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Performance Info, Management & Budgeting, and PSAs. Zafar Noman Performance & Efficiency Team [DRAFT]. Why care about performance information?. Good performance information: Indicates how well an organisation is performing against aims/objectives

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performance info management budgeting and psas

Performance Info, Management & Budgeting, and PSAs

Zafar Noman

Performance & Efficiency Team

[DRAFT]

why care about performance information
Why care about performance information?
  • Good performance information:
  • Indicates how well an organisation is performing against aims/objectives
  • Helps identify which policies and processes work – and why they work
  • Improves organisational performance
  • Enhances [public] accountability
  • Value for money? – Significant investment in the public sector– Real terms increases in public spending of 4.1% (05/06), 2.7% (06/07), 2.8% (07/08);
uk in context
UK in context
  • Total Managed Expenditure c. £500 billion (c. $900 bn)
  • Around 40% of GDP

To improve the quality and cost-effectiveness of public services whilst maintaining sound public finances.

public sector reform 1998
Public sector reform (1998)
  • Introduction of 3 year plans
  • Move to resource based accounting and budgeting
  • Separate budget for capital spending
  • Proper asset management
  • Underpinned by outcome focused performance targets (through Public Service Agreements)
principles of public service performance
Principles of Public Service Performance
  • Clear long-term strategic goals;
  • Independent audit and inspection;
  • Maximum local flexibility and discretion to innovate;
  • Transparency about what is being achieved.
the spending review cycle

SR2002

SR2002 plans set

Year 1 Year 2 Year 3

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

SR2004 plans set

Year 1 Year 2 Year 3

SR2004

The Spending Review Cycle
slide9

Efficiency Targets

Target

Key Measures

Public Service Agreement

Accountable Minister(s)

Aim

Objective

Objective

Target

Target

National Standards

Technical note

How measured

Efficiency Technical note

How measured

Note: ETNs and TNs can be revised – but PSAs cannot!

why set targets
Why set targets?
  • a clear statement of what government is trying to achieve;
  • a clear sense of direction;
  • a focus on delivering results;
  • a basis for monitoring what is and isn’t working;
  • better public accountability.
public service agreement targets
Public Service Agreement targets
  • Examples
  • DH: reduce health inequalities by 10% as measured by infant mortality and life expectancy at birth.
  • CJS: reduce crime by 15% and further in high crime areas.
  • Defra: Eliminate fuel poverty in vulnerable households in England by 2010 in line with the Govt’s Fuel Poverty Strategy objective.
performance management

Performance Management

(Through accountability and transparency)

internal monitoring
Internal monitoring
  • Departmental monitoring;
  • Delivery and Performance monitoring by Treasury / Prime Minister’s Delivery Unit;
  • PSX (Cabinet Committee);
  • PM stocktakes for key areas.
public reporting
Public reporting
  • Departmental reports provide backward look of expenditure and performance
  • APRs provide six-monthly performance update
  • Treasury performance portal

(www.hm-treasury.gov.uk/performance)

accountability of individuals
Accountability of individuals
  • Named Secretaries of State;
  • Permanent secretaries;
  • BUT…
  • No mechanistic link between performance and resource allocation in Spending Review.
inputs outputs outcomes

That interact with services affecting results

OTHER EXTERNAL

INFLUENCES

INPUTS

OUTPUTS

OUTCOMES

Resources that contribute to delivery such as labour and physical assets

Final goods and services produced for delivery to the consumer

Impact or consequences of these activities for the community

Inputs, outputs, outcomes

RESOURCES (£)

example health

OTHER EXTERNAL

INFLUENCES

LIFESTYLE CHOICES,

HOUSING, POVERTY

Example - health

RESOURCES (£)

DEPT OF HEALTH SPENDING REVIEW

SETTLEMENT

INPUTS

DOCTORS/NURSES,

HOSPITAL

EQUIPMENT

OUTPUTS

OPERATIONS,

CONSULTATIONS

OUTCOMES

LONGER LIFE EXPECTANCY, BETTER HEALTH

evolution of psas

Comprehensive Spending Review (1998)

