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Improving government expenditure decisions through programme analysis and review
Improving Government Expenditure Decisions through Programme Analysis and Review R. .J. East
There is increasingpublicinterestin howand whygovernmentdecisions are made, and in the nature of the analysis which supports such decisions. As a member of the small business team in Government the authorwas specificallysecondedto improvethe decisionprocessesand analyticalcapabilityofGovernment. The object of this paper is to summarizethe majorfeatures ofthe Programme Analysis & Review System (PAR) so that the approach may be subjected to constructive criticism.
T
HE NATURE AND PACE OF CHANGE IN
technology today has clearly created a situation where it is increasingly valid and healthy to question the way in which demOCratic government is being adapted. Obviously, if it is not adapted to meet the evolving situation, and in a timely manner, then the quality of democratic life will suffer. In particular, government today is being subjected to an increasing number, bigger and more complex problems than in earlier times. This profound change is occurring at a time when far better communications, a more educated and informed electorate, and the varied impact of economic growth, have led to a demand for more participation in public debate and in government decision-making than in earlier times. So, although the problems are getting bigger, more numerous and more complex, there is also emerging, and somewhat conversely, a demand for more public involvement in the issues and decisions. All this pressure is occurring too at a time when, by the nature of the problems, the 2
lead time for analysis and decision-taking is frequently getting shorter. In many ways Concorde, the third London airport, and the problems of large cities, have brought the reality of these comments much to the fore in recentyears. In a similar manner the impact of technology has also, during the same -period, enabled television to emerge and profoundly influence public opinion in a manner which contrasts sharply at times with the limited direct influence of debate on the floor of the House of Commons. Thus the advance of technology is both creating the problems and profoundly affecting the very means by which these problems are discussed and resolved. Clearly there will continue to be an increasing public interest in how and why government decisions are made, and in the nature of the analysis which supports such decisions. During the last 10 years, of course, much attention has been given by many countries to this subject. In the U.K. one immediately thinks of the improvements derived from the PESC system (Public Expenditure Survey Committee), following the 1961 Plowden Report, and of the very useful Green Paper technique developed by the Labour Government. Having been privileged to study this subject in a number of different countries during the last 3 years, one can think of many other progressive examples. It is certainly quite clear that democratic governments are devoting an enormous amount of time and effort to improving the process of decision-taking and of the supporting analysis. Having had the opportunity and privilege to study and to contribute to the developments in the U.K., my object in
this brief paper is to summarize, while the basic design concepts are still fresh in my mind, the major design features of what has become known as the Programme Analysis and Review system (PAR). Clearly any such system as this will rightly be subjected to much creative criticism. For that criticism to be constructive, however, it is desirable that it start from a clear picture of the basic conceptual design framework of PAR. It is this particular objective therefore which has shaped the content and design of this paper. The comments represent-my personal views and not a formal official statement. PROGRAMME ANALYSIS AND REVIEW (PAR)
The Treasury evidence on PAR to the Select Committee on Expenditure in January 1972 showed the way in which the system is developing, and the way it is basically complementary to the PESC system. In understanding the scope of PAR, it is therefore necessary to understand the way in which it relates to PESC so that the two systems are not just seen to be complementary, but do in fact profoundly strengthen each other to give a totally balanced and highly flexible management system. Initially, therefore, the object in these comments will be to outline the major features of PAR and then, against this background, to show the way in which it complements PESC. A major feature of PAR is the concentration of analysis and debate on primary programme objectives. The method of analysis gives considerable priority to isolating the key emerging decision issues in a defined policy area, and then in isolating the major policy decision options LONG RANGE PLANNING
surrounding each of these issues. The analytical language at this stage is essentially objective orientated, and seeks to highlight the major political choice options in a manner where the programme objectives for each option can be defined in a managerially and operationally useful sense. As mentioned in the Select Committee evidence this approach does give considerable emphasis to the development of what may be called 'needs' analysis. That is, .it seeks to ascertain by field research, if necessary, what the emerging needs of society are and the way in which existing expenditure and programmes are meeting these needs. Clearly it is necessary for such analysis to get below and behind an expressed demand. Thus, although one thinks of PAR as an analytical method, there is inherent in PAR considerable scope for truly creative work in the Public Sector. Where PAR helps is that it usefully highlights the issues on which this creative capacity can be most optimally concentrated, so that primary programme objectives can be most effectively defined. The second major feature of PAR is in highlighting the practical outputs of programmes in comparison to the actual programmes objectives mentioned above. In practice this type of analysis involves the breaking down of major programme objectives into output measures which facilitate the monitoring of programme effectiveness in achieving those objectives. Although the difficulties in this field of analysis should not be underestimated, such analysis is clearly fundamental in a number of ways to the development of accountable management in the Public Sector, as outlined for example in the Fulton Report. For the analysis to be useful it need not always be strictly quantified. The whole concept of gauging and monitoring programme effectiveness in achieving stated programme objectives is of the utmost public importance in any discussion concerned with the effectiveness of resource use. Although these two features of PAR, concerned firstly with programme objectives definition and then, secondly, with output monitoring for gauging programme effectiveness, are important, they clearly would lose significance and mainstream political relevance if the actual subjects chosen for this type of depth analysis arose in a somewhat haphazard manner. Bearing in mind the intense pressures upon Ministers over the whole range of immediate day-to-day matters this particular point has in many ways led to perhaps one of the most distinctive features of the PAR system. It is the feature which, if understood, helps to clarify the way the whole system has been designed to fit together. MARCH, 1973
Bearing.in mind the size of Government departments and the number of programmes managed it clearly would not be practicable or sensible to study every programme in thorough detail each year. In the choice of PAR issues for depth analysis each year, therefore, the third design feature of the system carefully facilitates emphasis on the following criteria: • Policy areas of major significance to overall Government strategy; • Programmes or potential programmes which involve a major use of resources; • Policy areas where actual decisions could usefully be taken in the near future, even though the basic programmes may be of a long-term nature and frequently beyond the life of a Parliament; • Policy areas where there is reason to believe existing programme objectives can be effectively sharpened for policy or operational purposes; • Programmes which cover the activities of more than one department. The annual PAR timetable, in addition to allowing appropriate time for this selective process to be effected, also allows sufficient time to facilitate: • Formal Cabinet approval of the choice of PAR studies each year before more detailed study commences; • and subsequently the defining of the scope of each major study between Central and Spending Departments, and the major political options to be covered, before more thorough detailed analysis is effected. As described above, the whole system can already be seen to be highly flexible and finely tuned to the requirements of Ministers, in both their departmental and collective Cabinet responsibilities. A formal broad system of this nature actually increases Government flexibility rather than inhibits it, as the very nature of the system design facilitates a continuing dialogue between officials and Ministers which enables each to perform their complementary roles. This is a particularly important point as anyone familiar with the analysis of governmental programmes will appreciate that the politically subjective element in a particular policy area is frequently difficult to isolate from the more objective and neutral aspects of the analysis. Also, of course, the choice of means for effecting even say agreed programme objectives can be highly political. In facilitating effective dialogues of this nature the PAR system is in particular helping to overcome the increasingly com-
plex communication problems which the sheer pace and complexity of technological change have created. It will also be obvious that by carefully concentrating the analytical and decisiontaking capacity of Government onto a specific number of PAR issues each year, the design of PAR has avoided the mistake that other Governments appear to have made in spreading those scarce capacities too thinly over too broad an area. Furthermore, by using a system which gives such emphasis to the strategic selection of the issues for depth study, Government is in a position where it can manage and be in control of the system, and the direction of its major policy surge, rather than becoming submerged under voluminous and time-consuming quantitative accounting and budgetary details. Part of the criteria for selecting PAR issues for intensive study each year is, as mentioned above, the significance of the issues to the Government's overall strategic objectives and priorities. For this to be done in a thorough manner therefore it is necessary that a fourth feature of PAR be concerned with the development and updating of Government overall objectives and priorities. Without such an input PAR could easily lose mainstream political relevance and wither into some peripheral backroom staff activity. In this context, of course, it will be remembered that the 1961 Plowden Report specifically drew attention to the need for a better information system for Ministers in their collective Cabinet role. The October 1970 Government White Paper on the machinery of government has already outlined how this task of developing government overall strategic objectives and priorities rests with the Central Policy Review Staff (CPRS). Today government is increasingly about priorities and the resultant need to allocate resources accordingly: a strategy or manifesto which is not related to resources is a mere kite. As public expenditure today already accounts for more than 50 per cent of GNP the significance of this point, in comparison to earlier times, can be readily appreciated. A major strength in the design of PAR is that it strongly links the work on overall strategy with the choice of actual depth programme studies and implementation. This point is particularly important as it is the programme analyses and implementation which give teeth and reality to the strategic thinking. Clearly the follow-through work on programmes can be then fed back into the overall government strategic thinking so that work on the latter is in turn kept practical and realistic. In this way the design of PAR overcomes a major problem in any decision system, 3
