Securing value for money in public services: lessons learnt – Speech Transcript

This is summary of the main remarks made by the Comptroller and Auditor General Sir Amyas Morse KCB on Tuesday 17 March 2015 at an event held by the think tank, Reform. CHECK AGAINST DELIVERY

I want to talk about some of the key learning points from nearly six years as Comptroller and Auditor General, and issues I see ahead over the next few years.

I feel the need to remember that everything being spent is taken from the citizens of this country. We should not see public money spent as a ‘free good’ that we can treat in a way we would not act with our own money. This, and the desire to improve the quality of public services, gets me cycling into work each day through the London traffic.

My fantastic staff join me in that ambition and I will acknowledge them. The ambition to improve public services is throughout the National Audit Office (NAO).

So what are the things we would really like to change?

It is the frequent examples of avoidable mishaps. I will just mention a couple:

  • the West Coast Mainline refranchising where the Department was appraised of a faulty model;
  • Universal Credit – a project with cross-party support. Everyone wanted to see it go ahead and yet it was driven forward with an overly aggressive time scale. We are still paying the price for that today in terms of where the project has got up to, although it is now on a sounder footing.

There are many, many more avoidable and costly mishaps that could have been prevented by sensible planning, and the application of basic management disciplines.

I should say I have seen real advances in the management capability of some departments, notably in HM Revenue and Customs and the Ministry of Defence.

Nevertheless, considering the unprecedented pressures that have been applied through years of austerity on public spending, I would have expected the skills and capability within the civil service to have moved forward faster than they have done to date. I think that is fair comment when you look at the scale of the challenges going forward.

Now, are the skills and capabilities in the public sector adequate to meet the challenges ahead? It looks like a very tough test indeed. A lot of change will have to happen very fast if those skills are going to be adequate.

So what does this mean in practice?

What we are talking about is delivering services through technology rather than in person and delayering organisations. It is not very mysterious. There is no other way of delivering this sort of cost reduction whilst maintaining services.

To be clear, cost reduction, if it involves less for less may be essential for budget reasons, but is not automatically value for money. More for less is so.

There are pervasive issues that block improvement in public service implementation. They fall into four categories:

  • Conflicting priorities;
  • Ignoring inconvenient facts;
  • Out of sight, out of mind; and
  • Not learning from mistakes.

First, conflicting priorities. There are competing ways of seeing public sector priorities and timescales.

The political process is time-bounded as far as Government is concerned, by the electoral cycle, and for individual ministers, by their possible time in post. This means a pressure to hurry.

Political debate happens at a rhetorical level, there is a big gap between attractive political ideas and a programme ready for implementation.

Yet, sustainable changes to public services are possible with careful planning and implementation.

Quite often ministers see civil servants as obstructive, hampering them in implementing change. That is wrong.

I believe what the politician is witnessing is civil servants trying to manage the risks associated with the implementation of large-scale reforms.

Civil servants know, but do not always admit, that the Department can only move at a slow pace, as it may not have the skills or the capacity to go faster; or they may be reluctant to point out the unreality of timescales being proposed or the need for further development of initiatives. They want to be seen as ‘can do’.

There is no deliberate resistance but there is unacknowledged reality.

Universal Credit is an example of this. There seems to have been a political imperative to show fast progress. This turned out to be very hard to deliver, damaged a valuable project, lost time, and cost money. The project is now proceeding on a much more conservative timescale.

These are unresolved conflicts and stand in the way of one of the major components of going through major change process, good leadership.

Secondly, ignoring inconvenient facts. There can be pressure to present the unlikely upside as the most likely result, and not to look carefully at unexpected positive evidence. So if positive evidence comes to light, it can be snatched up and put into the public domain. Quite often if it is unexpected there is a good reason for that, it is not accurate.

So historically, the majority of major projects in government have under-delivered on benefits and overshot on time and cost. This is optimism-bias.

And our back catalogue is littered with examples of optimism bias. High Speed 1 was an example. And High Speed 2 started in a similar fashion, uninformed by the experience of High Speed 1.

On the National Programme for IT in the NHS, the Department for Health had underestimated the scale and complexity of the programme. This was a major factor in leading to the programme’s cancellation. They also did not gain the consent from the hospitals involved.

A similar analysis could be applied to e-Borders.

In none of these cases, was it necessary to be particularly brilliant to understand how a critical path has to run, or to understand that unless certain parties outside of government agree to play their part, the project will not proceed. Yet those factors were ignored.

Third, out of sight, out of mind. It is relatively easy to allocate savings to those operating outside a Department’s boundary or with a different democratic mandate, without necessarily understanding their impact.

Nevertheless, in my view when public sector decision-makers are making big decisions and cost reductions, they need to be able to support those decisions very well. Decision-makers have an obligation to have good evidence, to have explored the secondary effects of their potential decision, and to have explored the downsides.

These are not arguments for not going ahead with making savings or changes. However, they are things that the taxpayer would reasonably expect to be in place before proceeding or very soon after.

I understand that in areas of cost reduction, there is often an urgency to get started and decision-makers might say that they cannot put all that in place beforehand.

However, we have been running with austerity for nearly five years. We are not in an emergency state any more. This is the normal environment we are in and it should be possible to understand the implications of decisions and cost reductions, and to explore them carefully.

What often happens is that a problem becomes apparent and then there is a reactive response, after the decision or cost reduction has taken place. The other way around would be better, with careful planning and forethought.

Equally, because of the complicated machinery of government, I observe that there are areas where no department is clearly the lead department. And problems on occasion fall through the cracks. A department or agency needs to step forward to tackle the problem and in a culture of leadership, a department would.

However, I find that when we write a report and suggest to a Department that they step forward to tackle a problem, we are not at all popular.

Recently, I saw this with the Department of Education in our work on children in care. The Department is responsible for setting standards for children in care. At the same time, local authorities are responsible for delivery of care in that setting.

Nevertheless, some local authorities only have a few children in care, so to say that it is the responsibility of local authorities to set standards and be ultimately responsible for service improvement is not reasonable. Yet, there is a great reluctance on the part of the Department to step up and drive up standards.

I believe that accountability to Parliament through the Public Accounts Committee and the other select committees that I have worked with, may sometimes deliver ‘rough justice’. But it does deliver justice.

You ask, are a committee of MPs going to get to the truth? My experience is that they normally do get to the nub of the issues. They are used to witnesses before them, and they know the difference between being told something straightforwardly and being ‘given a bit of a story’.

They build up their experience over the life of a Parliament and become more and more insightful. So I believe strongly in the Public Accounts Committee and Parliamentary accountability.

Finally, to sum up with the very substantial challenge ahead – the importance of learning from mistakes.

I believe we need strong unequivocal leadership in the public sector. We need to put civil servants where they can give that leadership with confidence, so they can lead through the problems that there may be.

We need an appetite for well-informed decisions and the civil service to become a learning environment.

The challenge for the next government is to shift the long-standing culture in the civil service to create a culture of learning from mistakes and use the public sector experience to build civil service expertise.

The civil service is full of very bright people – there is no shortage of talent. The current career path for civil servants, where civil servants have a tendency to hop about jobs every few years, does not develop the expertise in implementation that I would expect to see. They do not have a structured career development.

Let me offer you my working definition of expertise. It is doing something that is replicable several times over and being trained whilst you are doing it. Quite quickly, you pop out as having expertise. The civil services has an unproductive career development model.

The civil service could produce real expertise amongst its ranks on a much wider scale than it does now. And I would urge it to do so.