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NAO raise the curtain on early action

By David Robinson

The best National Audit Office reports are a two act drama.  First the report itself sets the scene quietly and carefully. Then the action breaks out when the report is discussed at the Public Accounts Committee hearing some weeks later. The  NAO’s “Early Action : Landscape Review” published last week, resulted from our publication of The Triple Dividend 15 months ago. It is a measured and methodical review but with plenty to suggest that the PAC hearing on the subject on 27/2 will be a humdinger.

We know where this report is going from the opening “Key Facts” on the first page: “£377bn social spending in 2012/13…£12bn spent on early action initiatives.” And just in case we missed the message in the figures Auditor General Amyas Morse is unequivocal: “Government has signalled its commitment to early action as a principle, and taken some tentative steps towards realising that ambition. There remains, however, much room for improvement.”

Subsequent detail illustrates the scale of the gap between the ambition and the realisation. Of the 23 strategic priorities declared by the Home Office, Ministry of Justice and Departments of Health and Education, more than half (13) “contain elements of early action.” The amount that they spend in this way, however, has stuck in recent years at a meagre 6%.

The NAO argue that the budget process is partly to blame. It “does not currently have enough focus on the long term. Current budgetary processes are medium term, with the Treasury‑led spending review covering 3–4 years. But the government’s fiscal framework has as one of its key aims the need for “sustainable public finances … promoting intergenerational fairness”….The UK budgetary process does not include the sort of longer-term vision seen in other countries which could help inform strategic decision-making. This would be more conducive to the development of spend-to-save initiatives, which require a willingness to accept short-term costs in return for later benefits.”

We agree with the argument but would go much further. In our conversations over the last 18 months the Early Action Task Force has found that in practise the “3 to 4 year” spending cycle has got tighter and tighter now often requiring managers to identify in year savings.

The NAO rightly mention additional challenges including electoral cycles, the inadequacy of evidence, the consequences of weak leadership and the impact of localism. All these are important – we explored them ourselves and made recommendations for resolving them in our most recent report – but it is the budget process that casts the darkest shadow over the preventative approach obliterating vision and curtailing delivery.

The Early Action Task Force has thought long and hard about the process and recommended the publication of ten year spending plans in each Spending Review. Plans would continue to be reviewed every two or three years, as now, but the current government would consider, publish and be held to account for the effect of its decisions over the next ten years.

There is a precedent for this kind of reform. Government moved from one year to three year spending plans at the end of the 1990s, and decisions have often been made which have implications beyond the electoral horizon. However, there is a radical difference between introducing new policies that may have long-term implications and consistently being forced to publish estimates of the consequences of existing policies over a ten year period.

Clearly, changing pressures and events, not least elections, will require a regular review of any plan but importantly governments would be consistently held to account for the longer term consequences of their decisions so requiring longer term thinking across political boundaries.

Other factors, not least the electoral cycle, do contribute to the short term bias but it is as much in the processes of government as it is in elections that choices are shaped and framed and, almost by default, options constrained and decisions made. Without ten year planning little else will ever change. The gap between ambition for earlier action and its meagre realisation will never shrink. Public services will continue on unsustainable trajectories, mired in the tiny 6% comfort zone, barely meeting current needs and accumulating impossible liabilities for the future.

This landscape review raises the curtain, attracting attention to early action, setting the scene and illuminating the big issues. We welcome its publication but look forward with eager anticipation to a quickening of the pace as the action unfolds, a hardening of resolve and a gathering commitment to bolder leadership and to wider change.

Photo by By Amit and Naroop: www.amitandnaroop.com

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