, long-term programmes to transform public services.

But they are forced to plan and deliver in silos, something “which can undermine value for money and negatively affect local services”.

It also said that despite the existence of various cross-government working groups there is “no visibility of their plans or impact”.

Departments’ accounting officers do not have enough incentives to prioritise, make realistic business plans and protect long-term value, the NAO said.

It said it repeatedly saw over-optimistic plans resulting in failure to deliver, lower quality service or need for further funding.

However, both HM Treasury and Cabinet Office had recognised the need for a more integrated approach to assessing and measuring value which would help government achieve long-term value from projects and programmes.

“Without it, the system is vulnerable to short-term thinking, leading to poor outcomes for public services and poor value for money,” said the NAO. 

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