namely how the information flows from bottom up and top down are integrated, and mutually strengthening, and not at variance with each other. This type of flexibility in PAR can also take account of the many major programmes which still cover the activities of a number of separate departments, despite the advent of large departments, and which need the most careful co-ordination and integration. Politics are, of course, primarily about people and not about analysis or systems. For a decision system in government to be practical it must, therefore, be appropriately sensitive to people's wishes and dislikes, and the way they communicate on these matters, and not egg bound in analytical objectivity. By helping to highlight and clarify the nature of the political judgement in major decisions, in programme output as well as resource input terms, PAR can contribute by improving the texture and the quality of the dialogue and enable people to communicate more effectively. By facilitating a more informed dialogue, PAR is directly helping to focus the real nature of the political judgement and options in each situation and thus contributing to the real texture of our democratic way of life. This major point of communication to facilitate priority resource allocation is also well illustrated in a brief consideration of how a Cabinet Minister, for example, is able to effect his dual roles of departmental minister and Cabinet Minister. As mentioned earlier, the 1961 Plowden Report proposed there should be more effective machinery for the taking of collective decisions and the bearing of collective responsibility by Ministers on matters of public expenditure. As the development of overall Government objectives and priorities, with collective staff support, enables a Minister to see more clearly the overall position outside his department, it will enable him and his colleagues to converse in a more informal and negotiable manner· on the way in which resource allocation priorities should be resolved between departments. Furthermore, by being directly involved in the development of overall Government objectives and priorities, an individual departmental minister will probably, in practice, be more willing to communicate and share with his colleagues a knowledge of the major political decisions which come to the surface in his department in the individual PAR studies. Thus this fourth feature of the PAR system concerned with the development of overall Government objectives and priorities, helps create the right atmosphere in which ministers can more easily reconcile the priorities between their different responsibilities. A reading of the writings of ex4
Mini~ters quickly shows the mainstream and practical relevance of this point. The advent of the large departments, of course, also makes this point certainly more significant today than it was in the past. If more attention is given to PAR-type strategic analysis in government then, bearing in mind the enormous day-to-day pressures of current events on a Minister's time, considerable care is needed in identifying those points in the analysis in which a Minister could most effectively become directly involved without putting undue pressures on his time. The fifth major feature designed into PAR, therefore, has been the formal presentation and review of each completed PAR study by the Ministers most concerned. In fact it is the importance attached to this feature which actually led to the inclusion of an R, for review, in the term PAR. Without this direct involvement at this critical stage by ministers there is a danger of this type of strategic depth analysis becoming peripheral and backroom in nature until it eventually ceases to justify the staff expense involved. Because of the interdependence of much of Government policy and decision taking, there is always the problem of knowing exactly what specific decisions can be taken during a PAR analysis. Fundamental to the PAR design, therefore, is a realization that it is about the taking of current decisions which affect the future. By formalizing the review of completed PAR's at ministerial level, time is allocated in advance in a Minister's time schedule to ensure that the PAR type of strategic decision taking is found a place in a situation where the urgent can reasonably be expected to drive out the important. In addition to Ministerial direct involvement at the completed stage of each PAR review, a Minister in his departmental capacity would probably also find it advantageous not only to determine, obviously, the choice of subject to be studied, but also the scope and options to be covered before too much detailed work is completed by his officials. In this way a Minister not only retains control of the study but can utilize PAR to develop an optimum communication with his officials. Anyone at all familiar with studies and decision-taking in government will know that this question of separating the politically subjective from the analytical objective aspects of any study is frequently quite complex and below the surface. As mentioned earlier, PAR is about the taking of political resource decisions and, in understanding the nature of the ministerial review, it is important to appreciate the nature of the decisions which can and cannot be made at that point of time. In
particular, clearly PAR should not duplicate or undermine the annual PESC exercise in which the specific expenditure decisions are made. In practice, however, it is quite practical to separate many of the actual strategic decisions on major resource priorities aw~y from the annual PESC exercise, and indeed wise to do so. For, basically, PESC is concerned with total public expenditure as an important aspect of the management of the economy. Clearly it is useful to look at total public expenditure as a whole in this Keynesian way at certain times in the year and to consider the predicted level of total expenditure in, say, the next 5 years based on actual current policy decisions. Against such a backcloth the predicted expenditure timing of individual programmes can also be appropriately related and gauged The converse and impractical alternative to this PESC approach would be one where individual expenditure decisions and commitments were made in an uncoordinated manner at different times throughout the year, and the overall total derived as some final resultant. In this age of Keynesian economics, combined with the vast nature of the competing claims for Government resources, such an uncoordinated approach would be somewhat antiquated. Although PAR-type specific decision taking reviews do not, and should not, pre-judge PESC by committing actual future expenditure, they can most constructively do three things. Firstly, ministerial decisions in the PAR context can guide the work of officials by clarifying the primary purposes and objectives of major Government resource programmes. Secondly, they can highlight certain policy options which justify priority attention and eliminate others before too much detailed and expensive work is carried out by officials. Thirdly, they can give a clear indication of the direction that research and development should take to assist most effectively in the evolution of Government policy. Furthermore, they can do all these things so that the work involved flows in a sensible time sequence into the further process of decisions in the PESC context. In fact, looked at in this way, it can be seen how PAR and PESC are really complementary, and how, in fact, PAR will also help strengthen the operation of PESC. In view of the comments already made on five of the major features of PAR, it will be clear that its development will create a pressure to improve Government information systems, including those concerned with programme objectives and performance in meeting those objectives. This aspect of the system is of sufficient importance that it does make up it sixth distinct feature of PAR. LONG RANGE PLANNING
Obviously information systems can get detailed and involved and it is not intended to delve into the question in this brief summary. Anyone at all familiar with information systems in government will know however, especially if they have tried, for example, to plough through the Estimates, that figures which are assembled for control and security purposes are often not in a particularly useful form for reconciling to, or evaluating, policy. In fact, governments throughout the world today are grappling with this problem of producing figures for policy analysis, control and management purposes in a manner which meets the requirements of each without undue paper work and duplication in material. In particular, a major aim in such development is to make the different figures used for policy, control and operational management purposes reasonably simple in the manner in which they are reconciled. Clearly, for example, in the case of education, it is frequently easier to discuss policy in terms of the structure and opportunities for different age groups, whereas it is not necessary practical to control or manage programme expenditures in this form. In the launch design of PAR, considerable care was taken to ensure that these quantitative aspects of analysis and decision-taking today were not allowed to blunt and reduce the capacity for actual policy analysis and decision. In particular the phasing of the PAR launch was designed to give priority in the earlier years to the completion of actual individual PAR studies rather than, as some other countries appear to have done, to encourage the too early creation of complex information systems which frequently go under the terms output budgeting or PPB. Clearly today the increasing problem is not one of security control to prevent a king spending money voted by Parliament for naval vessels on his mistresses, but increasingly to be clear on the real need and objectives which the ships are meant to meet, and then to ensure that a monitoring process evaluates the effectiveness with which these policy objectives are in fact being met. The design ofPAR has at all times been seen in its fullest Parliamentary setting, and not just as an aid to the Executive. It is the potential improvements in the formal nature of Government information in the fullest public and Parliamentary sense which do, in fact, make up the seventh and final major feature of the PAR sytem. PAR can make this major contribution to more 'open government' in that it will encourage and support greater emphasis in expenditure analysis and debate on the outputs and achievements of programmes MARCH. 1973
and not unduly on the security and budgetary input aspects of programme expenditures. For, in being designed to focus specifically on the emerging needs of a changing society, the way expenditure programme objectives meet these needs, the way actual programme outputs are effecting the objectives, and the way overall expenditure priorities between different programmes are strategically evaluated, PAR is directed at the very substance of politics. Clearly today there is the most intense pressure on the work of the House of Commons. It is, of course, a major and current problem to know how its very scarCi: time can be most effectively use'tl. Much experiment is going on, for example, with the use of Select Committees. Basically, however, by helping to improve over time the form in which expenditure programmes are presented to the House, PAR can make a contribution to easing the problem. In particular, it could be expected to help the Select Committees in their work involving expenditures, and in this way help relieve pressure on the main House. Anyone who has listened to the annual 2-day expenditure debates in the House, and has also seen the low attendance of Members, will readily appreciate there is an unresolved problem here. By its nature PAR could well make a significant contribution to the way in which the work of the House in this field is eventually related, for example, to the work of the Expenditure Committees and, in time, to the Public Accounts Committee. All this will not happen overnight, but the progress of PAR to date, as shown in Treasury evidence on PAR to the Expenditure Committee, has been fast. In practice, the Committee itself has not only taken evidence on PAR, but has already completed a number of hearings designed to ascertaitJ. the way in which methods of expenditure appraisal are being improved, and specifically the way in which expenditure objectives can be evaluated against needs analysis.
