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Performance & Accruals Budgeting OECD Senior Budget Officials Meeting, Vilnius. David Dipple Parliamentary Estimates Clerk, HM Treasury, UK 20-21 March, 2007. Performance and Accruals Budgeting. Departmental Expenditure Limits. Annually Managed Expenditure. Admin. Programme. Resource. - PowerPoint PPT Presentation
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Performance & Accruals Budgeting
OECD Senior Budget Officials Meeting, VilniusDavid Dipple
Parliamentary Estimates Clerk, HM Treasury, UK
20-21 March, 2007
Performance and Accruals Budgeting
Departmental Expenditure Limits Annually Managed Expenditure
Capital
Admin ProgrammeResource
Resource
Capital
DEL: Policy driven spending
(£330bn in 2006-07)
AME: Demand led spending
(£230bn in 2006-07)
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
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)
Performance Budgeting
Choose targets carefully: Outcome focussed Achievable Readily measurable Relevant Timed
UK currently has 110 for 20 departments
The UK experience
Performance Budgeting
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
The UK experience: what works
Performance Budgeting
50
55
60
65
70
75
80
85
1996 1997 1998 1999 2000 2001 2002
Eng tgt
Mth tgt
English
Maths
Targets set
Performance Budgeting
50
55
60
65
70
75
80
85
1996 1997 1998 1999 2000 2001 2002
Eng tgt
Mth tgt
English
Maths
Performance Budgeting
50
55
60
65
70
75
80
85
1996 1997 1998 1999 2000 2001 2002
Eng tgt
Mth tgt
English
Maths
Performance Budgeting
Where targets aren’t genuine priorities Perverse incentives:
National Health Service 4-hour A&E wait time; Access to GP within 48 hours.
Lack of measurement data: Reducing childhood obesity
Where exogenous risks impact on outcomes
The UK experience: what doesn’t work
Performance Budgeting
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’
The UK experience: what doesn’t work
Accruals Budgeting
Accruals applies to expenditure but not to revenue
Continue to control cash – ‘near-cash’ controls introduced in 2005-06
The UK experience
Accruals Budgeting
Inter-generational fairness
Inform decision-making Provide incentives Identify cost of
decisions
The UK experience: the purpose
Accruals Budgeting
Technical understanding Monitoring and control
mechanisms Freedom to make, and benefit
from, decisions:
The UK experience: what is needed
Accruals Budgeting
“Shifting to the accrual basis transfers budgetary power from elected leaders to technical experts” (para 81)
Tinkering: Capital grants Impairments
The UK experience: issues
