Performance

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Performance Accruals BudgetingOECD Senior
Budget Officials Meeting, Vilnius

• David Dipple
• Parliamentary Estimates Clerk, HM Treasury, UK
• 20-21 March, 2007

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Performance and Accruals Budgeting
Departmental Expenditure Limits
Annually Managed Expenditure
Admin
Programme
Resource
Resource
Capital
Capital
DEL Policy driven spending (330bn in 2006-07)
AME Demand led spending (230bn in 2006-07)
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Performance and Accruals Budgeting

• For information purposes we also use
• Spending by function (education, defence, etc)
• Spending by region
• Spending by economic activity (pay, grants, etc)
• Spending by sector (central/local govt, public
  corp)
• Funding authority

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Performance and Accruals Budgeting

• The UK moved to accruals budgeting in 2001-02
• New accruals data was in AME for first two years
• It was moved into DEL in 2003-04
• Allocated at organisational level (but some
  provision is allocated to cross-cutting functions
  across-departments)
• Performance budgeting introduced in 1999-2000
• Provide a focus on outputs (delivery)
• Some are shared between departments (eg, criminal
  justice)
• Number of targets has fallen (600 in 1998, 110 in
  2004)

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Performance Budgeting
The UK experience

• Choose targets carefully
• Outcome focussed
• Achievable
• Readily measurable
• Relevant
• Timed
• UK currently has 110 for 20 departments

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Performance Budgeting
The UK experience what works

• Where targets align with public political
  priorities
• All parties are signed-up and understand the
  delivery mechanism
• Education targets seem to have worked well, eg
• ..an increase in the proportion of of those aged
  11 meeting the standard of literacy) from 63 to
  80 by 2002
• ..an increase in the proportion of of those aged
  11 meeting the standard of numeracy from 62 to
  75 by 2002

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Performance Budgeting
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Performance Budgeting
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Performance Budgeting
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Performance Budgeting
The UK experience what doesnt work

• Where targets arent genuine priorities
• Perverse incentives
• National Health Service 4-hour AE wait time
• Access to GP within 48 hours.
• Lack of measurement data
• Reducing childhood obesity
• Where exogenous risks impact on outcomes

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Performance Budgeting
The UK experience what doesnt work

• Where the target is unclear
• Home Office Reduce race inequalities and build
  community cohesion,
• FCO Play a leading role in the development of
  the European Security Agenda, and enhance
  capabilities to undertake timely and effective
  security operations, by successfully encouraging
  a more efficient and effective NATO, a more
  coherent and effective European Security and
  Defence Policy operating in strategic partnership
  with NATO, and enhanced European defence
  capabilities

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Accruals Budgeting
The UK experience

• Accruals applies to expenditure but not to
  revenue
• Continue to control cash near-cash controls
  introduced in 2005-06

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Accruals Budgeting
The UK experience the purpose

• Inter-generational fairness
• Inform decision-making
• Provide incentives
• Identify cost of decisions

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Accruals Budgeting
The UK experience what is needed

• Technical understanding
• Monitoring and control mechanisms
• Freedom to make, and benefit from, decisions

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Accruals Budgeting
The UK experience issues

• Shifting to the accrual basis transfers
  budgetary power from elected leaders to technical
  experts (para 81)
• Tinkering
• Capital grants
• Impairments