What would it take to create public value?

Summary

To deliver the best possible value for every tax pound spent, the UK Treasury is shifting to an outcomes-oriented culture that incentivises efficiency, innovation, continuous improvement, and – most importantly – results.

Description
Real-world challenges

Governments around the world are facing intense pressure to deliver better public services while taxpayers, understandably, do not want to pay more tax. How can leaders respond to this bind? Sir Michael Barber outlines the UK’s Public Value Framework and how it focuses spending and performance on outputs.

Take the UK; it spends over £800 billion every year, around 40% of GDP. If the government were able to maximise the ‘good’ this sum delivered, if public services were consistently high quality, if markets were always effectively regulated, if opportunities for innovation were more often seized, if risks and threats were well managed, then social mobility would be enhanced, opportunity would be expanded, the country as a whole would be more productive, and many more people would lead fulfilling and productive lives.

And these gains could be delivered without raising or spending a single extra tax pound.

Among other factors, the Treasury has historically placed greater emphasis on inputs rather than outcomes. Ministers’ performance is judged on the size of the budget they negotiate, rather than how much they deliver. Civil servants get bigger rewards and more status for managing more people or bigger budgets. Departments rarely, if ever, go to the Treasury with ideas for spending less, even if, through innovation, doing so could improve outcomes.

Real-world solutions
To borrow a judicious phrase from Prime Minister Theresa May: focus on ‘the good that government can do’.

Of course, it is right that the Treasury should count the pennies – someone has to – but that should surely not be its only focus, even in hard times.

Sir Michael Barber's review for the UK Treasury, published in 2017, was undertaken explicitly to try to address these longstanding flaws. It had been commissioned precisely because Treasury ministers and officials, to their credit, recognised that radical change was needed.

While one report cannot solve profound historic problems at a stroke, it does propose clear practical steps in the required direction of travel. Without suggesting that the Treasury weakens its control on the inputs – on the contrary in fact – it also suggests a way of reviewing whether productivity (or public value) is being delivered and a provides a means of benchmarking programmes on their productivity, including those that cut across departmental boundaries.

Crucially, it defines public value as having three elements over and above fair and efficient use of inputs:

  • Achieving medium-term goals within areas such as cutting crime or improving healthcare
  • Strengthening legitimacy with taxpayers and engagement of service users
  • Prioritising stewardship – the idea that it is the task of public servants to leave the institutions they are responsible for better than they found them
Results

The Public Value Framework was piloted by the Treasury in partnership with five different government departments. The pilots went well and we learnt a lot about how to build the dialogue about public value within government, as well as how to use the Framework. The result has been clarification and simplification – and most importantly of all, continuing enthusiasm for a new approach.

In March 2019, as part of his Spring Statement, the Chancellor of the Exchequer Philip Hammond, published the revised Public Value Framework and new guidance on how to use it. He also made clear that it would inform the forthcoming Spending Review.

Since the report was written, the National Audit Office has added its powerful voice to the demand for greater focus on, and clarity about, outcomes as well as inputs.

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What would it take to create public value?
What would it take to create public value?

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