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This paper explores the case for a “balanced scorecard” approach to assessing the merits of public sector spending.
ACE recognises that economies in public spending will be necessary to achieve the deficit reduction necessary.
However, it is important that where spending cuts are made, these are done in as systematic and ideologically neutral a manner as possible. There is no benefit to the country from decisions on spending that is purely politically motivated.
Therefore, ACE recommends that the government establishes a clear and transparent set of criteria for assessing items of public spending. This should aim to eliminate wasteful activities that add little or no value to the public, while ensuring that investment that does generate significant returns is maintained.
ACE suggests that these criteria should be applied using a form of “balanced scorecard” methodology, which the government and its agencies can use to assign priorities to budget items. This is preferable to “salami slicing”, which raises the risk of damaging beneficial investment.
ACE suggests that the indicators chosen balance the immediate costs of the investment with the potential long term returns and the risks of cutting the investment. It is important that investments that could unlock significant economic benefits are preserved as far as possible.
ACE suggests that, in the rationalisation of public services, the needs of users, stakeholders and communities should be a paramount concern. Balancing the diverse needs of a wide range of communities and users is a significant challenge, but must be tackled.
This methodology would require a comprehensive spending review and may take longer than a straightforward programme of budget cuts, but would leave the UK better placed to respond in the future.
The concept of a balanced scorecard approach is not new to the public sector; ACE’s view is that established good practice in determining value for money should be applied at all levels wherever possible.
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