PAR LAUNCH DESIGN AND ORGANIZATION In addition to the design of the PAR system as such, comparable care was given to the design of the actual launch and also to the organization methods and responsibilities for effecting the overall approach. In order to gauge the nature and significance of these aspects it is useful firstly to summarize the seven major features of the PAR system as described above. (1) Programme objectives defined in an operational useful manner.
(2) Objectives then broken down into output measures which facilitate some measure of actual programme effectiveness. (3) A broad brush strategic review of a department's overall activities to highlight and determine the specific issues on which PAR depth analysis should be concentrated. (4) Development of Government overall objectives and priorities as a necessary aid for effecting (1) and (3) above. (5) Ministerial presentation and review of PAR studies. (6) Improved and integrated information systems across Government to facilitate strategic policy planning, control and management follow-through of programmes. (7) Transfer of these changes in the Executive arm of Government into their appropriate Parliamentary and public setting. Starting from January 1971, the actual total launch of the whole system has been designed to be effected in approximately 3 years. In the first year priority was given to the immediate study of a number of individual programmes with an emphasis in the analysis on programme objectives and effectiveness, features (1) and (2), and to the actual Ministerial presentation and review, feature (5). In the second year increased emphasis was given to features (3) and (4), to help concentrate the PAR depth analysis on to the mainstream emerging strategic issues of the Government. Priority was also given in the second year to start the fundamental improvements in information systems, particularly the design of programme structures across the full range of departments' activities according to the nature of programme objectives. During the second year Treasury evidence on PAR was also given to the House of Commons Expenditure Committee, which was subsequently followed up by the Committee in its basic PAR-type questions into four major fields of Government activity. In the third year of PAR the whole system can be consolidated, so that each of the seven features is used to help strengthen the other features. In many ways this point is particularly important as a close examination of each of the features of PAR will show that they are mutually interdependent, and each strengthens the others in operation. Although PAR cannot truly be called a technique, it is in fundamentals an approach to resource management. Obviously it is not a substitute for management, no more than objective analysis is a substitute for creative thinking. Bearing in mind these limitations, however, 5
it is an approach to management which should help to deploy the particularly scarce resources of able management and creative analysis in a particularly optimum manner. In addition to each feature of PAR strengthening and supporting the other, it will be found in practice that it is in many ways, as a system, significantly selfcorrecting over time. For clearly the feedback from measures of programme effectiveness will help identify programme objectives in a more effective manner which, in turn, will help to update overall Government strategy. Looked at a different way, for example, the probing and questioning of a PAR-like nature of House of Commons Committees will have a similar beneficial influence. Similarly, the very quality of this questioning can itself be improved by the development and improvement of programme structures, and the resultant availability of better programme information. Although there were two major problems which had to be overcome in the design of PAR, and which will be referred to later, there were also two additional, but smaller problems which needed particular attention. The first of these was concerned with the design of the appropriate annual timetable for PAR, to ensure the workload involved did not peak at particularly difficult times, such as during the deeply technical part of the PESC work during February-June of each year. In practice it was found to be perfectly feasible and even advantageous to design the annual PAR cycle in a way where the main workload occured outside this period, and could be managed by the Central and Spending Departments in a manner which actually complemented and strengthened the PESC process. The second of the relatively smaller problems inevitably arose from the scarce availability of creative analytical staff with PAR-type experience. In such a situation there is always a temptation to have trial runs, or feasibility studies, and enormous training session which, however, run the risk in practice of appearing academic, expensive in staff time, and rather of a long-term nature. In practice the approach adopted was one which limited the number and type of PAR issues to be studied to a manageable size in the first launch year. Thus experience was created in a practical manner which, at the same time, enabled the PAR system to contribute to the quality of actual programme decisions during its first year of operation. Clearly, in the second and subsequent years, this established knowhow base can be confidently consolidated, enlarged and managed according to the number, nature and demands 6
of emerging PAR-like questions. Particular priority was, however, given to the appointment of PAR co-ordinators in each major spending department early in the first year, so that an anchor position was established from which PAR could grow according to the particular requirements of each department. The two major problems in the design of PAR arose from (I) the need to break the total PAR process, covering the seven features mentioned earlier, up organizationally between central departments, and (2) the obvious need in the design ofthe overall 3-year launch to get the launch priorities in the first, second and third years properly balanced and inter-related to one another; and in particular to do this in a manner where PAR could be seen to be contributing in the first year. Anyone at all familiar with the efforts of a number of other countries to improve their analysis and decision processes in public expenditure during the last, say, 8 years, will know that various ways have been tried to overcome the second of these problems. Frequently, countries have coined terms such as planning, programming and budgeting (PPB) or output budgeting, which have in practice tended to give priority to the development of information systems in detail and on a broad front. As mentioned earlier, however, the 3-year PAR launch design was particularly structured to avoid the pitfalls and backlash which can result from this approach. Basically, the PAR launch was designed to enable it to contribute to the quality of policy analysis and decisions in the first year of operation and then to let the system broaden out in its second and third years in a managed way according to the seen and emerging advantages. In the early stages of the design of PAR the functions involved in all the separate features were collectively known, for want of a better expression, as the Central Capability. It was, however, a major problem to know how best and indeed whether to split the overall system, with its seven major features, up organizationally between the three central departments. Just prior to the June 1970 election, however, it was clear that there were advantages in separating the development of an overall government strategy and priorities organizationally away from the rest, and locating it in the Cabinet Office: the organization for effecting this function later became known, of course, as the Central Policy Review Staff. As mentioned in the January 1972 Treasury evidence to the House of Commons Expenditure Committee, Ministerial responsibility for operating and coordinating PAR is now with the Chief
Secretary to the Treasury. In practice, in fact, it has proved quite realistic to retain the overall integrated strength of the PAR system, and yet enable each of the three central departments to make a major and direct contribution. The major reason for the Treasury being responsible for PAR is that within the central departments the real depth knowledge of the spending departments expenditure policies and proposals is to be found at Assistant Secretary and Under Secretary level in the expenditure divisions of the Treasury. It made sense to utilize and build on this know-how in PAR by making the same expenditure divisions also responsible for co-ordinating PAR activities in their field, in a complementary manner to the way they used and progressed the PESC work. Such an arrangement also minimized the dangers of function and staff duplication between central departments. As the PAR approach becomes more consolidated its operation should help clarify and improve not only the organizational working relations between central departments, but also the working relations between central departments and the major spending departments. At the end of a decade in which the number of major spending departments has been reduced from 20 to 10, and the number of central departments increased from one to three, this is a very real point; it is also one which helps to illustrate how a thorough approach to strategic planning in this day and age of change does help identify and create the required changes in organizational relationships for effecting programme priorities. FUTURE DEVELOPMENTS The design of PAR has at all times given priority to making the whole approach absolutely flexible. In fact, as mentioned at the beginning of this paper, PAR was designed to help the executive and legislative branches of Government respond more sensitively to the increasing pace of technological change in society today. Governments come and go however and it is quite possible that a future Government will consider abolishing the system. In such a consideration however it is to be hoped that such a decision would not be taken in some general abstract manner but would be addressed firstly to the evaluation of the validity of each of the seven major features of the system. Only in this way can a proper appreciation and evaluation be effected, for PAR is basically about certain specific blocks of work, and is not some ambiguous general expression. From what has been said in this paper, however, there is good reason to believe that, just as the Labour Government designed the introduction and LONG RANGE PLANNING
