New resources for reform and results

As part of its plans for increased investment, the Government has put in place a tough regime for driving up the performance of public services. Announcing the new spending plans the Chancellor, Gordon Brown, made clear that new resources are tied to reform and results.

Andrew Smith, Chief Secretary to the Treasury said:

"We have put behind us the old short term annual spending reviews which focused on inputs. Our three year spending plans help the public sector to plan long term, and concentrate on what really matters - delivering high quality, cost effective services."

The new regime includes:

Demanding targets for the improvements each department is expected to deliver. New targets focused on the Government's strategic priorities have been agreed with departments alongside the new spending plans and are set out in new Public Service Agreements to be published shortly. This builds on the experience of the targets agreed in the 1998 Comprehensive Spending Review.

For example, when the Government took office, less than 60 per cent of 11 year olds could read and write to the expected standard. That has been increased to 70 per cent and the plans published today will take it above 80 per cent. Progress will be monitored closely and departments will publish details of their performance against targets every year. So the public can judge for themselves how performance is improving. Local authorities will also be agreeing local Public Service Agreements for service delivery.

Tough new efficiency targets to drive down costs. The Review sets quantified targets for departments to get better value for money through better procurement, better use of IT, and better organisation. All PSAs include a value for money target. For example the Home Office is committed to ensuring annual efficiency gains by police forces worth at least 2 per cent of police spending. Inland Revenue and Customs are committed to annual productivity gains of at least 2.5 per cent a year. The new targets aim to deliver annual efficiency savings building to over £7 billion a year by 2003-04 of which over £1 billion will come from procurement. Administration costs will continue to fall as a share of public spending.
Investing to modernise services. The new plans provide funds to modernise the way services are delivered, including a new centralised service to allow pensioners to sort out their claims by telephone, IT systems that will enable all revenue services to be available electronically by 2005, on-line payments to farmers, and driving licence applications on the Internet.
Breaking down barriers in government. The Government is determined that old departmental boundaries should not get in the way of delivering effective solutions. So this Spending Review has included 15 cross cutting reviews of problems ranging from Young People at Risk to meeting the challenges of the Knowledge Economy.
A clear out of surplus assets. Over the three years to 2004, £4 billion a year of unneeded assets will be sold, releasing resources for investment in priority areas. In the autumn the Government will publish a new National Asset Register giving updated details of the assets departments hold and their plans for disposals. Departments can plough back receipts into better services.
New investment strategies. To help make sure the extra capital spending going into public services is spent wisely, each department will draw up and publish a Departmental Investment Strategy in the autumn. It will set out how the department will manage the assets it holds and how it will plan new investments.
A new, commercial, regime for recording and planning government spending. For the first time government departments will be producing financial statements on the same basis as businesses, including a balance sheet. The new regime, known as 'Resource Accounting and Budgeting' will give departments better information and incentives, and give a better measure of the full cost of services, including the cost of holding and using capital assets.
A long-term basis for planning spending. Government departments know their funding allocations for three years ahead, allowing them to plan for the medium term with confidence to spend resources when they need to rather than rushing to meet a year-end deadline, and giving them a real incentive to look for efficiency savings. Local authorities will also be given a much clearer view of their funding allocations for the years ahead.
More information on performance for users of services. Parents are getting regular reports on schools performance and patients can see how hospitals are doing. Under the Best Value regime put in place from April this year all local authorities will collect and publish performance information which will allow council tax payers to see how their council is doing compared with others.

Notes for editors

1. The full Public Service Agreements will be published shortly.
2. For for further details contact the Treasury press office on 020 7270 5238.