Chief secretary to the Treasury Darren Jones has set out plans for an overhaul of the government’s central finance system, aimed at improving the timeliness and accuracy of data shared by departments – boosting productivity in the process.
It will end the current system of departments tracking their own spending and performance, then sharing data with the Treasury via manual uploads in online spreadsheets and physical letters.
In a speech at the Institute for Government, Jones said that at present the Treasury does not have real-time access to departments’ finance and performance-management data, and also cannot see departmental spending and its impact in real time.
He said that over the next three years the new approach to understanding, tracking, and evaluating spending across departments would be rolled out as part of the ongoing shared services programme across government.
The chief secretary added that knock-on advantages of the change would be that departments should have fewer key performance indicators to comply with and report on and “better levels of delegation”. He said giving HM Treasury direct access to departmental spending and performance data would save the considerable effort and interaction that the current system entailed, allowing departments to focus on their real work.
Jones said by 2028-29 the system should be integrated across departments. He said it would then be “business as usual” for ministers to be able to see in real time what programmes are over-spending, which projects are delivering, and how departments are performing against their budgets and objectives.
Jones told the IfG that the result would be improvements in the timeliness and accuracy of data insight that would boost financial and strategic decision-making at the heart of government.
“These reforms will update our operating model and they will transform the digital and data architecture of public spending across government,” he said.
“We're building on existing work that's taking place which is implementing shared ERP software; back-office functions basically – where the departments are already integrating some of those functions into the cloud through various groupings of departments.
“We will develop a single digital interface that sits over the top of these IT solutions, and will bring the data up into the centre of government to allow us to look at financial and performance data. We'll then be able to use data analytics and AI to track trends, spot emerging challenges and share best practice in real time.”
He said the new system would allow Treasury officials and ministers to spot “points of failure that lead to excessive spending” at an earlier stage than is currently the case.
“Too often, and there are lots of examples, we only realise that something is going wrong and costing a lot when it's a very large number,” he said. “We need to be able to spot those and deal with it much sooner in that process for the benefit of people who are relying on those services, but also for the benefit of taxpayers.”
Jones said the overhaul of the way spending is monitored and performance is tracked would be welcomed by finance professionals and departments.
“They've been looking for politicians to prioritise this niche-but-exciting opportunity for quite some time,” he said.
He added that the new real-time monitoring regime would also be an “important part” of improving public-sector productivity, which fell sharply during the Covid-19 pandemic and has failed to recover.
“It will give us the tools, the data and the insight to really be able to drive modernisation and productivity across the public sector so that we’re operating as a modern government fit for the 21st century,” he said.
Spending Review insights from the chief secretary
In a question-and-answer session after his speech, Jones gave updates on his ongoing work in relation to the Spending Review, which is due to be set out in June.
Jones was asked directly how the Treasury would ensure that the Spending Review supports the government’s cross-cutting “missions”.
He said conversations have now been started with the new mission boards about their individual Spending Review submissions, which will be considered alongside already-submitted departmental bids.
He said mission-board submissions would have to show how Plan for Change priorities were being delivered, as well as “broader mission delivery”.
“From a Spending Review perspective, they have to show how, through the zero-based review, they're gearing current budgets towards the priorities of this government, and how much they're able to do that," he said. “And then what their bid is for additional money on top of that.”
Jones said the mission-board submissions would be negotiated alongside those of departments later in the process.
Civil Service World editor Suzannah Brecknell asked Jones what is being done to make sure that the Treasury is an “enabler” of reform, rather than a “blocker”.
He said that departments often struggled to prove their case for extra investment. He expressed hope that the central finance system reforms would make it easier to provide credible evidence for funding proposals.
Jones added that work on the current Spending review had seen a culture shift, with early collaboration between departments and the Treasury, and a "very transparent", "numbers on the table" approach to trying to solve problems.
He said the Treasury was also now making itself more involved in "the delivery side of the conversation" in many areas, "as opposed to saying 'we've given you then money, now it's your job to get on with it – it's not our problem'".
"The culture and the tone of the government is starting to shift," he said. "The data and the evidence is going to really optimise that in the future."
NISTA teams “hard-wired” into spending decisions
Jones was asked about major infrastructure and IT projects. He said the National Infrastructure and Service Transformation Authority – which is being created from the merger of the National Infrastructure Commission and the Infrastructure and Projects Authority next month – was already “hard-wired” into some spending-decision processes.
Jones said he was “very excited” about the situation as were the NISTA teams, in their current form.
"So when we're making decisions, it's not just a value for money assessment, of course you've got to do that, but it's also a design and deliverability assessment,” he said.
“We're already hard-wiring that into the decisions where I give the thumbs up or down to a project going ahead by looking at all of those assessments. The data opportunity means that those assessments are going to be able to be done much more effectively and much more quickly. And in real time, as projects are being delivered over time being able to track things earlier on.”
However he acknowledged that there were still questions about what project information would be available to ministers as a result of the move to real-time data from departments, even for schemes that are part of the Government Major Projects Portfolio.
He cited the troubled High Speed Two railway line as an example of a scheme that is technically outside of the Department for Transport, which is its accountable department.