Chancellor announces progress on work for the next Spending Review

Further details on the key reviews that will form the backdrop to the next Spending Review were announced in the House of Commons today by Chancellor Gordon Brown.

The terms of reference for three reviews were announced today:

The Devolving Decision Making Review which will examine how best to achieve decentralised delivery and responsive local and regional services. This will be done in a way that is consistent with equity and efficiency, and against a clear framework of national standards.
The Childcare Review which will consider whether the long-term projection for childcare and early years education is sufficient to meet the Government's aims for employment and educational attainment. It will look at how fast the sector can expand and what more needs to be done in particular areas such as childcare for school age children and the role of extended schools.
The Child Poverty Review will set out what further action is required to halve child poverty by 2010 and eradicate it by 2020. It aims to ensure the welfare system and the range of public services work together to avoid the waste and poor outcomes which still occur all too often. Among the specific issues it will look at are increasing employment opportunities; improving the effectiveness with which current investment in public services tackles material deprivation; improving life chances; and dealing with the crisis points that families often face, all with an eye to the particular issues facing families in deprived areas.

The Review of the Voluntary and Community Sector will focus specifically on five public service areas: Health and Social Care; Crime and Community Cohesion; Education and Employment; Housing and Homelessness; and Children and Families. It will build on the foundations laid in last year’s Cross-Cutting Review of the Role of the Voluntary and Community Sector in Service Delivery and will make practical recommendations about specific areas where Government, the voluntary and community sector and social enterprise can work together even more closely to deliver world class public services.

The Chancellor also announced today that the first stage of the Review of Efficiency in Public Services will be completed later this month. The Review examines new ways of providing Departments, their agencies and other parts of the public sector with incentives to exploit efficiency savings, and so release more resources for front line delivery. It will make proposals for strengthening the drivers of efficiency and offer examples of existing good practice in the wider public sector. The Review will lay the basis for a continuing programme of work to improve efficiency.

Paymaster General Dawn Primarolo, will lead the Review of Financial Support for 16-19 year olds. The review is examining the incentives for young people to participate in education and training and the interaction between this support and any new minimum wage for 16 and 17 year olds. The review will look at ways of improving the system of financial support in order to increase young people’s participation in education and training and at ways to simplify the system radically in the long-term. The Paymaster General will work with children’s groups, the Local Government Association, the Low Pay Commission and in consultation with young people and their parents. It will report in spring 2004.

Sir Michael Lyon’s review on the scope for relocating public sector activities from London and the South East is conducting a public consultation on the impact of previous relocations and the economic effects of decentralization. In parallel Government Departments are preparing proposals for relocating activities and contributing to the Review.

In addition to the reviews that will feed into SR2004, Derek Wanless has been asked to provide an update on the long-term challenges in implementing the "fully engaged" scenario to improve population health as set out in his 2002 report. The terms of reference will be published in due course.

Notes for editors

1. Further background including, where published today, the terms of reference, on each Review are set out below.

Review of Efficiency in Public Services

2. Budget 2003 said that the Government would ‘review new ways of providing departments, their agencies and other parts of the public sector with incentives to exploit opportunities for efficiency savings, and so release resources for front line delivery’.

3. The first stage of this work is due to be completed by July 2003 and will deliver:

examples of the tools and good practice being used and mechanisms for spreading these;
examples of the scope for raising efficiency through redesigning services.

4. The Review is drawing on the work of the Public Services Productivity Panel, and consulting a wide range of people across the public services. The study covers the whole of public services, not just the work of civil servants or the activities of central government. It is envisaged that this Review will lay the basis for a continuing programme of work to improve efficiency in the use of resources and inform decisions in the 2004 Spending Review.

Devolved Decision Making

5. The devolved decision making review was commissioned in Budget 2003, following on from the Chancellor’s speech to the Social Market Foundation on 3 February. The Review has the following terms of reference:

“to examine in the run up to the next Spending Review how best to achieve decentralised delivery and responsive local and regional services in a way that is consistent with equity and efficiency, against a clear framework of national standards.”

6. The review has two closely linked parts:

exploring the rationale for devolving decision making to regional and local levels, looking at how it could improve service delivery outcomes, establishing an agreed approach to devolving decision making and identifying new approaches to locally-empowered service delivery in particular areas; and
working closely with the Prime Minister’s Delivery Unit, looking at how to combine the current targets regime with a drive for greater devolution of decision-making and greater transparency. This will consider how to develop a new system of data collection and performance indicators, which both maintains the high minimum standards implied by current targets and unlocks customer and citizen pressure for local service improvements and is, therefore, much more responsive to the needs and aspirations of local communities.”

