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Public spending system needs radical overhaul to cut out waste and deliver real results, warns top think-tank

Britain’s system of spending public money needs a fundamental shake-up to eliminate waste and boost results, according to a major new report from a leading think-tank. 

Whitehall decisions about the allocation of £700 billion of taxpayer’s money should be made on the basis of clearly defined objectives and not vague hopes of improving people’s lives, the report says. 

The report from the Centre for Social Justice is highly critical of Whitehall ’s historic approach to making spending decisions. 

For decades, spending programmes overseen by successive governments have lacked clear objectives and have been poorly managed and monitored. 

Ministers have concentrated too much on crude outputs – such as increasing police numbers – and not enough on outcomes – such as cutting crime. 

The danger is that the current £81 billion of cuts by 2014-15 will not be accurately targeted and leave wasteful programmes in place while taking out ones delivering services valued by the public. 

Nor are the Coalition Government’s new structural reform and departmental business plans likely to plug the gap. 

“The Government is holding itself to account for delivering reforms that change the machinery of government. We view this as a potential weakness.  “Without outcome-based objectives, how can the Government be held to account for improving the lives of its citizens?” the report adds. 

CSJ Executive Director Gavin Poole added: “Taxpayer’s money should tackle real problems and improve people’s lives. Too often there is limited evidence to show this is the case.” 

The report, Outcome-Based Government, argues that the long-standing Whitehall culture of public expenditure decision-making focuses on outputs but not outcomes. 

Historically, Ministers have extolled outputs such as higher spending and taxes leading to more police, teachers and social workers. But they ignore outcomes that matter to the public – such as less crime, better exam results and fewer drug addicts. 

The result of this approach is not just a waste of public money. It is also a waste of using spending programmes to deliver more effective outcomes for the country at large. 

The report calls on Ministers to create a new body – the Office of Spending Effectiveness – which would work with established organisations such as the Office of National Statistics and the National Audit Office – to check spending plans from government departments for their likely effectiveness before they are approved. 

The report cites international experience – such as the Washington State Institute for Public Policy – as evidence that an outcomes-based approach to spending priorities and decisions can be made to work. 

It also highlights a body of official and anecdotal evidence showing that Ministers and Whitehall officials have little idea whether their spending programmes are doing any good. 

One example is a report from the Commons spending watchdog the Public Accounts Committee, which concluded: “The Government spends £1.2 billion a year tackling problem drug use, yet does not know what overall effect this spending has.” 

For these reasons, it warns that current policy is off track. 

The report says:
“Spending cuts have to be implemented across government; within departments, local authorities and service partners, in the right way. 

“The impact of cuts can be minimised by following the recommendations in this report. 

“With clear objectives and proper guidance, cuts will tend to fall where they will have least impact; by gathering reliable measures of productivity, cuts will be focused in areas of unproductive and unjustifiable spend; and with effective governance, cuts will be made that avoid burdening future taxpayers with the ongoing and increasing costs of social breakdown.” 

The report urges the Government to spell out the outcomes of programmes, be more open about the impact of cuts, and focus on trimming the least effective schemes. 

Report Summary 
Key points from the CSJ report: 
• Radical overhaul of ’s £700 billion public spending programme urged. 
• Focus on effectiveness not efficiencies. 
• Put social value first 
• Lack of clear objectives, poor measurement & monitoring, and weak institutions all point to inability to put social value first. 
• Public money wasted 
Opportunity to improve outcomes for society wasted. 
• Cuts mean a greater priority for greater effectiveness 
• Govt must make spending choices 
“As things stand there is an ongoing risk that spending cuts by departments will be implemented in the wrong way. In the absence of clear objectives, cuts will not necessarily fall where they will have the least impact.

In the absence 
of any reliable measure of productivity, cuts will be made across the board. In the absence of effective governance, cuts will be made that are the most politically palatable (or at least unpalatable), but not the most effective.  Future taxpayers will be burdened with increasing costs of social breakdown.” 
• Cultural, organisational change in the way public spending viewed. 
• Clear about outcomes. 
• Focus on cutting least effective programmes 
• Be more open about cuts. 
• New Office of Spending Effectiveness (OSE) in tandem with ONS and NAO. 
• OSE to scrutinise departmental proposals before spending decisions. 
• Precedent: WSIPP in US. 
• Concentrate money on activities that improve lives. 
• Maximising Social Value approach would produce dramatic benefits to individuals, communities and taxpayers. 

"Outcome-Based Government: How to improve spending decisions across government" A Policy Report from the Social Return on Investment Working Group

  Executive Summary

For media inquiries, please contact Nick Wood of Media Intelligence Partners Ltd on 07889 617003 or 0203 008 8146, or Alistair Thompson on 07970 162225 or 0203 008 8145. 


The Centre for Social Justice is an independent think tank established, by Rt Hon Iain Duncan Smith MP in 2004, to seek effective solutions to the poverty that blights parts of Britain.

In July 2007 the group published Breakthrough Britain. Ending the Costs of Social breakdown. The paper presented over 190 policy proposals aimed at ending the growing social divide in Britain.

Subsequent reports have put forward proposals for reform of the police, prisons, social housing, the asylum system and family law. Other reports have dealt with street gangs and early intervention to help families with young children.

The Rt Hon Iain Duncan Smith MP stood down as Chairman of the Centre on his appointment as Secretary of State for Work and Pensions in May 2010 and is now the Founder and Patron.


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