5 questions to ask about a budget
DESCRIPTION
This was a presentation made to elected councillors who wanted some advice about questions they could ask when scrutinising their council's budget. I think, however, that the questions could be asked by any stakeholder about a budget.TRANSCRIPT
5 questions to ask about a budget
Gary Bandy5 December 2012
Fiveq u e s t i o n s you can ask about the budget
What is a budget?
It's clearly a budget.It's got a lot of numbers in it.
George W. Bush
Bernard:
Sir Humphrey:
Surely we want to save money?
Bernard, you know perfectly well that there has to be some way to measure success in the Civil Service. [...] we have to measure our success by the size of our staff and our budgets. By definition, Bernard, a big department is more successful than a small one.
Yes Minister, ‘The Economy Drive’ (1980)
A budget tells a story using numbers instead of words
“The budget is a representation in monetary terms of government activity. If politics is regarded in part as conflict over whose preferences shall prevail in the determination of policy, then the budget records the outcomes of this struggle.”
—Wildavsky, 1984
The ritual of budget preparation helps to establish “how things are done here.”
11How has the budget been made?
Hopefully, not like this ...
Incremental budgeting
Relatively easy to do
Understandable
Stable
Focus on departments
Focus on inputs
Over-estimation
Little review of base budget
and it can lead to this ...
salami slicing
Increments are not always best
Zero-based budgeting
Focus on priorities
Challenges service delivery
Budget adapts quickly to policy changes
Encourages ownership of budgets
Difficult to do
Time consuming
Resistance from losers
Many budgets “locked-in” by legislation
“rational incrementalism”
22What outputs will it deliver?
Budgets are about inputs but we need to think about outputs and outcomes
Policy-led budgeting?
Objective? Extinguish fires or save lives
Output Budgeting: Put out fires or save lives?
Community Budgets: complex families in Little Hulton
£0
£40,000
£80,000
£120,000
£160,000
Now Future?
Welfare BenefitsPlannedReactive
Focus on outputs/outcomes
More corporate than departmental
Multi-year view
Complex — e.g. some activities serve multiple outputs
Requires clear, consistent objectives
Harder to reach agreement than with incremental changes
33Who has been consulted?
In my experience it left nobody happy
The law and culture of consultation is stronger in some other countries.
Participatory Budgeting
Credibility and ownership by the public
Transparency
Good for rationing capital schemes
Risk of over-simplification of issues
High interest in some issues, none in others
44What assumptions is it based on?
Budget assumptions need to be clearly stated and understood
55How robust is the budget?
The chief finance officer has to make a statement about this
“It’s not the plan that’s important, it’s the planning.”
How was the budget made?What outcomes will it lead to?Who has been consulted?What assumptions is it based on?How robust is the budget?
