Justine Greening – 2011 Speech to the CIPFA/ HM Treasury World Class Performance Symposium

Below is the text of the speech made by the Economic Secretary to the Treasury, Justine Greening MP, at the CIPFA/ HM Treasury World Class Performance Symposium 2011, on 17th March 2011.

Introduction

Thank you.

First of all I’d like to thank you for inviting me to speak, and I’d like to welcome everyone, particularly the international delegates, who have come here to be with us today.

Treasury fully supports this event, and as Whitehall’s central finance department, we have a real stake in what you discuss here.

Because today is all about how we can improve the way Government manages its budget.

How we can deliver the best possible value for money.

And how you, as finance professionals, will help make this happen.

Because any accountant looking at the balance sheet we inherited could see that things need to change.

The books just didn’t balance.

Expenditure dwarfed income.

And borrowing levels risked spiralling out of control.

Which is why, as a Government, we’ve set out a clear strategy to deal with this mess.

To put the economy back on track.

And deliver more efficient public services.

But setting out a business plan that’s got the backing of the OECD and the IMF is one thing.

Delivering on it is quite another.

To be successful, we need to have three things in place:

Across Government, we need the right people in charge – making the decisions and driving efficiency.

We need the right systems in place – to produce clear, consistent data that’s easily digestible.

And we need the right processes to make this happen – to control what we do and challenge conventional practice.

Without these, it becomes difficult to make judgments on how we should be spending taxpayer’s money.

So let me talk a little about each of these things in turn.

Starting with the most important – people.

People – Managing taxpayers money wisely

It goes without saying that if you want something done properly… then you need to have the right people, with the right tools, who can get the job done.

Which is why the first thing I want to see is more effective leadership.

Where performance is driven from the top…

…and having more finance professionals in senior posts will help us achieve this.

Secondly, we need to create a more cost… conscious… culture.

As when times are hard, when resources are being squeezed, every decision should be based on detailed financial analysis.

The factual, not the anecdotal.

Thirdly, we need greater finance professionalism across Government as a whole.

Where all public servants have – at the very minimum – some degree of financial awareness or business savvy.

So that they understand the basic concepts of accounting and financial management and can apply them when making judgements on spending.

And finally, we need expert central functions.

What I mean by this, is that we have to be more joined up in our thinking.

Not just across departments, but also within them.

This is about having a financial management culture and processes that are as robust as you’d find in the private sector.

And a good first step is to adopt more of the disciplines of a business group finance function.

Departmental business plans and Spending Review have helped focus minds. So, like any successful organisation, we want our finance teams to ask themselves a few simple questions:

How has your department performed generally in recent years – and how has it performed financially?

What’s been spent to achieve this level of performance?

And, going forward, what are your priorities, and the risks you face in delivering them?

Again, this something I believe we can do better.

Systems – Clear line of sight / Oscar

But it’s no use having the right people in place if the systems they have to deal with – that they need to rely on – aren’t up to the task.

Having been a private sector accountant myself, I can see that we have a big job ahead of us when it comes to getting our financial architecture right.

Currently, complexity across Government can too often disguise the real story; make even the most basic financial reports difficult to decipher; and undermine proper debate and scrutiny.

An example I often use – many of you will be aware of this – is our current reporting standards.

Where in the House of Commons, we discuss and vote on estimates – which is one set of numbers.

With different departments, we negotiate budgets – a completely separate set of figures.

And as a Government, we publish the national accounts – which are constructed using different metrics again.

Needless to say, this is a rather inefficient way of doing things.

It’s unnecessarily opaque.

And it serves no one’s interests – especially not taxpayers’.

Instead, we want to present our finances in a way that’s credible, makes them more transparent, and helps get the best possible value for money from every pound spent.

So we’re introducing a whole new approach to financial accounting across Government.

Through the Clear Line of Sight programme, we’re bringing together the various accounting frameworks that are used across Whitehall, and, as far as possible, replacing them with a single set of uniform standards.

That tackles the estimates, budgets and national accounts problem I just mentioned.

This is commonsense policy making – it will make all our lives easier; and go a long way towards making the public sector accounts more accessible.

We’re also looking to replace the Treasury’s COINS system, which I realise has been the source of many headaches.

In its place, we intend to roll out the new OSCAR database that will provide reliable financial and non-financial information.

This will make it easier for permanent secretaries to manage the money in their budgets.

It will enable us to drive value across Government.

And it will also create a system that is simpler; more coherent; and ultimately, one that generates greater accountability.

Because, if we’re to deliver on our other policy reforms, we have to improve the way we manage taxpayers’ money.

And everyone will have to get on board.

Proceses – Individual departments

This is why one of the first things we did after the Spending Review was to ask every department to come up with its own business plan.

Where each plan sets out how the department will deliver more, for less.

How public services can be run more efficiently.

And in the interests of transparency, what’s being spent to deliver these objectives.

Whether it’s staff, capital, or facilities – all this information needs to be in the public domain.

We are also working towards greater disclosure of Government transactions.

It’s for this reason that Government bodies will now publish all expenditure over twenty-five thousand pounds, any IT contracts over ten thousand pounds, and all tenders over the same amount.

And why, from this summer, we’ll be asking departments to publish a quarterly scorecard, charting their performance.

Challenges for implementation

Yes, this will place certain demands on public servants.

It will be challenging.

Not only due to increased reporting requirements, but also in terms of being more openly accountable for the services you deliver.

Yet we shouldn’t fear this.

More openness and accountability will lead to vastly improved management of resources.

And, by focusing only on the most useful data for judging performance and value for money, we will also bear down on data burdens.

This will make the public sector a better place to work.

And it will thrust the accounting profession into the limelight – demonstrating why finance professionals in the public sector have such an important role.

Conclusion

I know it’s nothing new for a Government to say that it needs to alter the way it operates.

That we need to learn a few lessons from our private sector partners.

And that the status quo isn’t going to deliver the level of financial management we need.

And it’s a real priority of ours to deliver the Finance Transformation Project that we have now set in train.

We’re committed to improving the way we manage our money.

We know if we’re to deliver on our plans, we have to get a firm grip on our finances.

Better numbers will mean better decisions.

And only by working together can we ensure that the nation’s finances are run more efficiently, more transparently, and more prudently in the future.

Thank you.