Gavin Poole: Value for money from programmes that are proven to transform lives

THIS Government faces a monumental task to reduce Britain's massive debt burden. Government departments are being asked by the Treasury to consider what programmes they would retain, and which they would cut, if their budgets were 20 per cent or even 40 per cent less. This will apply to local government too.

Our fear is that cuts will be made in the wrong way. Instead of

assessing the true productivity of programmes and cutting those which are ineffective, we will see salami-slicing: equal cuts off all programmes, good and bad.

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We will see cuts based on political calculation and administrative ease rather than an over-arching, rational approach which looks at what works in achieving the Government's core objectives.

If we are serious about reversing the cycle of social breakdown and reducing the huge strain it places on public finances, spending needs to be linked directly to social outcomes while always demonstrating value for money.

Governments have too often thrown money at programmes for which there is no evidence of success. They have presided over a culture which fails to set clear objectives, shies away from prioritising, minimises effective monitoring and accountability, and, worst of all, has failed to distinguish between what works and what doesn't.

Record levels of public funds were spent in the last 10 years, with little sense even of what the spending is trying to achieve and for little discernible social improvement.

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What is required to resolve the problem is not just the usual debate about reductions in public spending but a system that ensures the money we spend in future delivers a proper return on investment.

So far, there has been no clear statement about what outcomes the Government is trying to achieve. The Spending Review framework announced the end of the Public Sector Agreement targets, but was completely silent on what should replace them.

Moreover, the framework document talks about increasing the efficiency of the services it provides, not about increasing the effectiveness of what it does. It consistently confuses government activity (ie building schools) and social outcomes (ie improving education) – which are not the same at all.

Finally, the framework fails to demand that departments set success criteria for spending proposals, against which Parliament and the

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public can judge their performance. How will we know whether a programme is working if there is no definition of success?

At the Centre for Social Justice, we believe that it is possible to spend money more wisely on achieving important social outcomes and reversing social breakdown.

Government needs to understand not just the financial value created, but the social value of competing programmes. We need to assess, according to the best available evidence, whether the costs of individual programmes are outweighed by the value of their longer-term social and financial benefits.

In response to the Spending Review Framework, we suggest simple steps that the Treasury can take to dramatically improve the quality of spending submissions.

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First, they need to ask departments to be explicit about the key societal outcomes they would like to see, and which they have the capability to achieve. They also need to ensure that departments are consistent in how they value changes in these outcomes.

Secondly, they need to insist that all departments' spending proposals make a clear and evidence-based link between the money, the

department's activity and how that activity will cause the desired change in society. We think there should be an explicit discussion of the strength of evidence for any causal claim.

Thirdly, departments should be encouraged to claim outcomes not traditionally seen as part of their remit: for example, if the Department for Work and Pensions can demonstrate that some spending has an effect on reducing crime, it should be able to claim additional

funds as a result of that outcome.

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Departments should also be encouraged to compare long-term achievements with short-term achievements in a consistent way approved by the

Treasury.

Finally, departments must be clear in their plans about what their

output will be and the social outcomes they expect within given timeframes, and how they will produce the data and indicators which we can use to judge these milestones.

This approach is not just for national government. Local authority spending will have to be withdrawn with equal rigour. How will local authorities assess what programmes to cut? Will it be those that fail to deliver the greatest outcomes?

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By not focusing on outcomes, local authorities could be creating further, more expensive problems in the future.

Mending our broken society is one of the most important challenges facing government. To succeed will require a cultural change in the way we approach public spending. Focusing on programmes that are proven to transform lives will deliver value for money.

If we get it right, the social and financial returns to society and the public sector will be breathtaking.

Gavin Poole is executive director of the Centre for Social Justice, the think-tank founded by Iain Duncan Smith, the Work and Pensions Secretary.