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Newsroom & speeches
29 January 2009
Thank you and good morning. I hope you are all feeling suitably refreshed after your coffee break.
I’d like to start by thanking the National Audit Office for hosting this important conference, and for the excellent work they do more generally.
As Minister responsible for public expenditure, you might expect the words “National Audit Office” to strike terror in to my heart, but I have an enormous respect for the NAO, who carry out their job of holding the government to account for the use of public money with the utmost professionalism.
I’m delighted to have the opportunity today to say a few words about the critical role of performance management in achieving the government’s objectives.
When this government came into office eleven years ago, we had huge challenges to overcome.
We were facing the results of years of underinvestment in our public services; unacceptable variation in quality; and a lack of clear direction.
And so in 1998 we introduced the first Public Service Agreements- or “PSAs”- to give the direction that was missing, and to reduce inconsistency across public services.
That was a major step – it was the first time that a Government had set out the key outcomes it expected to be delivered from reform and investment.
And the PSAs have helped us towards some major achievements, particularly on the priorities that we shared with the public, like reducing waiting times in the NHS.
Back in 1997, over 300,000 people were waiting over six months for NHS treatment. By 2007, it was less than 500.
And in August 2008 we met our target that no one should wait more than 18 weeks from referral to hospital treatment. This was achieved four months before our deadline.
And we’ve seen other improvements across the board, form better standards in schools to lower crime.
Over time our approach to performance management has been able to evolve. While retaining its basic principles, the framework was refined and developed at Spending Reviews in 2000, 2002 and 2004.
Our most major reforms to the framework came in 2007 when we were able to reduce the number of PSAs to just 30 which set out the Government’s top-level ambitions for the next three years – rather than the hundreds of targets that we’ve had in the past.
Other reforms included:
And work against each PSA is now scrutinised by a cabinet committee, improving collaboration and helping ensure that Secretaries of State from all the relevant departments are kept fully up to date with progress towards our priorities.
All the changes we have made to our performance management framework were motivated by the wish to have a system that would be:
At the local level, the new system of Local Area Agreements and Comprehensive Area Assessments are implementing much the same approach to performance management as PSAs do nationally.
In both the national and local cases, the reason for having fewer top-down targets is the same. They’ve had a place in raising standards from the levels of ten years ago, but the test for public services today isn’t the same as it was in 1997. It’s not about getting services back on their feet, and providing a basic level of service – it’s now about whether they’re as good as they can be. It’s about the highest levels of quality.
To move public services on to that next stage, we need to give the people delivering them more freedom to use their knowledge and experience to do what works best on the ground.
That is a big change – and it isn’t always easy for central government to let go of control like this. But I believe that local authorities and their partners are best placed to understand and meet local needs.
At times like these, people rely on public services more than ever. Efficient and improving public services are vital to help people get through the downturn, and to support and build our economy for the future.
We set out our vision for the future of public service reform in a document called “Excellence and Fairness”. We want to push our services from decent to excellent, and we’ve been working with Liam Byrne and the Cabinet Office on a prospectus that we will publish next month, setting out exactly how we will deliver that vision.
Whether it is through transport infrastructure or education and science, our public services are vital to building economic strength for the long term. And services such as job centres, Business Links, local councils, or debt advice agencies play an essential role giving people support at a time they need it most.
That is why we are proud to have increased investment in our public services over many years to help support people and businesses through thick and thin.
But we also need to make sure all those services are delivered as effectively and efficiently as possible. That means tackling waste or inefficiency wherever we find it.
Already great improvements have been made in public sector efficiency. In 2004, Sir Peter Gershon’s Review brought the concept of value-for-money to the heart of public services and asked people to be hugely ambitious about delivering efficiencies.
Against a target of £21.5 billion of efficiency savings in 2004-07, the public sector actually achieved £26.5 billion of savings. That means billions of extra pounds spent where it makes the most difference: improving front line services- on refurbished schools, better hospitals, affordable housing and improved transport infrastructure.
But while public sector efficiency achievements to date are impressive, this is no time to rest on our laurels.
So last year we set up the Operational Efficiency Programme to review work so far and to see what more could be done to get better value and deliver additional savings whilst protecting, improving and extending the services we rely on.
We asked four business experts to look at particular areas of public sector operations including corporate services, procurement, asset management, and property management.
They have looked at areas ranging from the way organisations draw up energy contracts or IT contracts, to the way they manage property or financial services. Their final conclusions will be made in time for the Budget next year, and they will feed into the plans for the next spending review.
However, their interim findings produced for the pre-budget report have convinced us that we can achieve even higher levels of efficiency savings than originally planned.
For example our reviewers believe more could be saved across the public sector on fees for professional services such as lawyers, IT specialists and consultants. Savings of £300m in this area are already being planned for this year as a result of joint procurement between departments and the Office of Government Commerce. But the reviewers believe there is scope to go further.
We could make further savings – potentially worth hundreds of millions - on public sector energy bills. The multitude of existing contracts range in price by over 50 per cent for every unit of energy supplied.
And more could be saved in general computing and office support where the cost of desktop computer support currently varies by nearly 500 per cent between comparable public sector organisations.
Our reviewers have looked too at improving the HR, finance and back office functions of the poorest performers in the public sector. For example, if you look at the most expensive 25 per cent of corporate service departments across government and the public sector, and reduced their costs to be in line with other similar departments, that alone could save over a billion pounds.
In each of these areas, our reviewers are clear that there are improvements to be made and better value for money to be delivered. And these savings can be made whilst continuing to support and improve our important public services too.
But there’s only so far that central government can drive efficiency and excellence in services- the rest has to come from the knowledge and experience of service professionals.
Top down standards have played their part in resurrecting services after chronic under-investment under previous governments. But excellent services are forged on the front line.
So we asked Sir Michael Bichard to lead a new fifth strand of the Operational Efficiency Programme, exploring how to encourage front line professionals to come forward with their own ideas to cut waste an improve standards.
The best public services treat their users as unique individuals: this leads not only to a better experience for citizens, but to better outcomes and better value for money.
But highly personalised services cannot be mandated by central government. They rely on relationships between the service user and provider: teacher and pupil, police and neighbourhood; nurse and patient; social worker and family.
We must empower users of public services by ensuring they have the information and control to shape the services they want.
And we must engender a new professionalism among providers, giving them, the space, support and powers they need to lead reform from the front line.
It has been suggested that the uncertainty in the global economy makes our performance management framework irrelevant, and that all priorities beyond revitalising the economy can fall by the wayside.
I don’t agree. While the backdrop to public sector work has changed dramatically in the last 18 months, our top-level priorities remain the same.
Not a single PSA has become less important because of the downturn, and many are more important than ever – finding people training and apprenticeships, helping people on the path to getting jobs and providing homes for the people that need them. Delivery of these priority outcomes remains at the forefront of my, and every one of my cabinet colleagues’ minds.
Certainly, some areas may become more challenging- like our aim to provide three million new homes by 2020. But just because things become harder, does not mean that we should abandon our goals.
Our performance management framework is flexible- so, of course, where a new priority emerges, perhaps as a result of the economic downturn, we have the ability to incorporate this.
But we remain convinced that our performance management framework remains the most effective way of translating the government’s strategic vision into real change on the ground.
The downturn is not a get-out clause for delivering our priorities. We will not be distracted. Now more than ever we must maintain our focus on delivering excellent public services and improving outcomes for British people.
Thank you.
[ENDS]
