Monday, June 14, 2010

Check list for ensuring value for money of public spending?

British Treasurer George Osborne issued details of the 'process and principles' that will underpin the Spending Review;

-Thinking innovatively about the role of government in society;
-Taking the difficult decisions to reduce the deficit collectively as a Government; and
-Consulting widely using all available talents to deliver a stronger society as well as a smaller state.

It also lists a check list of criteria for evaluation public spending-
  • Is the activity essential to meet Government priorities?
  • Does the Government need to fund this activity?
  • Does the activity provide substantial economic value?
  • Can the activity be targeted to those most in need?
  • How can the activity be provided at lower cost?
  • How can the activity be provided more effectively?
  • Can the activity be provided by a non-state provider or by citizens, wholly or in
  • partnership?
  • Can non-state providers be paid to carry out the activity according to the results
  • they achieve?
  • Can local bodies as opposed to central government provide the activity?

How the UK Will Wield the Razor;
The first is that there is too much emphasis on efficiency gains as the source of savings, whereas the focus should have been primarily on program cuts. Thus the number one objective of the new “strategic approach to spending” outlined in the government’s document is a “step change in the drive for efficiency and value for money in the public sector” – with specific mention of operational efficiencies, contract renegotiations, benchmarking and the maximization of collective buying power. Substantial quick reductions in public expenditure can, however, only come about by eliminating or scaling back whole programs...

One notes in this context that the nine criteria which ministries will be asked to apply in reviewing their expenditure are not as single-mindedly focused on the identification of program cuts as was the case with the six tests applied in the Canadian program review process, but instead wander into the areas of improving the targeting and effectiveness of programs. To be fair, the government document does mention welfare spending as a key focus of the spending review, and this is very important. But overall, there needs to be a much greater focus on program review.

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