development of Green Papers, and both major political parties have contributed to the way in which the PESC system has developed, so too PAR will emerge and become improved over the years by successive administrations. Before finishing this description of PAR, however, it is interesting, just briefly, to indicate some of the ways in which it can develop in future, in addition to the ~ pletion of the launch and general ~()nsoli dation of the changes already 1fiade. In particular: (l) As government is the 'art of the possible' it follows that particular care is needed in the development of a government's overall strategy to ensure that the different programmes are integrated and balanced, one to another, and do not pull in different directions. To the extent they are not integrated, and perhaps the cumulative result of fragmented decisions taken in different contexts, then without doubt much less will be possible of achievement than would otherwise be the case. PAR is no substitute for a sound and integrated strategy, but it can, and should, make a considerable contribution to the development of such a strategy. (2) Although PAR has been described in this paper in its overall government setting, without doubt each of the seven major features of the approach are for practical purposes equally valid in a single department of government context. In this day and age of giant departments, with annual expenditures sometimes of the order of £2000m., it does not take much effort to justify this point. Over time, increasingly individual departmental Ministers and Officials can be expected to adapt the seven features of PAR, whatever they may at the time be called, to the peculiar requirements of individual departments. Some departments will lead and some will follow but, in the final analysis, it is the pace of change in a department's working environment combined with the peculiar nature of its work which will trigger some departments to move faster in this direction than others. (3) Because PAR necessitates not only a thorough dialogue between Central and Spending Departments, but also a specific contribution from each of the Central Departments, its operation will continually encourage not only a clear and logical interface in functions between Central and Spending Departments, but also between the individual Central Departments themMARCH. 1973
selves. In fact, the operation of PAR could be used to define these relations in an operationally most useful manner. In a similar manner PAR should facilitate the further development of new organization forms such as, in particular, the department agency concept as an aid to reducing the present 'operations' work load on Permanent Secretaries and Ministers. (4) By emphasizing the need for a thorough and systematic selection of issues for depth analysis, PAR will encourage a more managed use of scarce analytical resources between on-going Government programmes and new policies. Without such' a systematic approach for selecting issues for depth analysis there is always the probability that these scarce analytical resources will be largely engaged on developing new policy fields to the detriment of the up-dating of on-going programmes. (5) Once PAR becomes fully run in and government emerges more strongly as a sensitive 'learning system' in a changing environment, the case for major outside convulsions of, for example, the Fulton, 1961 Plowden, and 1968 Duncan Reports should be considerably reduced. (It is interesting, for example, in this context to consider the seven features of the PAR system in relation to the comments of Dr. Schon in his 1970 series of Reith lectures on Beyond the Stable State.) (6) The Fulton Report brought out clearly the many varied pressures on a Permanent Secretary, and went on to make proposals on how, for example, department planning functions might be improved and reorganized. As a Minister, however, also has somehow to effect not only his departmental executive responsibilities, but his collective Government role, constituency work, House of Commons commitments, and, not least, the communicating of Government policies to the Public at large, it is quite clear that every effort is needed to ensure in this day and age that the decision processes of Government do not bottle neck at this Permanent Secretarial and Ministerial level. Clearly this problem is inevitably more severe with the advent of the giant departments. As PAR has been designed to improve the decision processes of government it will be surprising if it does not make a significant contribution towards minimizing the nature of this problem. In fact, it will be surprising if future developments do not justify the formal
strengthening of departmental planning functions, easing of the Accounting Officer and specific 'operational' responsibilities of Permanent Secretaries, and the selective but obviously limited use of political advisory appointments at senior level. By clarifying programme objectives in an operationally useful manner, a followthrough from PAR should enable individual job functions to be more easily defined, so that such possible changes as mentioned above become both feasible and justified. (7) As PAR helps to give greater attention to matters of programme effectiveness, in meeting programme objectives, it will also be interesting to see the way in which the work of the Select Committee of Expenditure evolves in relation to the role of the Public Accounts Committee. Value for money is, of course, a different thing from efficiency in control of voted expenditure. As a Permanent Secretary is, however, in most cases also the Department Accounting OffiCQ", it will be particularly interesting as mentioned above to see if his workload in this area is eased as the policy analysis pressures of House of Commons Expenditure Committees are increased. It can certainly be argued that the security and control type of work can be more easily delegated than the policy work. (8) The way in which analysis and decision taking today copes with the management of research and development, in its full social, economic and industrial context, is of course, becoming far more main-stream as a subject for public debate and interest. The work of the Select Committee on Science and Technology has done much to foster this encouraging development. Earlier in this paper in describing the specific nature of decisions which PAR has. been designed to facilitate, it mentioned that during the PAR review quite specific decisions could and should be made on the direction and priority that research and development should take. In this way PAR can help determine not only the priorities between different research programmes, but also what the absolute level for research and development budgets should be at different points of time. (The actual way in which PAR can help in the management of research and development is shown, for reference purposes, in the note* at the foot of the following page.) 7
(9) Probably most Governments in the past have got rather tired in Office, run out of policy ideas, and consequently produced somewhat vague Election Manifestos. If PAR is followed through effectively it should, in that it is concerned with overall Government objectives and priorities being continually brought up to date, considerably help overcome this problem. Likewise, as Select Committees get more information of a PAR-like nature from the Executive, the Manifesto of an Opposition Party can also benefit. Either way this type of development, in a day and age where more participation in Government is demanded, should help clarify the nature and priority objectives of a Party's Manifesto and Mandate. (10) As new Ministers have found it valuable and indeed essential to master the nature of PESC, so too they will find it increasingly useful to familiarize themselves with the scope and nature of PAR. (11) No doubt there will be very many able individuals who will not find the management discipline inherent in
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PAR to their liking or taste. But in this te.chnical age there is this need to choose between resource priorities which do have alternative uses. As the pace of change increases so too will the need for some sort of PAR-like approach to decision taking only become more pronounced. •
*In general discussion on this R&D subject today it is generally agreed that there is a dialogue problem in this field between what may be called the R&D experts and those reponsible for what might also be called overall administration and resource deployment. Because PAR has been designed specifically to tackle this problem it can help in three major stages during the analysis and review. Firstly, it can facilitate a two-way exchange of views at the time basic 'external' assumptions and 'external' forecasts are made at the first stage of a study. Secondly, it can facilitate a two-way exchange of views early in the study on the current 'internal' programme situation in terms of current overall programme effectiveness in the area of activity being reviewed. This latter point merely recognizes, of course, that frequently great care and often research is needed to find out the actual effects of current programmes. After completion of these two stages, when the R&D experts have had every early opportunity to evaluate and contribute to the initial analysis of overall policy options, the third stage involves a
two-way exchange of views in which the R&D experts commit, in specific programme form, to undertake certain assignments which, because of the early dialogues and analysis, can be seen to fit by all concerned into overall policy development plans for the areas considered. It is a major responsibility of top management itself to create the framework and atmosphere for these dialogues to take place. As mentioned earlier, the nature of these dialogues and work are at the heart of the PAR process. This should not be surprising because in fundamentals PAR is concerned with government as a learning system in which the programmes of government are systematically adapted to a fast changing involvement. As PAR is concerned with the management of that interface between Government and its changing environment. it must be particularly concerned with the way in which inevitably scarce research and development talent is deployed in effecting this role.
REFERENCES The reading references to the comments in this paper are the same as those listed in an article which appeared in the June 1972 issue of this Journal under the heading Comparison of Strategic Planning in Large Corporations and Government. The two articles were designed to be complementary, and it will be seen that the major points of comparison in the earlier article do, in fact, make up the foundations and specific features of the PAR system.
