Show, don’t tell: How government departments can better demonstrate the impact of their spend
As budgets tighten, the UK Treasury is putting more pressure on government departments to show how their spending directly supports the delivery of key outcomes and policy priorities.
Each department now has an Outcome Delivery Plan that sets out their priority policy outcomes, strategies for achieving them and metrics to track delivery. And all this is aligned to Green Book best practice – the Treasury’s guidance on developing business cases to appraise proposed policies, programmes and projects, and evaluating them before, during and after implementation.
It’s likely the Treasury will require departments to show progress on these plans as part of future funding settlements. But showing a direct link between activities and outcomes is often challenging. Many areas of government struggle to see how their activities influence long-term outcomes. Despite the Green Book, departments often don’t know how they can monitor, track and evaluate the impacts of activities.
A National Audit Office (NAO) report from December 2021 found that, despite commitment to evidence-based decision-making, there’s little to no evaluation of much government activity. The report showed that, of the 108 most complex and strategically significant projects in the Government Major Projects Portfolio (with a total spend of £432bn), only nine had robust evaluation. And 77 (accounting for 64 per cent of total spend) had no evaluation arrangements in place.
At the same time:
- government departments often align to inputs, not outputs or outcomes – for example, the Department for Transport is structured around different modes of transport despite them all impacting many of the same outcomes
- there are many external influences that affect the meeting of target outcomes, and the interplay between them is difficult to understand
- data is often incomplete or scattered across systems, which hinders efficient and effective decision-making.
So, how can government departments better understand how their spend achieves outcomes to make informed choices on their approach and prove their impact to the Treasury?
Government departments need to design their policies with clear outcomes set out in the associated business case. They then need to establish clear and measurable links between activities and outcomes whilst embedding a culture of continuous evaluation – of both policy and programme delivery. That means giving decision makers the tools and data needed to make informed judgements, and the Treasury the information to justify the use of government funds.
Government departments can achieve this by:
Using Theory of Change to underpin a structured, pragmatic evaluation framework
Theory of Change is a framework originally developed and used in international development programme delivery. It provides a logical and structured way to help organisations show causal relationships between inputs, activities, outputs and outcomes.
The structure can provide a strong foundation for organisations to understand how their day-to-day activities are delivering organisational outcomes, clarifying key assumptions and dependencies. This can be particularly useful when policy or delivery are adopting new initiatives. For example, in innovation and R&D where a more experimental approach to evaluation is necessary.
A robust Theory of Change also informs measures of how inputs and activities contribute to the desired outcomes.
Creating simple digital tools to provide insight to decision makers
To ensure decision makers use the right information to help justify strategies, approaches and spending plans, Government departments need to bring supporting data together into a single location and make it easy to understand.
Creating simple, insightful digital tools that capture measures and indicators across the Theory of Change, provide a single source of truth and ensure consistency and robustness of evidence will support strategic decisions. This can be achieved by ensuring that tools bring together the right information (not all possible information), focus on the output and outcome measures that drive reporting, and present information using simple yet insightful graphics.
Fundamentally, this approach builds trust within the department and with key external stakeholders, such as the Treasury and other funders. That’s because it creates a mechanism that encourages disciplined collection of data, ensuring consistency and a single source of truth. It also creates better feedback loops that improve inputs and assumptions, which increases the likelihood of delivering outcomes.
Creating a culture of continuous evaluation
To ensure teams are willing and able to use the digital tools to develop strategies and make decisions, it’s important to understand the organisational culture, gain the sponsorship of leadership and communicate effectively.
Understanding the culture and ways of working will make it easier to identify what needs to change to support the transition to an outcome-focussed mindset. And by getting the leadership team visibly on board, the change in mindset will happen much more quickly. Of course, everyone needs to go along with the change, so effective communication through existing and new channels will be crucial.
Leaders can achieve this by:
- developing rapid proof-of-concepts to quickly demonstrate the value to the department and communicating this to the senior leadership team
- ensuring digital outputs are easy to access and focussed on the needs of all stakeholders
- building evidence requirements and scenario testing into standard business planning processes
- challenging the organisation to focus on the right reporting metrics, noting that quality is better than quantity.
Although aligning activities to the delivery of policy outcomes and justifying spend remains challenging, using a Theory of Change, developing simple data analysis tools and embedding a culture of continuous evaluation will help. Together, they provide a robust yet pragmatic approach that can deliver quick results while building long-term capability.