mike driver, department for work and pensions
TRANSCRIPT
Spending Reviews - a perspective from a spending ministry
Mike Driver, Director General, Finance GroupJacinda Humphry, Director, Planning and Performance ManagementPhill Wells, Deputy Director, Planning and Performance Management
Italy – UK Spending Review SeminarRome, 6 February 2014
2Department for Work & Pensions
About the Department for Work and Pensions
Families & Children -
recognising the importance
of family in providing the foundation of every child’s
life
Supporting separated families to play an active
role in the lives of their children.
Working Age -encouraging
work & making work pay
Promoting high levels of
employment by helping people,
including the disadvantaged, into work and to stay in work by making it
pay.
Disability & Ill Health –
enabling work, independence
& wider participation in
society
Fulfilling potential and having
opportunities to play a full role in society.
Controlling costs – improving services to the public by delivering value for money and reducing fraud and error
Social Justice – transforming livesProviding support to the most disadvantaged in order to help them turn their lives around.
One DWPCreating an extraordinary Department, working together as One DWP.
For Retirement - providing a
firm foundation & promoting
saving
Helping people to meet the challenges of an ageing society
and maintain standards of living
in later life.
Families & Children -
recognising the importance
of family in providing the foundation of every child’s
life
Supporting separated families to play an active
role in the lives of their children.
Working Age -encouraging
work & making work pay
Promoting high levels of
employment by helping people,
including the disadvantaged, into work and to stay in work by making it
pay.
Disability & Ill Health –
enabling work, independence
& wider participation in
society
Fulfilling potential and having
opportunities to play a full role in society.
Controlling costs – improving services to the public by delivering value for money and reducing fraud and error
Social Justice – transforming livesProviding support to the most disadvantaged in order to help them turn their lives around.
One DWPCreating an extraordinary Department, working together as One DWP.
For Retirement - providing a
firm foundation & promoting
saving
Helping people to meet the challenges of an ageing society
and maintain standards of living
in later life.
The department’s objective is to help people lift themselves out of poverty and stay out of poverty, through work, saving and support
3Department for Work & Pensions
And an outline of our key governance arrangements
Departmental Board• Advises on strategic and operational issues• Scrutinises and challenges Departmental
policies and performance
Executive Team• Agrees the framework of responsibilities,
plans and resourcing to deliver agenda• Ensures the culture of the Department best
supports the agenda
Departmental Audit Risk and Assurance Committee
• Independently challenges the appropriateness and adequacy of the Department’s governance, risk management and assurance processes
HM Treasury• On-going scrutiny of departmental spending,
monthly forecasting and forward planning
National Audit Office• Scrutinises public spending on behalf of
Parliament including formal audits of annual accounts and regular, specific value for money studies
Parliament• Department expenditure is voted by
Parliament and committee system provides detailed and rigorous challenge, especially by the Public Accounts Committee
Internal External
4Department for Work & Pensions
DWP’s overall budget for 2013-14 was £171.8bn….
Child Benefit £11.2bn
HMRC (Benefits + Credits)
AnnuallyManaged
Expenditure£40.2bn
Tax Credits +
In-work Benefits£28.9bn
HMRC (Benefits + Credits) Departmental Expenditure Limit £160m
Other Benefits £2m
Source: No.10 Transparency Return and DWP Statistics
5Department for Work & Pensions
…. of which £7.98bn was under our direct control
6Department for Work & Pensions
Departmental resources and Annually Managed Expenditure both controlled more tightly….
• SR10 and SR13 also sought significant savings in social security expenditure as a key element of deficit reduction programme
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
£ m
illio
n
0
20,000
40,000
60,000
80,000
100,000
120,000
head
coun
t
Baseline expenditure Non-baseline expenditure Headcount
7Department for Work & Pensions
The Spending Review process…. And how it works for us
• Spending Review sets multi-year financial limits– Department operates internal continuous planning process– Additional in-year fiscal events: Budget and Autumn Statement
• SR process formally announced by Treasury– Set information requirements– Overall objective for Government and initial indication of departmental
contribution
• In reality, work in the department starts much earlier…..
• Led from within Finance Group but involves wider department from the outset
8Department for Work & Pensions
Spending Review 2010 – the key decisions on Annually Managed Expenditure….
• Once-in-a-generation welfare reforms were enacted in the Welfare Reform Act 2012 including:
– Universal Credit– Personal Independence Payment
– Time limits to incapacity benefits– Housing Benefit reform
• Alongside major long term reforms to State Pensions and state pension age
• Designed to deliver improved work incentives, better support for the most vulnerable and….
• …Expenditure reductions in the short and long term - SR10 proposed welfare savings of £7bn a year
9Department for Work & Pensions
… and on Departmental expenditure
• Between 2010 and 2015 DWP DEL budget will reduce by 34%
• Overall workforce will fall from 110,000 to around 70,000 full-time equivalents– SR10 corporate centre organisation redesign – resulted in 40% headcount
reductions in 2011-12
– A single DWP Operational organisation created from a number of separate delivery agencies and 25% efficiencies over 4 years
– 2013-14 voluntary exit scheme – reducing operational staff who were originally planned to be working on delayed key reforms – circa 3,300 FTE at a cost of £120-140m generating £100m annual and recurrent savings
• Other changes included refreshed estate strategy and new cross-Whitehall shared services model
10Department for Work & Pensions
Pre-conditions for a successful Spending Review…
• Clarity
• Strong relationship DWP and HM Treasury officials
• Internal co-operation
• Permanent Secretary (as Accounting Officer) and Ministerial involvement
11Department for Work & Pensions
… but on reflection, several other issues matter
• Truly “zero-based”?
• Stability of the policy environment
• Capacity and capability of the organisation to deliver
• Evidence and ideology
• Reaching a “final” agreement
12Department for Work & Pensions
What happens post-Spending Review?
• Formal settlement letter received
• Subsequent negotiations with HM Treasury on points of detail
• Departmental allocations, and monthly control process (in year)
• Multi-year plans to deliver in medium term within voted funding
• Adjustments to settlement agreed at two annual fiscal events – Budget (March) and Autumn Statement (December)