13 June 2001
Speech by the Chief Secretary to the Treasury, Andrew Smith MP, at the CIPFA Conference: Delivering Better Public Services
1. I am very pleased to be here - for many reasons - it is a privilege and a challenge to be appointed again as Chief Secretary to the Treasury. The Prime Minister has stressed the crucial importance of delivering better public services - and so I am delighted to have the opportunity to continue my role in ensuring this Government is able to deliver on our promises of better public services.
2. The Treasury is at the heart of driving this agenda forward, because the taxpayer has a right to know what to expect in return for the new resources being put into services. But delivery requires the active involvement of a vast range of other organisations, including your own.
3. Delivering real improvements in our public services has been the central issue of this election campaign, so I am delighted to have the opportunity to speak to you so soon after the election.
4. As the people involved in the frontline delivery of public services, you are the people who have helped deliver the improvements in services we have seen over the past four years; and you are the people we are relying on to make sure the priorities for this Parliament are delivered on the ground.
5. This Government has been elected to rebuild our public services. Our goal is to improve public services, and to improve the way we deliver them. When we took office, we faced chronic under investment in public services and a £27 billion deficit on the public finances
6. Our first task was to create stability and sustainable public finances, and we have delivered both:
- Inflation on target and the lowest it has been for 30 years
- the lowest long-term interest rates for 35 years;
- the lowest unemployment since 1975, with more people in work than ever before; and
- sound public finances: This government inherited debt at an unsustainable 44% of national income. Four years later, we were able to make the biggest net cash debt repayment in one year ever by a British Government at £34 billion, and we have reduced 32% of national income.
7. Because we have cut debt and cut unemployment, and achieved higher growth and earnings, we are freeing up resources for priority areas in a sustainable way. By 2003-04 debt interest is forecast to be £6 billion a year lower than it was in 1997.
8. As the fundamentals of our economy are stronger, so we are able to make a sustained investment in our public services.
9. In the spending review last summer, we announced an additional £4 billion of capital spending this year, and the doubling of net investment by the public sector over the next three years, to £19 billion in 2003-4.
10. We are carrying forward:
- the biggest new hospital building programme in the history of the NHS: Alan Milburn has already announced 29 new hospital developments, worth £3.1 billion.
- the 10 year modernisation of our transport infrastructure;
- the replacement or refurbishment of 650 schools.
We are making a massive investment in rebuilding public services, and we expect a return for that investment. We need to ensure it is used to deliver real improvements in quality on the ground. The public expects and deserves high quality services; and it is in everyone's interest that they are delivered at the best value and to budget.
11. The quality of services depends not just on how much the Government spends; it depends on how effectively the Government uses these resources. It is essential that the investment we are making is used prudently and effectively to create infrastructure and services people want and value.
12. Our public services are not just suffering from decades of under-investment, of course. They are suffering from decades of being undervalued and denigrated. Reviving our public services means reversing both these legacies. As well as investing in the modernisation of our public services, we need radical reform to transform the way in which we deliver services. We have a mandate to accelerate the pace of change, to build world-class public services in Britain.
Public Service Agreements
13. In the last Parliament we began the process of reforming the machinery of Government, to raise standards and focus on results. One of the key tools we are using is the targets we have set in the Public Service Agreements, first established as part of the fourth comprehensive spending review in 1998. PSAs set out what the taxpayer can expect the Government to deliver with the resources it uses.
14. The original PSAs were the most ambitious attempt internationally to set explicit goals for outcomes across the whole of Government. Never before had a British Government set out so clearly the aim, objectives, resources, performance targets, and operations targets for every major government Department in one public document.
15. Targets drive good performance by clarifying the outcomes that services ought to focus on; and they encourage the less good to rise to the level of the best. Publishing targets and progress against them drives good performance, focusing government on delivering the services that matter - bringing real improvements to people's lives.
16. They have helped us concentrate on the promises we have made and the improvements we want to deliver for the British people, and they have helped to make Government more transparent and accountable.
17. Anyone - a member of Parliament, civil servant, public sector worker, journalist, researcher, or member of the public - who wants to know what the Government wants to achieve and how well we are doing in meeting our targets can do so :
- the New Deal has helped over ¼ million young people off benefit and into work
- 75% of 11 year olds have achieved literacy targets
- we have cut inpatient waiting lists by 119,000, and
- and recorded crime has fallen by 100,000 offences.
18. In the 2000 spending review, we took the opportunity to improve the structure of the Government's objectives and set more streamlined PSAs covering the additional expenditure we are putting in over the next three years:
- We are focusing harder on the things that really matter, with fewer targets, better focussed on the important issues.
- To make the PSA targets sharper, we have separated the key outcome goals - what it is we want to achieve, from processes and operations - how we plan to achieve them.
- And we are working harder than ever before on ensuring we target the right measures of success. Determining what it is you want to achieve is the first crucial step. But picking the right measure to avoid unwanted distortions in the system is also important.
19. So the 2000 Spending Review White Paper shows the resources we are devoting to our priorities. The PSAs explain what we will deliver in return, and the Service Delivery Agreements set out how departments will do it and how they will ensure good value for money in their operations. We have learned from the first set of PSAs. The new PSAs will be an even more effective tool for raising performance, and they will benefit a far wider range of services now we are extending them to local authorities.
Local PSAs
20. We need to ensure our national, as well as local priorities are reflected in the services people use every day. Local PSAs are the framework which will link our targets to local services, and which will help give local government the conditions it needs to deliver, joining up services and making genuine local choices, according to the needs of local communities.
