Supplementary memorandum from Mr John
In my memorandum of evidence to the Sub-Committee
of 23 May, I drew attention to two issues: first, the low quality
of the Treasury's 600 Public Service Agreements (PSAs) and 1,000
Output and Performance Analyses (OPAs) of 1998-99 by which it
intended to review the efficiency and effectiveness of departments.
Secondly, I pointed out (under "public accountability")
that the Treasury's Government Resources and Accounting Bill,
then before the House of Commons, removed large expenditures from
examination by the national Audit Office, to the extent that the
Comptroller and Auditor General had complained that the new arrangement
"diminishes the accountability to parliament of bodies in
receipt of substantial (public) funds".
I have observed that both of these developments
were in keeping with long Treasury traditionsof being inexpert
in management and of undermining, whenever possible, the effectiveness
of our national or state audit.
This supplementary memorandum is intended to
bring my observations up to date in the light of the publication
"Prudent for a PurposeThe Spending Review, 2000".
It is worth noting that the Chief Secretary had promised, prior
to its publication, to reduce the number of PSA/OPAs and to make
them more relevant.
Examination of the Spending Review, 2000 shows
that though what are now called "Key PSA Targets" have
been reduced to about 500, very many of them are still quite meaningless
and the Review includes some new intrusions on the national audit.
First, the Review includes no record of the
performance of departments in relation to the PSA/OPAs of the
previous year. The Sub-Committee might care to enquire whether
outcomes were tracked against the earlier targets and if so, what
were the results.
To select some of the more vacuous key PSA targets
in the new document: "One million more people to be involved
in their communities"; "to increase by 5,000 by 2004
the number of people experiencing the arts"; "increasing
the satisfaction of those using the justice system"; "ensuring
by 2004 that levels of the fear of crime are lower than in 2001";
"increasing the level of exploitation of technological knowledge
derived from the science and engineering base, as demonstrated
by a significant rise in the proportion of innovating businesses
citing such sources"; "to secure a fairer deal for consumers,
as measured by the level of consumer knowledge". Remember
that PSAs are supposed to be SMART: Specific, Measurable, Achievable,
Relevant and Timed!
Readers of the Spending Review will find two
surprising references to the role of national audit. In Section
2 the Review tells us that the government's assumptions, including
a view of the economy's trend rate of growth, forecasts of unemployment
and interest rates "have been confirmed as reasonable and
prudent by the National Audit Office" (p.7). In section 22
the Review refers to the role of audit in "encouraging the
greater use of risk-taking inevitable in cross-departmental work"
What is the National Audit doing in endorsing
government economic forecasts and encouraging risk taking? The
NAO does not exist to give prior endorsement to any government
action. In doing so, it is overstepping the boundary between scrutinising
the results of government decisions and taking part in government.
Does it expect to be called to account for its support for the
Executive? There have been several worrying examples recently
of select committees getting involved in government. In this case
the Treasury, once again, is slowly trying to absorb a parliamentary
24 July 2000