Headlines: December 12th, 2003

Only a quarter of Government departments are taking full advantage of recent changes that allow them to make improved use of money, assets and other resources. A report today from the National Audit Office says there is still a tendency towards wasteful surges in spending in the final weeks of the financial year.In the report, Sir John Bourn, head of the NAO, says many departments have begun to take advantage of new flexibilities but they can do still more to improve the management of what they have so that they can deliver high quality public services. The changes to improve resource management include three-year budgets, greater flexibility to carry forward unspent funds into future years, resources linked to targets and the introduction of commercial style accounting and budgeting. Sir John says making full use of these tools requires a stepwise change in departmental behaviour.

Only a quarter of the departments examined were making good use of the new systems to manage their resources. Over a third had made use of the new flexibility to carry forward unspent resources, but there was still a bias towards potentially wasteful spending surges in the last two months of the year.

Sir John found that more than a third of departments still rely on cash-based management information and, as a result, do not know how much it really costs to deliver services. This, he says, increases the risk that poor value for money may go undetected or that the investment needed to improve services in the future may be underestimated.

The report says while departments and their agencies adjust to the new approaches, they could take steps to improve their management of resources. These include providing a clearer lead in demonstrating the importance of better resource management and the use of improved information and flexibilities, engaging regularly with the chain of public, private and voluntary organisations who increasingly deliver frontline services. They could also allow appropriate flexibility to encourage innovation and sensible and well managed risk taking when allocating resources and using the new management information to make better use of resources and improve efficiency.

Citing good practice, the report highlights the improvement in levels of teacher recruitment achieved by the Teacher Training Agency, as a good example of the benefits that can be realised by addressing the areas set out in the report.

Sir John said good resource management was vital if departments were to meet their objectives and targets for service improvement. Given the huge amounts of resources involved in Governmental programmes even a relatively small improvement in efficiency could release significant resources for frontline public services.