Select Committee on Treasury Appendices to the Minutes of Evidence


APPENDIX 4

Supplementary memorandum from Mr John Garrett

  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 traditions—of 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 Purpose—The 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!

PUBLIC ACCOUNTABILITY

  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" (p.102).

  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 state audit.

24 July 2000


 
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