LONG RANGE PLANNING
There is increasingpublicinterestin howand whygovernmentdecisions are made, and in the nature of the analysis which supports such decisions. As a member of the small business team in Government the authorwas specificallysecondedto improvethe decisionprocessesand analyticalcapabilityofGovernment. The object of this paper is to summarizethe majorfeatures ofthe Programme Analysis & Review System (PAR) so that the approach may be subjected to constructive criticism.
T
HE NATURE AND PACE OF CHANGE IN
technology today has clearly created a situation where it is increasingly valid and healthy to question the way in which demOCratic government is being adapted. Obviously, if it is not adapted to meet the evolving situation, and in a timely manner, then the quality of democratic life will suffer. In particular, government today is being subjected to an increasing number, bigger and more complex problems than in earlier times. This profound change is occurring at a time when far better communications, a more educated and informed electorate, and the varied impact of economic growth, have led to a demand for more participation in public debate and in government decision-making than in earlier times. So, although the problems are getting bigger, more numerous and more complex, there is also emerging, and somewhat conversely, a demand for more public involvement in the issues and decisions. All this pressure is occurring too at a time when, by the nature of the problems, the 2
lead time for analysis and decision-taking is frequently getting shorter. In many ways Concorde, the third London airport, and the problems of large cities, have brought the reality of these comments much to the fore in recentyears. In a similar manner the impact of technology has also, during the same -period, enabled television to emerge and profoundly influence public opinion in a manner which contrasts sharply at times with the limited direct influence of debate on the floor of the House of Commons. Thus the advance of technology is both creating the problems and profoundly affecting the very means by which these problems are discussed and resolved. Clearly there will continue to be an increasing public interest in how and why government decisions are made, and in the nature of the analysis which supports such decisions. During the last 10 years, of course, much attention has been given by many countries to this subject. In the U.K. one immediately thinks of the improvements derived from the PESC system (Public Expenditure Survey Committee), following the 1961 Plowden Report, and of the very useful Green Paper technique developed by the Labour Government. Having been privileged to study this subject in a number of different countries during the last 3 years, one can think of many other progressive examples. It is certainly quite clear that democratic governments are devoting an enormous amount of time and effort to improving the process of decision-taking and of the supporting analysis. Having had the opportunity and privilege to study and to contribute to the developments in the U.K., my object in
this brief paper is to summarize, while the basic design concepts are still fresh in my mind, the major design features of what has become known as the Programme Analysis and Review system (PAR). Clearly any such system as this will rightly be subjected to much creative criticism. For that criticism to be constructive, however, it is desirable that it start from a clear picture of the basic conceptual design framework of PAR. It is this particular objective therefore which has shaped the content and design of this paper. The comments represent-my personal views and not a formal official statement. PROGRAMME ANALYSIS AND REVIEW (PAR)
The Treasury evidence on PAR to the Select Committee on Expenditure in January 1972 showed the way in which the system is developing, and the way it is basically complementary to the PESC system. In understanding the scope of PAR, it is therefore necessary to understand the way in which it relates to PESC so that the two systems are not just seen to be complementary, but do in fact profoundly strengthen each other to give a totally balanced and highly flexible management system. Initially, therefore, the object in these comments will be to outline the major features of PAR and then, against this background, to show the way in which it complements PESC. A major feature of PAR is the concentration of analysis and debate on primary programme objectives. The method of analysis gives considerable priority to isolating the key emerging decision issues in a defined policy area, and then in isolating the major policy decision options LONG RANGE PLANNING
surrounding each of these issues. The analytical language at this stage is essentially objective orientated, and seeks to highlight the major political choice options in a manner where the programme objectives for each option can be defined in a managerially and operationally useful sense. As mentioned in the Select Committee evidence this approach does give considerable emphasis to the development of what may be called 'needs' analysis. That is, .it seeks to ascertain by field research, if necessary, what the emerging needs of society are and the way in which existing expenditure and programmes are meeting these needs. Clearly it is necessary for such analysis to get below and behind an expressed demand. Thus, although one thinks of PAR as an analytical method, there is inherent in PAR considerable scope for truly creative work in the Public Sector. Where PAR helps is that it usefully highlights the issues on which this creative capacity can be most optimally concentrated, so that primary programme objectives can be most effectively defined. The second major feature of PAR is in highlighting the practical outputs of programmes in comparison to the actual programmes objectives mentioned above. In practice this type of analysis involves the breaking down of major programme objectives into output measures which facilitate the monitoring of programme effectiveness in achieving those objectives. Although the difficulties in this field of analysis should not be underestimated, such analysis is clearly fundamental in a number of ways to the development of accountable management in the Public Sector, as outlined for example in the Fulton Report. For the analysis to be useful it need not always be strictly quantified. The whole concept of gauging and monitoring programme effectiveness in achieving stated programme objectives is of the utmost public importance in any discussion concerned with the effectiveness of resource use. Although these two features of PAR, concerned firstly with programme objectives definition and then, secondly, with output monitoring for gauging programme effectiveness, are important, they clearly would lose significance and mainstream political relevance if the actual subjects chosen for this type of depth analysis arose in a somewhat haphazard manner. Bearing in mind the intense pressures upon Ministers over the whole range of immediate day-to-day matters this particular point has in many ways led to perhaps one of the most distinctive features of the PAR system. It is the feature which, if understood, helps to clarify the way the whole system has been designed to fit together. MARCH, 1973
Bearing.in mind the size of Government departments and the number of programmes managed it clearly would not be practicable or sensible to study every programme in thorough detail each year. In the choice of PAR issues for depth analysis each year, therefore, the third design feature of the system carefully facilitates emphasis on the following criteria: • Policy areas of major significance to overall Government strategy; • Programmes or potential programmes which involve a major use of resources; • Policy areas where actual decisions could usefully be taken in the near future, even though the basic programmes may be of a long-term nature and frequently beyond the life of a Parliament; • Policy areas where there is reason to believe existing programme objectives can be effectively sharpened for policy or operational purposes; • Programmes which cover the activities of more than one department. The annual PAR timetable, in addition to allowing appropriate time for this selective process to be effected, also allows sufficient time to facilitate: • Formal Cabinet approval of the choice of PAR studies each year before more detailed study commences; • and subsequently the defining of the scope of each major study between Central and Spending Departments, and the major political options to be covered, before more thorough detailed analysis is effected. As described above, the whole system can already be seen to be highly flexible and finely tuned to the requirements of Ministers, in both their departmental and collective Cabinet responsibilities. A formal broad system of this nature actually increases Government flexibility rather than inhibits it, as the very nature of the system design facilitates a continuing dialogue between officials and Ministers which enables each to perform their complementary roles. This is a particularly important point as anyone familiar with the analysis of governmental programmes will appreciate that the politically subjective element in a particular policy area is frequently difficult to isolate from the more objective and neutral aspects of the analysis. Also, of course, the choice of means for effecting even say agreed programme objectives can be highly political. In facilitating effective dialogues of this nature the PAR system is in particular helping to overcome the increasingly com-
plex communication problems which the sheer pace and complexity of technological change have created. It will also be obvious that by carefully concentrating the analytical and decisiontaking capacity of Government onto a specific number of PAR issues each year, the design of PAR has avoided the mistake that other Governments appear to have made in spreading those scarce capacities too thinly over too broad an area. Furthermore, by using a system which gives such emphasis to the strategic selection of the issues for depth study, Government is in a position where it can manage and be in control of the system, and the direction of its major policy surge, rather than becoming submerged under voluminous and time-consuming quantitative accounting and budgetary details. Part of the criteria for selecting PAR issues for intensive study each year is, as mentioned above, the significance of the issues to the Government's overall strategic objectives and priorities. For this to be done in a thorough manner therefore it is necessary that a fourth feature of PAR be concerned with the development and updating of Government overall objectives and priorities. Without such an input PAR could easily lose mainstream political relevance and wither into some peripheral backroom staff activity. In this context, of course, it will be remembered that the 1961 Plowden Report specifically drew attention to the need for a better information system for Ministers in their collective Cabinet role. The October 1970 Government White Paper on the machinery of government has already outlined how this task of developing government overall strategic objectives and priorities rests with the Central Policy Review Staff (CPRS). Today government is increasingly about priorities and the resultant need to allocate resources accordingly: a strategy or manifesto which is not related to resources is a mere kite. As public expenditure today already accounts for more than 50 per cent of GNP the significance of this point, in comparison to earlier times, can be readily appreciated. A major strength in the design of PAR is that it strongly links the work on overall strategy with the choice of actual depth programme studies and implementation. This point is particularly important as it is the programme analyses and implementation which give teeth and reality to the strategic thinking. Clearly the follow-through work on programmes can be then fed back into the overall government strategic thinking so that work on the latter is in turn kept practical and realistic. In this way the design of PAR overcomes a major problem in any decision system, 3