7. The review will draw on the considerable work taking place in related areas, including:

the Balance of Funding Review, which is considering whether it would be desirable to increase the amount of money raised at the local level;
the Innovation Forum, which is considering what future freedoms and approaches could be developed in: education, social services for the elderly, community safety and how services can be better joined up at the local level;
work to improve Local PSAs for the second round, enhancing the scope for a clear focus on local priorities;
work to refresh the Comprehensive Performance Assessment (CPA) for 2005-06 to tie the CPA in more closely with the aims of the Community Strategy to assess more explicitly the influence and impact of local authorities on their particular localities; and
evidence from the United States on real time performance indicators.

Voluntary and Community Sector

8. The Voluntary and Community Sector Review was commissioned in Budget 2003. The Review will build on the Cross-Cutting Review of the Role of the Voluntary and Community Sector in Service Delivery, published last September as part of Spending Review 2002. The Cross-Cutting Review recommended that Government and the voluntary and community sector work together to reinforce and improve the day-to-day relationships between the sector and the state, by improving funding arrangements, building capacity, and ensuring full implementation of the Compact.

9. It was announced today that this Review will build on the foundations laid in the Cross-Cutting Review by examining selected public services within five categories:

Health and Social Care;
Crime and Community Cohesion;
Education and employment;
Housing and Homelessness;
Children and Families.

10. Within these categories the Review will examine selected public services where the voluntary and community sector and social enterprise can and do add value, explore the existing relationship between the sector and the state at the central and local level, and make recommendations about where Government, the voluntary and community sector and social enterprise can work even more closely together to deliver world class public services, whilst maintaining the independence of the sector.

11. The review will be practical in focus and aims to build upon and reinforce the key recommendations of the Cross-Cutting Review of the Role of the Voluntary and Community Sector in Service Delivery, and on the Government’s Social Enterprise Strategy.

Childcare

12. The terms of reference of the Childcare Review, published today, are to consider:

whether the long-term projection for childcare and early years education is sufficient to meet the Government's aims for employment and educational attainment;
whether the expansion is proceeding quickly enough;
and whether there are areas where more remains to be done.

13. The review will be conducted by officials from relevant departments and draw on the expertise of others. The review reflects the high priority the Government attaches to issues affecting children, as seen also in the recent appointment of the new Minister for Children.

Child Poverty

14. In the light of the new long term measure for child poverty, which will be published by the end of 2003, the Review intends to set out the policies necessary to:

increase employment opportunities, raising incomes for those who can work;
increase support for those who cannot work;
improve the effectiveness of public services that tackle material deprivation, for instance housing and homelessness;
improve those public services that can contribute most to increasing the future life chances of children in households suffering low income, for example education, and ensure public services and the welfare system work well together when families face crisis points in their lives; and
improve services for children and their families living in deprived areas, including targeted programmes.

15. The Review will work across Government drawing in expertise from the research community and the voluntary sector.

Financial Support for 16-19 Year Olds

16. Budget 2003 set out the Government’s plans to establish a wider cross-government group to examine the overall system of financial support for 16 to 19 year olds. The review will examine:

the financial incentives for young people to participate in education and training and the interaction between this support and any new minimum wage for 16 and 17 year olds;
the financial support for young people and their parents or carers, including those who are living independently and those in very low paid employment; and
how the system of financial incentives and support could be rationalised, given the variety of channels through which it is currently delivered.

17. The Chancellor announced today that the Review will be lead by the Paymaster General who will work with children’s groups, relevant Government departments, the Local Government Association, the Low Pay Commission and in consultation with young people and their parents. It will look at ways of improving the system of financial support to increase young people’s participation in education and training. The Review group will include and develop analysis undertaken by Department for Education and Skills, Department for Work and Pensions led group, the Social Exclusion Unit and the Children and Young People’s Unit. The Review will report in spring 2004.

Sir Michael Lyons’ Review on Relocation

18. Budget 2003 invited Sir Michael Lyons to lead an independent review to examine the scope for relocating a significant number of public sector activities from London and the South East to other parts of the United Kingdom. Sir Michael is identifying options, in the context of Departmental pay and workforce strategies, for relocations that will improve the delivery and efficiency of public services and improve the regional balance of economic activity.

19. The terms of reference as set out in a joint letter from the Chancellor and Deputy Prime Minister are:

“In the light of the need to improve:

the delivery and efficiency of public services; and
the regional balance of economic activity;
and, taking account of departmental pay and workforce strategies, updated to reflect relocation plans. Sir Michael Lyons will make recommendations to the Deputy Prime Minister and the Chancellor for the relocation of civil service and other public sector workers, by November, to inform the next Spending Review.”

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