Mr. Sebastian Barnes:

The Chairperson has picked up on two issues regarding the case for this more medium-term approach. There is a complementarity between these stronger performance budgeting-type frameworks and medium-term planning. By setting clear spending envelopes several years ahead, Departments can then plan to deliver around that. There is a big complementarity with that, which might help to increase performance and efficiency. Of course, this makes it easier, because it is not necessary to spend as much money to get to the same outcomes, or better outcomes can be achieved with the same money.

The other complementarity is a process like that might reveal more information and encourage the Government to build more data. It could then build bottom-up forecasts of these things more effectively. The Chairperson will remember over the past couple of years this has been a big problem in the area of health. Basically, a top-level, top-down target was set for the health service, which did not correspond to anything it planned to spend or any of the pressures it was under. The health service was spending on a bottom-up basis and the average overrun was in the hundreds of millions every year. This is a really big problem. Improving the budgeting framework in general, with a more microeconomic focus, would help to solve these macroeconomic problems. The two very much go hand in hand.