The influential Public Administration and Constitutional Affairs Select Committee has today endorsed a number of our recommendations in their report on financial disclosure in the public sector. The report, entitled Accounting for Democracy, extensively cites our submission, recommending a major overhaul of the way public bodies present their accounts, in order to make them more accessible to any taxpayer who wishes to know more about how their money is spent.
In our submission to the committee, we recommended that Departmental Annual Report and Accounts (ARA) ought to provide taxpayers with a clear statement of how their money is being spent and what they are getting for it. Most ARAs are currently dense and confusing for outsiders, lacing in meaningful output and performance measures. The Committee shared our view, saying:
27. It is clear that Annual Reports and Accounts are hard to follow. Non-accountants and commentators like the King’s Fund and Taxpayer’s Alliance do not find them as useful as they should be.
We further recommend that the Treasury should regularly seek to find out what potential users of the Annual Reports and Accounts (including those who submitted evidence to our inquiry) think about how they could be improved to make it easier to assess the effectiveness of Government spending.
We also argued that the ‘Performance’ section of the proposed new ARA should be structured around the services delivered to the taxpayers rather than around departmental organisation. Output and performance numbers should appear alongside cost indicators allowing an assessment of overall value. Where possible benchmark comparisons should be included.
Consequently, the Taxpayer’s Alliance told us that “the Performance section of the proposed new A[nnual] R[eport and] A[ccounts] should be structured around the services delivered to taxpayers [for example, primary or secondary education] rather than around Departmental organisation”. This, in their view, would help the Government “demonstrate its services deliver value for money”.
45. We recommend that the Treasury explore how Annual Reports and Accounts can be made more useful by requiring Departments to report not just by organisational unit but also by policy area. This could be achieved by, for instance, restructuring the Estimates subheads or providing additional spending breakdowns of spending within the notes to the Accounts. Senior officials would remain accountable for the money they have spent through reporting by organisational unit. Audited statements for policy area should include both performance and financial data so that citizens can evaluate how effectively Departments are spending money.
We have further called for greater emphasis on disclosing the marginal cost of services provided, such as the cost of a single school place over one year, or the average cost of a single Accident & Emergency admission. The Committee fully agreed, saying:
52. In order to fully understand the value for money and efficiency of services, the public needs to understand the unit cost of each particular output. For example, the public should be able to compare the costs in one year of a primary school place with the costs of the same place a year later. As the Taxpayer’s Alliance argued, “to properly scrutinise value for money, we need quantified information on both service costs and service outputs, and we need to be able to link the two”.
We recommend that Departments in future publish the full public sector unit costs (on a consistent basis) for key services (including those mentioned in their Single Departmental Plan and Annual Report) – for example the cost of a prison place, a court hearing, a school place or a hospital stay - on a consistent basis over time.
This is a major victory for accountability and transparency of public spending, and consequently, for the taxpayers. We do not just hold the Government to account over how it spends our money, we also want to enable citizens everywhere to do the same. This is why we publish the annual Town Hall Rich List; this is why we built our app; and now, we have helped to make the Government’s own information more accessible.