namely how the information flows from bottom up and top down are integrated, and mutually strengthening, and not at variance with each other. This type of flexibility in PAR can also take account of the many major programmes which still cover the activities of a number of separate departments, despite the advent of large departments, and which need the most careful co-ordination and integration. Politics are, of course, primarily about people and not about analysis or systems. For a decision system in government to be practical it must, therefore, be appropriately sensitive to people's wishes and dislikes, and the way they communicate on these matters, and not egg bound in analytical objectivity. By helping to highlight and clarify the nature of the political judgement in major decisions, in programme output as well as resource input terms, PAR can contribute by improving the texture and the quality of the dialogue and enable people to communicate more effectively. By facilitating a more informed dialogue, PAR is directly helping to focus the real nature of the political judgement and options in each situation and thus contributing to the real texture of our democratic way of life. This major point of communication to facilitate priority resource allocation is also well illustrated in a brief consideration of how a Cabinet Minister, for example, is able to effect his dual roles of departmental minister and Cabinet Minister. As mentioned earlier, the 1961 Plowden Report proposed there should be more effective machinery for the taking of collective decisions and the bearing of collective responsibility by Ministers on matters of public expenditure. As the development of overall Government objectives and priorities, with collective staff support, enables a Minister to see more clearly the overall position outside his department, it will enable him and his colleagues to converse in a more informal and negotiable manner· on the way in which resource allocation priorities should be resolved between departments. Furthermore, by being directly involved in the development of overall Government objectives and priorities, an individual departmental minister will probably, in practice, be more willing to communicate and share with his colleagues a knowledge of the major political decisions which come to the surface in his department in the individual PAR studies. Thus this fourth feature of the PAR system concerned with the development of overall Government objectives and priorities, helps create the right atmosphere in which ministers can more easily reconcile the priorities between their different responsibilities. A reading of the writings of ex4
Mini~ters quickly shows the mainstream and practical relevance of this point. The advent of the large departments, of course, also makes this point certainly more significant today than it was in the past. If more attention is given to PAR-type strategic analysis in government then, bearing in mind the enormous day-to-day pressures of current events on a Minister's time, considerable care is needed in identifying those points in the analysis in which a Minister could most effectively become directly involved without putting undue pressures on his time. The fifth major feature designed into PAR, therefore, has been the formal presentation and review of each completed PAR study by the Ministers most concerned. In fact it is the importance attached to this feature which actually led to the inclusion of an R, for review, in the term PAR. Without this direct involvement at this critical stage by ministers there is a danger of this type of strategic depth analysis becoming peripheral and backroom in nature until it eventually ceases to justify the staff expense involved. Because of the interdependence of much of Government policy and decision taking, there is always the problem of knowing exactly what specific decisions can be taken during a PAR analysis. Fundamental to the PAR design, therefore, is a realization that it is about the taking of current decisions which affect the future. By formalizing the review of completed PAR's at ministerial level, time is allocated in advance in a Minister's time schedule to ensure that the PAR type of strategic decision taking is found a place in a situation where the urgent can reasonably be expected to drive out the important. In addition to Ministerial direct involvement at the completed stage of each PAR review, a Minister in his departmental capacity would probably also find it advantageous not only to determine, obviously, the choice of subject to be studied, but also the scope and options to be covered before too much detailed work is completed by his officials. In this way a Minister not only retains control of the study but can utilize PAR to develop an optimum communication with his officials. Anyone at all familiar with studies and decision-taking in government will know that this question of separating the politically subjective from the analytical objective aspects of any study is frequently quite complex and below the surface. As mentioned earlier, PAR is about the taking of political resource decisions and, in understanding the nature of the ministerial review, it is important to appreciate the nature of the decisions which can and cannot be made at that point of time. In
particular, clearly PAR should not duplicate or undermine the annual PESC exercise in which the specific expenditure decisions are made. In practice, however, it is quite practical to separate many of the actual strategic decisions on major resource priorities aw~y from the annual PESC exercise, and indeed wise to do so. For, basically, PESC is concerned with total public expenditure as an important aspect of the management of the economy. Clearly it is useful to look at total public expenditure as a whole in this Keynesian way at certain times in the year and to consider the predicted level of total expenditure in, say, the next 5 years based on actual current policy decisions. Against such a backcloth the predicted expenditure timing of individual programmes can also be appropriately related and gauged The converse and impractical alternative to this PESC approach would be one where individual expenditure decisions and commitments were made in an uncoordinated manner at different times throughout the year, and the overall total derived as some final resultant. In this age of Keynesian economics, combined with the vast nature of the competing claims for Government resources, such an uncoordinated approach would be somewhat antiquated. Although PAR-type specific decision taking reviews do not, and should not, pre-judge PESC by committing actual future expenditure, they can most constructively do three things. Firstly, ministerial decisions in the PAR context can guide the work of officials by clarifying the primary purposes and objectives of major Government resource programmes. Secondly, they can highlight certain policy options which justify priority attention and eliminate others before too much detailed and expensive work is carried out by officials. Thirdly, they can give a clear indication of the direction that research and development should take to assist most effectively in the evolution of Government policy. Furthermore, they can do all these things so that the work involved flows in a sensible time sequence into the further process of decisions in the PESC context. In fact, looked at in this way, it can be seen how PAR and PESC are really complementary, and how, in fact, PAR will also help strengthen the operation of PESC. In view of the comments already made on five of the major features of PAR, it will be clear that its development will create a pressure to improve Government information systems, including those concerned with programme objectives and performance in meeting those objectives. This aspect of the system is of sufficient importance that it does make up it sixth distinct feature of PAR. LONG RANGE PLANNING
Obviously information systems can get detailed and involved and it is not intended to delve into the question in this brief summary. Anyone at all familiar with information systems in government will know however, especially if they have tried, for example, to plough through the Estimates, that figures which are assembled for control and security purposes are often not in a particularly useful form for reconciling to, or evaluating, policy. In fact, governments throughout the world today are grappling with this problem of producing figures for policy analysis, control and management purposes in a manner which meets the requirements of each without undue paper work and duplication in material. In particular, a major aim in such development is to make the different figures used for policy, control and operational management purposes reasonably simple in the manner in which they are reconciled. Clearly, for example, in the case of education, it is frequently easier to discuss policy in terms of the structure and opportunities for different age groups, whereas it is not necessary practical to control or manage programme expenditures in this form. In the launch design of PAR, considerable care was taken to ensure that these quantitative aspects of analysis and decision-taking today were not allowed to blunt and reduce the capacity for actual policy analysis and decision. In particular the phasing of the PAR launch was designed to give priority in the earlier years to the completion of actual individual PAR studies rather than, as some other countries appear to have done, to encourage the too early creation of complex information systems which frequently go under the terms output budgeting or PPB. Clearly today the increasing problem is not one of security control to prevent a king spending money voted by Parliament for naval vessels on his mistresses, but increasingly to be clear on the real need and objectives which the ships are meant to meet, and then to ensure that a monitoring process evaluates the effectiveness with which these policy objectives are in fact being met. The design ofPAR has at all times been seen in its fullest Parliamentary setting, and not just as an aid to the Executive. It is the potential improvements in the formal nature of Government information in the fullest public and Parliamentary sense which do, in fact, make up the seventh and final major feature of the PAR sytem. PAR can make this major contribution to more 'open government' in that it will encourage and support greater emphasis in expenditure analysis and debate on the outputs and achievements of programmes MARCH. 1973
and not unduly on the security and budgetary input aspects of programme expenditures. For, in being designed to focus specifically on the emerging needs of a changing society, the way expenditure programme objectives meet these needs, the way actual programme outputs are effecting the objectives, and the way overall expenditure priorities between different programmes are strategically evaluated, PAR is directed at the very substance of politics. Clearly today there is the most intense pressure on the work of the House of Commons. It is, of course, a major and current problem to know how its very scarCi: time can be most effectively use'tl. Much experiment is going on, for example, with the use of Select Committees. Basically, however, by helping to improve over time the form in which expenditure programmes are presented to the House, PAR can make a contribution to easing the problem. In particular, it could be expected to help the Select Committees in their work involving expenditures, and in this way help relieve pressure on the main House. Anyone who has listened to the annual 2-day expenditure debates in the House, and has also seen the low attendance of Members, will readily appreciate there is an unresolved problem here. By its nature PAR could well make a significant contribution to the way in which the work of the House in this field is eventually related, for example, to the work of the Expenditure Committees and, in time, to the Public Accounts Committee. All this will not happen overnight, but the progress of PAR to date, as shown in Treasury evidence on PAR to the Expenditure Committee, has been fast. In practice, the Committee itself has not only taken evidence on PAR, but has already completed a number of hearings designed to ascertaitJ. the way in which methods of expenditure appraisal are being improved, and specifically the way in which expenditure objectives can be evaluated against needs analysis.
