Mr. Sebastian Barnes:

This is a very useful tool for the committee. A number of countries do it in different ways. The Netherlands is the outstanding example of how to do it. Currently, we have a process where IGs, the evaluation service, could be used more effectively. It did much good work on forecasting and describing what is going on in the public sector, which we do find useful, but it is not the same as the kind of process we would see in the Netherlands. The Netherlands look very closely at different programmes. Different countries can do it different ways. All the spending can be tested at the same time or have a regular programme of going through it. It is important to look at the priority areas. One of the aspects I recall from the past is that sometimes the areas that were taken out for reviews were not the obvious areas we would look at. They were areas that were quite small and where one would think the scope for significant savings was quite low.

As the Chairman said, there are two aspects of this. One is to look at the way spending is allocated between different activities and the other one is to look within activities to see whether there is scope to do things differently. In this tougher fiscal environment that we will be in choices will be more difficult. If there is scope on the spending side we might spend less money on activities that are lower priority and that may reflect priorities set a long time ago and see where there is scope to increase cost efficiencies. It is very useful to use that scope because it then freezes up resources for other areas and, from our perspective, it reduces the pressure on the public finances to borrow more just because we can find the money through what we are doing already. My understanding from other countries is that those kinds of reviews are most effective. It is easier to do things to do with prioritisation or setting the parameters of existing policies. It is much harder sometimes to go into the nitty-gritty of the efficiency. The Dutch example is very useful. They have significant expertise in doing this. They ask some hard questions of themselves about what they are doing. That kind of process would hugely strengthen the public finances in general. One of the mechanisms through which that works would be through strengthening the oversight procedure. It would give the committee the analysis it needs to ask the questions it wants to ask.