21. By focussing local authorities on key outcomes - outcomes chosen by the local authority itself, though also reflecting national priorities - we can reduce detailed regulation and still be confident that objectives will be met. By reducing the planning and reporting burdens local authorities face, we free them to tackle problems faster, and in the most effective way.
22. So far the local PSA approach has been piloted with 20 Local Authorities. It has been well received, and the focus on a few key outcomes has appealed to senior managers and politicians. Successfully rolling out local PSAs over the next two years to all 150 upper-tier local authorities is vital to delivering real improvements on the ground, and it is one of our top priorities.
23. Close cooperation to deliver improved outcomes between local partners - local authorities, police, business, local communities and others - will be critical to their success. Successful local authorities will secure significant financial rewards but the real winners will be local residents who will see real improvements in the services they receive.
24. Public service agreements are changing the way government sets about delivering services, and we have also modernised the machinery government uses to meet those objectives:
- Resource accounting and budgeting has brought central government into line with best practice in the rest of the economy. It not only provides a better basis for resource allocation and decision taking, but makes government's finances more transparent to the taxpayer. In mentioning this, I'm delighted to acknowledge the help that CIPFA members have made to the introduction of these important reforms.
- we are delivering more government services online, making them faster, more accessible and more cost-effective. NHS Direct online, self assessment tax returns, and the UK Online portal are a start, and the next four years will see all government services available online.
- the Invest to Save Budget is supporting innovative ways of delivering services and joining up government, for example the single point of contact for business on equality issues, linking up seven different agencies, and joint call centres for all the emergency services, to speed up responses to 999 calls.
Radical reform
25. We have made a lot of progress in modernising the machinery behind public services, and we have delivered significant improvements to those services. But the rate of improvement has been too slow, so for our second term, we sought a mandate to accelerate the pace of change.
26. Our manifesto set out three fundamental goals for public service change in our second term:
- to set high minimum standards in every service;
- to build public services around the consumer; and
- to put the front-line first.
27. Our public services can be the best in the world: in every field, there are examples where we are the most advanced and the most effective. But for too long the average standard has been too low, and worse, there are too many places where provision is completely substandard. We need to set high minimum standards, and we need to reach them.
28. This means striking the right balance between local autonomy and central prescription. Where frontline staff and managers are achieving high standards, greater autonomy and responsibility will allow them to extend and improve the service they provide still more.
29. But we need effective means of turning round services which fall short of the standards they have been set. Though PSAs and SDAs are a way of giving greater autonomy to service deliverers that are performing well, they are also a way of identifying where performance is substandard, and where effective action needs to be taken.
30. Our aim is to go beyond guaranteeing a high minimum standard for our services, to deliver responsive and consumer-driven services. Public services should meet the diverse and changing needs of individuals to a universal high standard. We need to place the needs and aspirations of the citizen at the heart of our public service culture, so that services are built around the needs of consumers, and not around the capacities of agencies.
31. Our third goal is to put the front line first. Ministers are ultimately responsible for delivering their departments performance targets, but Ministers cannot deliver services on their own.
32. Every target that we meet and every improvement in the quality of our services depends on the dedication and professionalism of a host of people: the teachers, doctors, nurses, police officers, local authority and agency staff who are at the sharp end of providing services to people who need them; and the public sector managers at every level.
33. Staff in the public services work hard under pressure, and we need more of them, so during this parliament we will recruit at least 10,000 extra teachers, 10,000 extra doctors, and 6,000 extra police recruits. And we will give frontline staff the support, training and incentives they need to introduce more flexible and effective ways of working.
34. And we are not just committed to making sure frontline staff have the numbers and the support they need to raise standards: we will also be giving them the autonomy they need to take the initiative in improving services.
35. Agencies and local authorities and are a crucial source of good ideas and good practise. The way to improve public services across the board is not to try to control services from the centre, but to focus public servants on the outcomes we want to deliver, to give them the flexibility to tackle the problems they face in delivering those outcomes, and to use the solutions they find to improve other services.
36. It is the local leaders who will make the most important difference to the quality of each service - and at all levels, not just among chief executives.
37. We want a spirit of enterprise in the public sector, where local leaders have the freedom to innovate and change, and where we can delegate more autonomy and budgetary responsibility to frontline leaders who can deliver high standards. But this spirit of enterprise also means using the private sector providers where they can support public efforts, and bringing in alternative providers where quality is not improving quickly enough.
Treasury's Role
38. PSAs will be the Government's main tool for driving improvements in performance on the ground; and as the Department which established PSAs , the Treasury has a central role in the reform of the public sector, and for ensuring that reform delivers real improvements to peoples? lives.
39. But our role should not be to direct and control the detailed delivery of services. It should be to create a framework in which effective and innovative public service deliverers are able to innovate and improve the services they provide, and where all public services reach the high minimum standard the public has a right to expect.
40. My vision of the future of public services and of local government is one where greater autonomy goes hand-in-hand with better outcomes. Where central government sets national priorities and the structures and resources to deliver them locally, but where there are real local choices about how to meet those priorities - a renaissance both for public services and for local democracy.
Conclusion
41. In this Parliament we want to transform the service the public receives. The reforms we have already made in :
- building economic stability and the strong public finances we need to support investment
- PSAs that focus our efforts on the outcomes we want to achieve
- modern, effective government machinery
- mean we are ready to deliver real change on the ground, with focussed and empowered frontline staff, putting users? interests first, and delivering a wide range of services to a consistent high standard.
42. Reforming public services is not about elegantly drafted documents: it is about driving change on the ground that the public can see - delivering the world class public services they want and deserve. The public's expectations have been raised. Now they will see the change we have promised.