National Audit Office NAO

Planning across Government - Background

"The roles and responsibilities in central government’s planning and spending framework are threefold:"

"- Departments, led by accounting officers, plan and deliver their objectives and they are accountable for their delegated budgets."

"- HM Treasury is responsible for allocating and controlling public spending; scrutinising and approving project and programme spending outside of departments' delegated limits and novel and contentious proposals, with the aim of delivering value for money. It delegates budgets to departments; and sets rules for government financial management. Its 20 spending teams advise HM Treasury ministers on decisions at spending reviews; review and approve submissions for new spending on projects and programmes; and monitor departments' budgets and spending risks."

"- The Cabinet Office monitors delivery of departments’ objectives and government policy priorities and oversees departmental business planning."

Risk of over-optimism

"spending teams do not routinely monitor departmental performance against an agreed set of objectives."

"a risk that departments and HM Treasury are complicit in agreeing over-optimistic delivery or spending reduction plans that have no realistic chance of being delivered."

Recommendation 1 HM Treasury should: Reflect its commitment to deliver longer-term value for money more strongly in its systems and processes, including performance management of its teams and staff, and arrangements for monitoring departmental performance and risks.
Silos against good planning

"government’s structure of departments, with separate accountabilities, leads to business planning and spending review submissions being created in silos."

Recommendation 4 Departments should: Demonstrate how they have worked with other departments to consider joint bids where objectives are shared.
Realism of analysis

"Not all business plans integrated activity planning with resource planning."

Recommendation 5 HM Treasury and the Cabinet Office should: Make explicit that accounting officers are accountable for producing medium-term business plans that are deliverable – within their expected capability and resource levels – as part of their general accountability for taxpayers’ money under Managing Public Money.
Planning maturity issues

"there was no business case, no clear statement of intended objectives and outcomes, and no plan covering the full duration of the programme."

"When identifying potential risks, spending teams focus mainly on in-year and medium-term spending risks – our review of a sample of risk registers showed they rarely flagged balance sheet risks that have no short-term effect on spending."

"Our analysis of risk registers maintained by spending teams showed they focus on spending risks rather than value for money, and there was limited reference to the risk of not delivering the expected outcomes or benefits."

Recommendation 6 Departments should: Use the results of their business planning maturity self-assessment to agree an improvement plan that integrates strategy, finance and workforce planning, and aligns these with the cross-government SDP process, by the beginning of the 2020-21 business planning round.
Multi-level challenge

"At the root of this problem lies not only poor data on costs and performance, but also inconsistent challenge, both within departments and by the centre of government."

"Parliament has also made clear that it wants greater visibility of government’s spending choices, but traditionally only details of the outcomes have been published, whereas details of how decisions are reached have not (paragraphs 1.6, 4.10, 4.13, 4.16 and 4.17 and Figure 24)."

Recommendation 2 HM Treasury and the Cabinet Office should: Develop a joint approach to share with departments, explaining how they will bring together information on costs, cross-government objectives, public value, the balance sheet, performance and risk, to challenge departments' bids, and identify joint funding opportunities. Alongside this, HM Treasury should set out how this will inform allocation decisions at the Spending Review, and establish how spending teams will routinely use this information between spending reviews to scrutinise and challenge departments' projects, programmes and performance.
Capacity and capability not taken into account

"While survey respondents felt that criteria used by their departments for making decisions about priorities had improved (Figure 9), only 53% said their department accurately aligned planned deliverables with capacity and capability (Figure 15 overleaf)."

Recommendation 3 The Cabinet Office, working with the functions and HM Treasury, should: Based on its review of departments SDPs and explicit consideration of affordability, capability and risk, create an aggregate understanding of what government can deliver, and how this contributes to its long-term objectives. It should share this with HM Treasury to inform funding allocation decisions.
Objectives

This report reviews government’s progress in improving the planning and spending framework since we last reported in July 2016,2 and the way in which HM Treasury and the Cabinet Office have sought to address the systemic issues around planning and spending decisions that we have identified in our work across government. We set out:

- the current planning and spending framework and the approach to long-term planning (Part One);

- the evolution of medium-term business planning (Part Two);

- the evolution of HM Treasury’s approach to managing spending in the short term (Part Three); and

- the challenges for the 2019 Spending Review and beyond (Part Four).

The items above were selected and named by the e-Government Subgroup of the EUROSAI IT Working Group on the basis of publicly available report of the author Supreme Audit Institutions (SAI). In the same way, the Subgroup prepared the analytical assumptions and headings. All readers are encouraged to consult the original texts by the author SAIs (linked).