The Treasury must do more to monitor how the money it allocates is being spent and to ensure it is being spent as effectively as possible, a think tank has said.
In a report this week, the Institute for Government said the Treasury is “too focused on ‘managing the numbers’ – making sure that departments do not spend more than they are allocated” and does not pay enough attention to the impact of that spending.
The think tank has called on the exchequer to “address intended performance with the same thoroughness as it does spending – with much stronger use of data and evidence”, and to set and enforce clear standards for departments on public spending.
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It said at the moment, there is “much cause for concern” about how public spending is used and monitored.
“Spending and accountability are often not adequately lined up; information is not used properly to inform decisions; the government does too little to understand or plan the impact of spending on metro or county areas; spending is planned wastefully; and the government does not explain its intentions clearly,” the report said.
“The Treasury’s current ways of working contribute strongly to these problems,” it added.
The IfG researchers argued that departments in charge of putting spending decicions into practice are not being given a clear enough indication of the government’s priorities. It said No.10 and the Cabinet Office must present departments with a clear, public statement about what it wants to achieve through its spending, and that the Treasury must contribute to the process and ensure it is put into practice.
The IfG researchers also identified a disjoint between the Treasury and departments in planning that underpins Single Departmental Plans. It said departments see SDPs as “being run by the Cabinet Office and as detached from their financial planning conversations with the Treasury”.
This not only makes it difficult to track the impact of spending in individual departments, but also means the Treasury does not have a clear picture of the “combined effect of various spending decisions on public services and different parts of the country”, they said.
The government’s push to embed the Public Value Framework, which departments will use to ensure projects achieve value for money, in SDPs is welcome progress but does not go far enough to fix the flaws in the system, the IfG report argued.
And there are weaknesses in the PVF, among them that the tool is “peripheral to the conversation that departments regard as essential – namely the one with the Treasury about their spending allocation,” the report said.
The report concluded that despite the introduction of measures to improve public spending such as the PVF and SDPs, the Treasury is “not currently doing enough to ensure results are well managed”.
“It still tends to focus on individual policies within departmental boundaries rather than whole-of-government priorities and the quality of departments’ planning. It still does not publish clear enough information on spending or results to allow outsiders, be it parliament or the public, to scrutinise either properly.”
The report stressed that efforts to improve public spending plans must be made transparent. Its authors called on the Treasury to publish more information about its spending plans in an accessible way, including plans drawn up in the next Spending Review and the evidence and analysis underpinning them.
Commenting on the report, IfG senior fellow Martin Wheatley said: “Brexit has wrecked the Treasury’s plans to run a serious spending review this year. It must consistently and seriously focus on how money can be spent to achieve as much impact as possible and at least cost. The recently announced Public Value Framework, while a step in the right direction, is nowhere near enough.”