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    The art of spending public money wisely

  • Posted on January 5, 2016 by

    4 pitfallsThere’s never a good time to spend money inefficiently, but the recent Spending Review reinforces the great importance of making every pound count. As the watchdog on value for money, the NAO has repeatedly come across four issues that frequently impede public service improvement and lead to poor services for citizens. They are not specific to individual sectors or related to particular policies. They are, rather, behaviours; often unconscious. The good news is: they can be avoided!

    Often with the best will, government has a tendency to overlook conflicting priorities, ignore inconvenient facts, allow what’s out of sight to be out of mind, and just not learn from mistakes.

    Busy-DeskHandling conflicting priorities: We all want to say ‘yes’ to solutions to the problems that blight lives. But big promises can result in unrealistic timeframes, simultaneous changes placing conflicting demands on resources, and rushed planning undermining sustainability.

    Where organisations take time to acknowledge the challenges, benefits have been realised. Portfolios of change programmes can be managed; planning and capacity-management can avoid expensive mistakes.
    Elephant-in-roomConfronting inconvenient facts: That “elephant in the room” tends to be the optimism bias, the unrealistic assumption that is treated as the “likely result”, leading to under-delivery of benefits and over-run in time and money.

    Although assumptions are unavoidable, results can be improved considerably by understanding the limitations of assumptions, considering the consequences of variation in their accuracy, monitoring their achievement, recognising and addressing risks, and tackling complications head on.
    LocalOut of sight, but not out of mind: Localism can have great benefits. But devolving responsibility puts public service delivery beyond the day-to-day consideration of central government, which may then make funding and policy decisions without consideration of the local consequences. Accountability chains become long and complex, often meaning reduced accountability for public spending and a lack of understanding of how users are affected.

    As our recent reports on financial and service sustainability have shown, there needs to be better lines of accountability, a long-term view, consideration of knock-on effects, performance and cost data, evaluation and response, and sharing best practice across sectors.
    Learn-by-mistakesLearning from mistakes: Austerity has pushed government to find new ways to deliver services. Changes that mean:

    – new challenges;

    – new complexities – such as ‘quasi markets’ for public services; and

    – new skills needed – e.g. complex project management, digital transformation and commercial contracting (see our post Skills for digital transformation).

    Transforming services while reducing spending means that now, more than ever, government cannot afford to make costly mistakes or ignore past lessons.

    There needs to be a culture of learning from mistakes and successes. Our Welfare Reform – lessons learnt shows how government can learn and adapt.

    The art of spending public money wisely shares more secrets about how to avoid these 4 pervasive issues. Produced to complement the NAO’s 2015 Civil Service Live presentations on these issues, it links to a wide range of NAO reports that illustrate lessons learnt and areas of good practice.

    Keep an eye on our blog for more insights on these pervasive issues and ways they can be addressed. Please, too, share your comments and questions and please contact us to let us know what you would like to hear more about from us.
    Sue Higgins

    About the author: Sue Higgins joined the NAO in January 2014 as Executive Leader responsible for the NAO’s work on local government, education and health. Sue previously held Director General roles in the Department for Communities and Local Government and Department for Education, and senior finance roles in the local government sector.



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    Our experts share their views about issues and common challenges facing government, what public sector leaders should look out for and how organisations have addressed issues. Our posts draw together threads from across our reports, share secrets spilled in events and reveal our experts’ expectations for the future.

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