Press Release - Managing Resources To Deliver Better Public
Services
12 December 2003
Recent changes have allowed Government departments to make
improved use of money, assets and other resources. Many departments
have begun to take advantage of these tools but they can still do
more to better manage what they have so that they can deliver high
quality public services, Sir John Bourn, the head of the NAO,
reported to Parliament today. The changes to improve resource
management include three year budgets, greater flexibility to carry
forward unspent funds into future years, resources linked to
targets and the introduction of commercial style accounting and
budgeting. To fully utilize these tools requires a stepwise change
in departmental behaviour.
A quarter of the departments examined are making good use of the
new flexibilities and information to manage their resources,
identify inefficient use of assets and improve the scheduling of
expenditure to match service needs. The remaining departments,
however, have as yet made limited progress. While over a third of
departments have made use of the new flexibility to carry forward
unspent resources, there is still a bias towards potentially
wasteful spending surges in the last two months of the year. Over a
third of departments still rely on cash-based management
information and therefore do not know how much it really costs to
deliver services. This increases the risk that poor value for money
may go undetected or that the investment needed to improve services
in the future may be underestimated.
While departments and their agencies continue to adjust to the
new approaches, there is more they could do to improve their
management of resources including:
- Providing a clearer lead, particularly at board level, in
demonstrating the importance of better resource management and the
use of improved information and flexibilities, and in ensuring
greater alignment of the targets and resource allocation of key
organisations involved in delivering specific services.
- Engaging regularly with the chain of public, private and
voluntary organisations who increasingly deliver frontline services
to ensure they have the appropriate capabilities and skills, and
where these are deficient seek to strengthen them.
- Allowing appropriate flexibility to encourage innovation and
sensible and well managed risk taking when allocating resources
both internally and to partner organisations.
- Using the new management information now available to make
better use of resources and improve efficiency. Accruals based
information is a powerful tool to identify efficiency savings, but
is not yet widely used in this way by Departments. More needs to be
done in overcoming constraints such as insufficient IT system
capability and financial expertise.
The improvement in levels of teacher recruitment achieved by the
Teacher Training Agency is a good example of the benefits that can
be realised by addressing the areas set out in this report.
Sir John Bourn said today:
"Good resource management is vital if departments are to
meet their ambitious objectives and targets for service
improvement. They need to review their resource management
practices and make best use of the new information on service costs
and the consumption of resources. Given the huge amounts of
resources involved in Governmental programmes even a relatively
small improvement in efficiency could release significant resources
for frontline public services."
Notes for Editors
In the three year period 2003-04 to 2005-06 departments and
their agencies expect to spend £1,447 billion in resources, and in
any one year manage assets and liabilities valued at around £334
billion and £112 billion respectively.
The study was based on detailed examination of four case study
bodies (the Highways Agency, the Teacher Training Agency, the
Housing Corporation and the Serious Fraud Office). Details of the
findings on the case study bodies are set out in the accompanying
volume to this report. Evidence was also obtained from detailed
structured interviews at six other departments and agencies, the
National Audit Office’s financial audit of departments and
agencies, and comparisons with overseas bodies, the private sector
and local government.
Fundamental HM Treasury-led changes introduced to improve
resource management include:
- Public Service Agreements, introduced in 1998 to increase
departments focus on using their resources to achieve sustainable
improvements in service delivery by setting out quantifiable
targets for the delivery of their main objectives.
- From the 1998 Comprehensive Spending Review onwards, three year
resource budgets, plus flexibility to carry forward unspent funds
into future years, to provide stability and certainty in financial
planning and encourage longer-term investment.
- Full resource accounting and budgeting from 2001-02 which, in
accordance with best practice in the private sector, requires
departments to prepare their accounts on an accruals basis
generating more complete information on resource consumption.
Press notices and reports are available from the date of
publication on the NAO website at http://www.nao.org.uk/ Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
The Comptroller and Auditor General, Sir John Bourn, is the head
of the National Audit Office which employs some 800 staff. He and
the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 76/03
All enquiries to Mark Strathdene, NAO Press Office:
Tel: 020 7798 7183
Mobile: 07748 181693