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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
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