Peter Smith: The Comprehensive Spending Review - and why government should target the targets

Peter Smith is a lawyer who works in central London. He has previously worked in Parliament for Edward Leigh MP.

Next week, George Osborne will announce the result of the triennial Comprehensive Spending Review (CSR). CSRs are the big brother to Departmental Spending Reviews, where ministries consider their goals over the short- and middle-term and match slices of the funding pie to policies which – they hope – will be instruments to achieve desired outcomes.

In financial terms, DSRs aren’t truly zero-sum. Although interest groups within any particular ministry will lobby for their pet projects, there is always a little give around the whole pie. In the MoD, for instance, the media hype up tensions between the Army, Navy and Air Force, but when the chips are down the whole lot can demand cash off the Treasury.

In contrast, the pie can’t really grow for the CSR. The Treasury has no bigger hand to feed it, as it raises money direct from us, the tax payer, and from the bond market. Neither is particularly forgiving when Mr Osborne asks for more moolah, especially during a recession.

The Chancellor will this year sit in a Star Chamber to hear Secretaries of State make their pitches for cash. To an extent he is balancing apples with pears and bananas, aircraft carriers with housing benefit and bobbies on the beat. The quid pro quo for bearing the risk and getting the blend wrong, is that One Horse Guards can set departmental public sector agreements (PSAs) - targets to you and me.

PSAs sound superficially attractive, and it is no surprise then that they were introduced by Gordon Brown in CSR 1998. We all use targets in our personal and professional lives – earn more, lose a stone in weight, run a marathon – and it makes sense to set a yardstick by which financial efficacy can be measured. An initial problem is that PSAs are widely-scoped and without any formal mechanism for sanction. Departments are obliged to translate them into their own metrics, and report these back to the Treasury and No 10.

One of the PSAs for the Department of Health, “Promote better health and wellbeing for call”, is so bland and vacuous to be otiose. But it spawned the infamous A&E target: initially 97% then 98% of patients had to be seen within four hours. It was at first welcomed by medics as a way of compelling hospitals to improve and ratchet up standards, but rapidly led to skewed clinical decisions. Lots of ‘easy’ patients were seen speedily, ambulances queued before disgorging the injured, and the quite-sick-but-not-critical patients (often elderly) put on trolleys and parked in corridors or medical assessment units.

The Conservative response in 2010 was to reduce to 95% the number of patients to be seen within the golden time-frame, ostensibly giving leeway to the clinical judgment of medics but triggering the recent rabid headlines, “NHS misses A&E waiting time target, worst in nine years”, when a particularly long winter caused more illness and only 94.1% of attendees were seen within time.

The truth is bean counters are in no position to set targets which depend on judgment, as practical policy delivery becomes skewed to produce perverse and unintended effects. The Mid-Staffs hospital disaster was caused in part when nurses and doctors ceased to be virtuous, autonomous professionals and become box-ticking functionaries, with managers obsessed by Whitehall dictat rather than seeing the bigger picture. The trend following the Francis Review will inexorably be to turn targets with no or merely financial penalties into ones attracting harsher sanction for their breach.

Rather, what ought to be happening is a reduction in PSAs and micro-managed targets. Sure, political parties set out objectives in their manifestos and it is right these become guiding principles. But to fit more output into fewer civil servants and improve the ‘British disease’ of low productivity, a renewed emphasis on trusting professionals would be welcome.