CSR 98

Spending Review2000

SR00

Spending Review2002

SR02

600 targets

160 targets

130 targets

110 targets

First set of PSAs published

Significant changes to CSR model

Greater continuity, architecture refined

Increased

consultation

Introduction

of standards

Focus on outcomes

Evolution of PSAs
choose the right targets
Choose the right targets
  • Not too many…
  • Real measures of success…
  • Which are owned by deliverers
  • Outcome-focussed and SMART…
smart targets are
SMART targets are…
  • Specific – avoiding vague targets which might lead to uncertainty;
  • Measurable – underpinned by a sensible and reliable quantitative data source;
  • Achievable – whilst at the same time setting a stretch, or step-change in performance;
  • Relevant – to what the organisation is trying to achieve;
  • Timed – with a clear end date, and supported by timely data.
lessons learned
Lessons learned
  • With respect to:
  • Taking a top-down approach
  • Delivery
  • Measurement
top down issues responses
Top-down: Issues & responses
  • Lack of consultation – 2007 Comprehensive Spending Review
  • Too command & control – Increasing focus on outcomes address this criticism;
  • Too many targets – Less than 1 PSA target for every £5billion of expenditure;
  • Distortion – increased use of evidence and consultation.
delivery what s the connection with performance information
Delivery: What’s the connection with Performance Information?
  • If you can’t measure how you are doing (or the lags are too large), you can’t get delivery better
  • A weak delivery plan and low understanding of delivery chain may signal low understanding of data system
  • Highlights importance of rigorous delivery planning & reporting
delivery issues education
Delivery issues - education
  • CSR (1998)

..an increase in the proportion of of those aged 11 meeting the standard of literacy for that age (level 4 in key stage 2) from 63% to 80% by 2002

..an increase in the proportion of of those aged 11 meeting the standard of numeracy for that age (level 4 in key stage 2) from 62% to 75% by 2002

delivery issues education28
Delivery issues - education

Necessity of timely performance information for management intervention

measurement
Measurement
  • Consider measurement issues when attempting to link perf. Info w/ management & budgeting
  • Systematically assess data quality risks
    • Consider carefully potential for ‘gaming’
  • Perverse incentives / Distortion of activity
  • Cascading
    • Kent County Council
data systems validation
Data systems validation
  • How did we do?
  • SR2002 targets: “77% of data systems provided a broadly appropriate basis for measuring progress”
how did we do
How did we do?

PSA 2003-06 Validation Ratings

Not fit for

Broadly

purpose

appropriate,

12%

but systems

need

Not

strengthening

established

30%

7%

Broadly

appropriate,

but disclosure

needs

Fit for purpose

strengthening

30%

21%

Note: for 5% of systems it was too early to form a view

further issues to consider
Further Issues to Consider
  • Performance management should reflect local priorities;
  • Key agents: Consultation and ownership;
  • What will the effect be on the frontline
  • Should be informed by evidence and analysis at the outset (performance evaluations);
  • X-organisation co-operation
  • Performance information should permit decentralised decisions (measure outcomes)
2007 comprehensive spending review i
2007 Comprehensive Spending Review - I
  • “a fundamental review of the balance and pattern of public expenditure” informed by:
  • Reviews of the long-term challenges
  • Consultation with public, experts & front-line
  • Identifying efficiencies
  • Zero-based reviews of department’s baseline expenditure
2007 comprehensive spending review ii
2007 Comprehensive Spending Review - II
  • ?
  • (Performance framework; SR process and use of information for budgeting; reform)
useful websites
Useful websites
  • PERFORMANCE WEBSITE:
  • http://www.hm-treasury.gov.uk/performance/
  • “On Target? Government by Measurement”
  • (Public Administration Select Committee, 22 July 2003)
  • http://www.publications.parliament.uk/pa/cm200203/cmselect/cmpubadm/62/6202.htm
  • “2006 Survey Report - PSA targets: Performance Information”
  • http://www.nao.org.uk/publications/nao_reports/05-06/Acting_on_Information.pdf
  • “Second Validation Compendium Report: 2003-2006 data systems”
  • http://www.nao.org.uk/pn/05-06/0506985.htm
performance info management budgeting and psas38

Performance Info, Management & Budgeting, and PSAs

Zafar Noman

Performance & Efficiency Team

zafar.noman@hm-treasury.gov.uk