PAR LAUNCH DESIGN AND ORGANIZATION In addition to the design of the PAR system as such, comparable care was given to the design of the actual launch and also to the organization methods and responsibilities for effecting the overall approach. In order to gauge the nature and significance of these aspects it is useful firstly to summarize the seven major features of the PAR system as described above. (1) Programme objectives defined in an operational useful manner.
(2) Objectives then broken down into output measures which facilitate some measure of actual programme effectiveness. (3) A broad brush strategic review of a department's overall activities to highlight and determine the specific issues on which PAR depth analysis should be concentrated. (4) Development of Government overall objectives and priorities as a necessary aid for effecting (1) and (3) above. (5) Ministerial presentation and review of PAR studies. (6) Improved and integrated information systems across Government to facilitate strategic policy planning, control and management follow-through of programmes. (7) Transfer of these changes in the Executive arm of Government into their appropriate Parliamentary and public setting. Starting from January 1971, the actual total launch of the whole system has been designed to be effected in approximately 3 years. In the first year priority was given to the immediate study of a number of individual programmes with an emphasis in the analysis on programme objectives and effectiveness, features (1) and (2), and to the actual Ministerial presentation and review, feature (5). In the second year increased emphasis was given to features (3) and (4), to help concentrate the PAR depth analysis on to the mainstream emerging strategic issues of the Government. Priority was also given in the second year to start the fundamental improvements in information systems, particularly the design of programme structures across the full range of departments' activities according to the nature of programme objectives. During the second year Treasury evidence on PAR was also given to the House of Commons Expenditure Committee, which was subsequently followed up by the Committee in its basic PAR-type questions into four major fields of Government activity. In the third year of PAR the whole system can be consolidated, so that each of the seven features is used to help strengthen the other features. In many ways this point is particularly important as a close examination of each of the features of PAR will show that they are mutually interdependent, and each strengthens the others in operation. Although PAR cannot truly be called a technique, it is in fundamentals an approach to resource management. Obviously it is not a substitute for management, no more than objective analysis is a substitute for creative thinking. Bearing in mind these limitations, however, 5
it is an approach to management which should help to deploy the particularly scarce resources of able management and creative analysis in a particularly optimum manner. In addition to each feature of PAR strengthening and supporting the other, it will be found in practice that it is in many ways, as a system, significantly selfcorrecting over time. For clearly the feedback from measures of programme effectiveness will help identify programme objectives in a more effective manner which, in turn, will help to update overall Government strategy. Looked at a different way, for example, the probing and questioning of a PAR-like nature of House of Commons Committees will have a similar beneficial influence. Similarly, the very quality of this questioning can itself be improved by the development and improvement of programme structures, and the resultant availability of better programme information. Although there were two major problems which had to be overcome in the design of PAR, and which will be referred to later, there were also two additional, but smaller problems which needed particular attention. The first of these was concerned with the design of the appropriate annual timetable for PAR, to ensure the workload involved did not peak at particularly difficult times, such as during the deeply technical part of the PESC work during February-June of each year. In practice it was found to be perfectly feasible and even advantageous to design the annual PAR cycle in a way where the main workload occured outside this period, and could be managed by the Central and Spending Departments in a manner which actually complemented and strengthened the PESC process. The second of the relatively smaller problems inevitably arose from the scarce availability of creative analytical staff with PAR-type experience. In such a situation there is always a temptation to have trial runs, or feasibility studies, and enormous training session which, however, run the risk in practice of appearing academic, expensive in staff time, and rather of a long-term nature. In practice the approach adopted was one which limited the number and type of PAR issues to be studied to a manageable size in the first launch year. Thus experience was created in a practical manner which, at the same time, enabled the PAR system to contribute to the quality of actual programme decisions during its first year of operation. Clearly, in the second and subsequent years, this established knowhow base can be confidently consolidated, enlarged and managed according to the number, nature and demands 6
of emerging PAR-like questions. Particular priority was, however, given to the appointment of PAR co-ordinators in each major spending department early in the first year, so that an anchor position was established from which PAR could grow according to the particular requirements of each department. The two major problems in the design of PAR arose from (I) the need to break the total PAR process, covering the seven features mentioned earlier, up organizationally between central departments, and (2) the obvious need in the design ofthe overall 3-year launch to get the launch priorities in the first, second and third years properly balanced and inter-related to one another; and in particular to do this in a manner where PAR could be seen to be contributing in the first year. Anyone at all familiar with the efforts of a number of other countries to improve their analysis and decision processes in public expenditure during the last, say, 8 years, will know that various ways have been tried to overcome the second of these problems. Frequently, countries have coined terms such as planning, programming and budgeting (PPB) or output budgeting, which have in practice tended to give priority to the development of information systems in detail and on a broad front. As mentioned earlier, however, the 3-year PAR launch design was particularly structured to avoid the pitfalls and backlash which can result from this approach. Basically, the PAR launch was designed to enable it to contribute to the quality of policy analysis and decisions in the first year of operation and then to let the system broaden out in its second and third years in a managed way according to the seen and emerging advantages. In the early stages of the design of PAR the functions involved in all the separate features were collectively known, for want of a better expression, as the Central Capability. It was, however, a major problem to know how best and indeed whether to split the overall system, with its seven major features, up organizationally between the three central departments. Just prior to the June 1970 election, however, it was clear that there were advantages in separating the development of an overall government strategy and priorities organizationally away from the rest, and locating it in the Cabinet Office: the organization for effecting this function later became known, of course, as the Central Policy Review Staff. As mentioned in the January 1972 Treasury evidence to the House of Commons Expenditure Committee, Ministerial responsibility for operating and coordinating PAR is now with the Chief
Secretary to the Treasury. In practice, in fact, it has proved quite realistic to retain the overall integrated strength of the PAR system, and yet enable each of the three central departments to make a major and direct contribution. The major reason for the Treasury being responsible for PAR is that within the central departments the real depth knowledge of the spending departments expenditure policies and proposals is to be found at Assistant Secretary and Under Secretary level in the expenditure divisions of the Treasury. It made sense to utilize and build on this know-how in PAR by making the same expenditure divisions also responsible for co-ordinating PAR activities in their field, in a complementary manner to the way they used and progressed the PESC work. Such an arrangement also minimized the dangers of function and staff duplication between central departments. As the PAR approach becomes more consolidated its operation should help clarify and improve not only the organizational working relations between central departments, but also the working relations between central departments and the major spending departments. At the end of a decade in which the number of major spending departments has been reduced from 20 to 10, and the number of central departments increased from one to three, this is a very real point; it is also one which helps to illustrate how a thorough approach to strategic planning in this day and age of change does help identify and create the required changes in organizational relationships for effecting programme priorities. FUTURE DEVELOPMENTS The design of PAR has at all times given priority to making the whole approach absolutely flexible. In fact, as mentioned at the beginning of this paper, PAR was designed to help the executive and legislative branches of Government respond more sensitively to the increasing pace of technological change in society today. Governments come and go however and it is quite possible that a future Government will consider abolishing the system. In such a consideration however it is to be hoped that such a decision would not be taken in some general abstract manner but would be addressed firstly to the evaluation of the validity of each of the seven major features of the system. Only in this way can a proper appreciation and evaluation be effected, for PAR is basically about certain specific blocks of work, and is not some ambiguous general expression. From what has been said in this paper, however, there is good reason to believe that, just as the Labour Government designed the introduction and LONG RANGE PLANNING
