Departments will have to earn their cash

18 Jul 02
Whitehall departments that benefited from Gordon Brown's largesse in Monday's long-awaited Spending Review will be expected to meet 'demanding' national targets.

19 July 2002

The chancellor made clear in his statement to Parliament on July 15 that, in return for a real-terms increase in the budget of every ministry, the Treasury expected to see improvements and reforms across all public services.

Brown published details of the 130 Public Service Agreements that have been negotiated between the Treasury and the other Whitehall departments, a reduction of 30 on the 160 PSAs struck under the 2000 Spending Review. These set out a range of performance targets and reforms that each ministry will be expected to meet in return for their extra cash.

'We have a special duty to make sure public money is spent efficiently and we are as determined to secure value for money as we are to secure money for services,' Brown told MPs.

'In each area of service delivery, from housing to education, from policing to defence, we are tying new resources to new reform and results, developing a modern way for running efficient public services.'

But the PSAs attracted immediate scepticism. Matthew Taylor, Treasury spokesman for the Liberal Democrats, said they were a meaningless exercise because departments were not held accountable.

'The Treasury claimed these targets were measurable, but many have never been measured. To date we don't have a list of which targets have been passed, failed, dropped or changed, because the Treasury refuses to publish them,' he said.

But the government has insisted that 90% of the 1998 and 2000 PSAs have been 'met or partially met', and is putting its faith in the agreements to ensure that the extra money being poured into public services over the next three years will be spent efficiently.

Brown declared that failure would no longer be tolerated: bad schools will be taken over or closed, while poorly performing local authorities will be given a recovery plan and, if that fails, given new management or stripped of their functions.

'Failing institutions will be dealt with early and decisively,' Brown said.

The PSAs will be underpinned by Service Delivery Agreements, which will set out how each department will meet its performance targets. Examples of targets set include cutting vehicle crime by 30% by 2004 and boosting the proportion of schoolchildren doing two hours of sport a week from 25% to 75% by 2006.

Each ministry has to publish its progress against these targets in its annual departmental reports, but this information has not so far been analysed collectively. However, Brown said that the Treasury intended to publish progress reports on the Internet so 'the public can access the information in a single place'.

Brown's Spending Review will boost departmental spending by £61bn a year by 2006. The Whitehall budget will increase from £240bn this year, to £263bn in 2003/04, to £280bn in 2004/05, and £301bn in 2005/06.

The biggest winner is education, which will receive an extra £12.8bn or 6% by 2006, following on the record increase for the NHS unveiled in April's Budget.

Other departments to do well include the Home Office, which will get an extra £2.9bn per year by 2006, and International Development, which will receive an extra £1.6bn per year by 2006, its largest-ever increase.

Trades Union Congress general secretary John Monks praised the review, which represents the largest sustained increase in Whitehall spending for nearly 30 years.

But he called on the government to effect reform through consensus rather than confrontation. 'Funding will best be followed by reform if the government works in partnership with public servants and their unions, rather than overloading them with Whitehall initiatives or threatening people with contracting out.'

CBI director general Digby Jones said business was 'encouraged' by the chancellor's plans for public spending. 'It is important neither to over-manage nor under-manage the spending process. The cash must go on frontline services and putting the customer first,' he added.

Local Government Association chair Sir Jeremy Beecham said he welcomed the extra money for schools, social services and housing.

'We will seek further clarity as to how much this extra investment is ring-fenced. Local authorities have a crucial role to play in delivering improvements to essential public services. However, it is important that they have the freedom and flexibility to employ resources in a way that reflects their local circumstances,' he added.

PFjul2002

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