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Recent changes have allowed Government departments to make improved use of money, assets and other resources. Many departments have begun to take advantage of these tools but they can still do more to better manage what they have so that they can deliver high quality public services, Sir John Bourn, the head of the NAO, reported to Parliament today. 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. To fully utilize these tools requires a stepwise change in departmental behaviour.

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A quarter of the departments examined are making good use of the new flexibilities and information to manage their resources, identify inefficient use of assets and improve the scheduling of expenditure to match service needs. The remaining departments, however, have as yet made limited progress. While over a third of departments have made use of the new flexibility to carry forward unspent resources, there is still a bias towards potentially wasteful spending surges in the last two months of the year. Over a third of departments still rely on cash-based management information and therefore do not know how much it really costs to deliver services. This 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.

While departments and their agencies continue to adjust to the new approaches, there is more they could do to improve their management of resources including:

  • Providing a clearer lead, particularly at board level, in demonstrating the importance of better resource management and the use of improved information and flexibilities, and in ensuring greater alignment of the targets and resource allocation of key organisations involved in delivering specific services.
  • Engaging regularly with the chain of public, private and voluntary organisations who increasingly deliver frontline services to ensure they have the appropriate capabilities and skills, and where these are deficient seek to strengthen them.
  • Allowing appropriate flexibility to encourage innovation and sensible and well managed risk taking when allocating resources both internally and to partner organisations.
  • Using the new management information now available to make better use of resources and improve efficiency. Accruals based information is a powerful tool to identify efficiency savings, but is not yet widely used in this way by Departments. More needs to be done in overcoming constraints such as insufficient IT system capability and financial expertise.

The improvement in levels of teacher recruitment achieved by the Teacher Training Agency is a good example of the benefits that can be realised by addressing the areas set out in this report.

"Good resource management is vital if departments are to meet their ambitious objectives and targets for service improvement. They need to review their resource management practices and make best use of the new information on service costs and the consumption of resources. 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."

Sir John Bourn

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