development of Green Papers, and both major political parties have contributed to the way in which the PESC system has developed, so too PAR will emerge and become improved over the years by successive administrations. Before finishing this description of PAR, however, it is interesting, just briefly, to indicate some of the ways in which it can develop in future, in addition to the ~ pletion of the launch and general ~()nsoli dation of the changes already 1fiade. In particular: (l) As government is the 'art of the possible' it follows that particular care is needed in the development of a government's overall strategy to ensure that the different programmes are integrated and balanced, one to another, and do not pull in different directions. To the extent they are not integrated, and perhaps the cumulative result of fragmented decisions taken in different contexts, then without doubt much less will be possible of achievement than would otherwise be the case. PAR is no substitute for a sound and integrated strategy, but it can, and should, make a considerable contribution to the development of such a strategy. (2) Although PAR has been described in this paper in its overall government setting, without doubt each of the seven major features of the approach are for practical purposes equally valid in a single department of government context. In this day and age of giant departments, with annual expenditures sometimes of the order of £2000m., it does not take much effort to justify this point. Over time, increasingly individual departmental Ministers and Officials can be expected to adapt the seven features of PAR, whatever they may at the time be called, to the peculiar requirements of individual departments. Some departments will lead and some will follow but, in the final analysis, it is the pace of change in a department's working environment combined with the peculiar nature of its work which will trigger some departments to move faster in this direction than others. (3) Because PAR necessitates not only a thorough dialogue between Central and Spending Departments, but also a specific contribution from each of the Central Departments, its operation will continually encourage not only a clear and logical interface in functions between Central and Spending Departments, but also between the individual Central Departments themMARCH. 1973
selves. In fact, the operation of PAR could be used to define these relations in an operationally most useful manner. In a similar manner PAR should facilitate the further development of new organization forms such as, in particular, the department agency concept as an aid to reducing the present 'operations' work load on Permanent Secretaries and Ministers. (4) By emphasizing the need for a thorough and systematic selection of issues for depth analysis, PAR will encourage a more managed use of scarce analytical resources between on-going Government programmes and new policies. Without such' a systematic approach for selecting issues for depth analysis there is always the probability that these scarce analytical resources will be largely engaged on developing new policy fields to the detriment of the up-dating of on-going programmes. (5) Once PAR becomes fully run in and government emerges more strongly as a sensitive 'learning system' in a changing environment, the case for major outside convulsions of, for example, the Fulton, 1961 Plowden, and 1968 Duncan Reports should be considerably reduced. (It is interesting, for example, in this context to consider the seven features of the PAR system in relation to the comments of Dr. Schon in his 1970 series of Reith lectures on Beyond the Stable State.) (6) The Fulton Report brought out clearly the many varied pressures on a Permanent Secretary, and went on to make proposals on how, for example, department planning functions might be improved and reorganized. As a Minister, however, also has somehow to effect not only his departmental executive responsibilities, but his collective Government role, constituency work, House of Commons commitments, and, not least, the communicating of Government policies to the Public at large, it is quite clear that every effort is needed to ensure in this day and age that the decision processes of Government do not bottle neck at this Permanent Secretarial and Ministerial level. Clearly this problem is inevitably more severe with the advent of the giant departments. As PAR has been designed to improve the decision processes of government it will be surprising if it does not make a significant contribution towards minimizing the nature of this problem. In fact, it will be surprising if future developments do not justify the formal
strengthening of departmental planning functions, easing of the Accounting Officer and specific 'operational' responsibilities of Permanent Secretaries, and the selective but obviously limited use of political advisory appointments at senior level. By clarifying programme objectives in an operationally useful manner, a followthrough from PAR should enable individual job functions to be more easily defined, so that such possible changes as mentioned above become both feasible and justified. (7) As PAR helps to give greater attention to matters of programme effectiveness, in meeting programme objectives, it will also be interesting to see the way in which the work of the Select Committee of Expenditure evolves in relation to the role of the Public Accounts Committee. Value for money is, of course, a different thing from efficiency in control of voted expenditure. As a Permanent Secretary is, however, in most cases also the Department Accounting OffiCQ", it will be particularly interesting as mentioned above to see if his workload in this area is eased as the policy analysis pressures of House of Commons Expenditure Committees are increased. It can certainly be argued that the security and control type of work can be more easily delegated than the policy work. (8) The way in which analysis and decision taking today copes with the management of research and development, in its full social, economic and industrial context, is of course, becoming far more main-stream as a subject for public debate and interest. The work of the Select Committee on Science and Technology has done much to foster this encouraging development. Earlier in this paper in describing the specific nature of decisions which PAR has. been designed to facilitate, it mentioned that during the PAR review quite specific decisions could and should be made on the direction and priority that research and development should take. In this way PAR can help determine not only the priorities between different research programmes, but also what the absolute level for research and development budgets should be at different points of time. (The actual way in which PAR can help in the management of research and development is shown, for reference purposes, in the note* at the foot of the following page.) 7
(9) Probably most Governments in the past have got rather tired in Office, run out of policy ideas, and consequently produced somewhat vague Election Manifestos. If PAR is followed through effectively it should, in that it is concerned with overall Government objectives and priorities being continually brought up to date, considerably help overcome this problem. Likewise, as Select Committees get more information of a PAR-like nature from the Executive, the Manifesto of an Opposition Party can also benefit. Either way this type of development, in a day and age where more participation in Government is demanded, should help clarify the nature and priority objectives of a Party's Manifesto and Mandate. (10) As new Ministers have found it valuable and indeed essential to master the nature of PESC, so too they will find it increasingly useful to familiarize themselves with the scope and nature of PAR. (11) No doubt there will be very many able individuals who will not find the management discipline inherent in
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PAR to their liking or taste. But in this te.chnical age there is this need to choose between resource priorities which do have alternative uses. As the pace of change increases so too will the need for some sort of PAR-like approach to decision taking only become more pronounced. •
*In general discussion on this R&D subject today it is generally agreed that there is a dialogue problem in this field between what may be called the R&D experts and those reponsible for what might also be called overall administration and resource deployment. Because PAR has been designed specifically to tackle this problem it can help in three major stages during the analysis and review. Firstly, it can facilitate a two-way exchange of views at the time basic 'external' assumptions and 'external' forecasts are made at the first stage of a study. Secondly, it can facilitate a two-way exchange of views early in the study on the current 'internal' programme situation in terms of current overall programme effectiveness in the area of activity being reviewed. This latter point merely recognizes, of course, that frequently great care and often research is needed to find out the actual effects of current programmes. After completion of these two stages, when the R&D experts have had every early opportunity to evaluate and contribute to the initial analysis of overall policy options, the third stage involves a
two-way exchange of views in which the R&D experts commit, in specific programme form, to undertake certain assignments which, because of the early dialogues and analysis, can be seen to fit by all concerned into overall policy development plans for the areas considered. It is a major responsibility of top management itself to create the framework and atmosphere for these dialogues to take place. As mentioned earlier, the nature of these dialogues and work are at the heart of the PAR process. This should not be surprising because in fundamentals PAR is concerned with government as a learning system in which the programmes of government are systematically adapted to a fast changing involvement. As PAR is concerned with the management of that interface between Government and its changing environment. it must be particularly concerned with the way in which inevitably scarce research and development talent is deployed in effecting this role.
REFERENCES The reading references to the comments in this paper are the same as those listed in an article which appeared in the June 1972 issue of this Journal under the heading Comparison of Strategic Planning in Large Corporations and Government. The two articles were designed to be complementary, and it will be seen that the major points of comparison in the earlier article do, in fact, make up the foundations and specific features of the PAR system.
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