Dan Corry, chief executive of thinktank New Philanthropy Capital and former head of the Number 10 Policy Unit under Prime Minister Gordon Brown, makes the case for Public Service Agreements as a key tool in helping governments produce the outcomes they want to achieve. 

He recently joined ICAEW Managing Director for Reputation and Influence Iain Wright, ICAEW Director for Public Sector Alison Ring and other policy experts at an ICAEW-Fabian roundtable with Shadow Chief Secretary to HM Treasury Bridget Phillipson to discuss the challenges of delivering policy objectives while at the same time ensuring sustainable public finances.

Corry thinks clear accountability for delivering on policy objectives is essential to getting the machinery of government to work effectively, saying: “Every organisation needs to use its resources carefully. You will have a limited pot of money, as well as staff time. So, as you dish it out to your different divisions, projects and programmes, you want to know what it is being used for and hold some sort of accountability that it does in the end deliver that project. 

Nobody finds any of this easy. Metrics are hard, various incentives play themselves in and out, and priorities change mid-term.

Now, when you get to the level of a government, things get even trickier. So much is going on that it is hard to see the wood for the trees. It is easy therefore to feel with hindsight that a lot got spent but you are not really sure what was achieved and whether that was what you wanted to achieve. The public feels this, too.

Governments have tried different ways of addressing this problem, but one that worked pretty well was Public Service Agreements (PSAs). Brought in by the Labour government in 1998 and reformed several times, they were a brave attempt to be up front about what the government was trying to achieve and to link the granting of money to departments to these aims. A firm accountability system, with measures and metrics, was also part of the package.

This initiative also tried to recognise that much of what a government wants to do is ‘cross-cutting’ and can’t possibly be the responsibility of only one department. Mental health, for instance, or better regional economic balance require many departments to be involved. So many of these responsibilities were sensibly held jointly by a number of departments. 

In principle, such a set of PSAs should lead to improving policy outcomes and using taxpayers’ money more efficiently and effectively with clear and more transparent financial management. Something like that is essential as we come up to the long-awaited Spending Review.

PSAs went above and beyond departmental plans and so on that subsequent governments have relied on and had the imprint of No 10 and the Treasury all over them, which is essential for them to have bite and lead to good government.

Of course, not everything about PSAs went well. There were too many to start with, as government was reluctant to admit that not everything was a priority. But they did reduce over time with, for instance, the 2007 Spending Review giving what the Treasury called “a streamlined set of 30 new Public Service Agreements … which articulate the Government’s highest priority outcomes for the CSR07 period and span departmental boundaries, setting out a shared vision and leading collaboration at all levels in the delivery system”, superseding 110 PSAs at the time of the 2004 Spending Review. 

They could turn into cascades of targets and KPIs at the front line, with the Public Accounts Committee noting that “for example, 14 Public Service Agreement targets for health in England were translated into 206 health targets and measures for NHS Trusts and Primary Care Trusts”. Some felt the choice of PSAs was too top-down and that the whole edifice was a way of giving the Treasury even more power than it had had in the past. One way through this was to bring in Local Public Service Agreements (LPSAs), where the local authority had more choice about what it wanted to target. 

PSAs also fell out of favour as they were seen as part of the top-down, ‘New Public Management’ approach to managing public services, with targets, inspectorates, data and the like. More practically, it was unclear how to ‘punish’ departments for missing their PSA target: did taking money away from them really make sense? PSAs were ultimately abolished by the Coalition government in 2010.

So, there are issues with the PSA approach – as with any way of trying to link spending to outcomes – and we need to learn the lessons of the past. But the British public should demand some sort of framework like this as the government decides in its spending review where and how to spend hundreds of billions of pounds of public money.