Speech by the Rt. Hon. Elizabeth Truss, Chief Secretary to the Treasury

This is an excerpt from the Chief Secretary to the Treasury Liz Truss’s speech to the SMF, available here

If we want to make sure our public services continue to lead the world, we shouldn’t be losing control of the public finances or wrecking the economy.

We need a balanced approach – investing while driving productivity and value for money.

Productivity doesn’t mean we’re expecting people to work harder – people already work hard.

It’s about giving people the means and the freedom to maximise the impact of what they do. And making sure public services are having the greatest impact on people’s lives.

To achieve this, we need to continue to move towards a system that rewards the impact money has, rather than the amount of money spent.

We must also cultivate leadership in public services. We know what we want to see, but we should give those on the front line freedom to deliver.

And, finally, we must open up more of our public services to new ideas and disruptive innovation. We need to think big. Here’s what I mean:

Impact

Firstly: we must rigorously measure the impact each pound spent has.

If we can’t measure results, people will talk about what they always talk about: money.

We’re now much better at investing in economic infrastructure. With more sophisticated analysis we’re making better decisions than ever about where we invest taxpayers’ money. This means families and businesses see maximum gain when we spend money on roads or railways.

For example, in 2015, we were able to prioritise the dualling of the A11 to Norfolk, because it had a very high cost-benefit ratio compared to other projects.

Now we need to go beyond concrete and steel and use this approach to look at how government spending affects people.

We’re already doing this in higher education. We’ve recently published data measuring the impact of a university course on students’ prospects.

It’s a new tool for comparing the return on investment at different institutions and courses.

It shows, for example, that students taking engineering at the OU can earn well over £50,000 five years after graduating.

And our Teaching Excellence Framework is incorporating earnings data, and providing a measure of the overall value-add that universities and courses provide.

However, effective measurement is not just about holding ourselves to our own standards, it is also about benchmarking our performance against other countries – noting where we are better and when we are not, so we can improve.

We know how to benchmark. We simply need to do it more.

Prioritisation

This measurement can help us prioritise.

We are already doing this by rebalancing public spending.  For example, by helping people into work, we’ve reduced the Jobseekers Allowance bill by £2.1 billion since 2010. And we are increasing public investment to around £1 in every £8, as opposed to £1 in every £14 in recent decades.

And we are reprioritising within out Budgets.

On Education, our prioritisation of funding to the front line has meant that we’ve been able to put £1.3 billion extra into core schools funding.

The evidence shows that high quality teaching that is the key factor of educational performance.

But we need to go further.

We need to back brave leaders, like Simon Bailey of Norfolk Constabulary, who is reshaping his force to deal with the changing nature of crime: making difficult decisions so he can invest in the IT required to deal with increasingly complex crimes such as adult and child abuse, sexual offences and cyber-crime.

Leadership freedom

As Charlie Mayfield identified in his report industry productivity, leadership is an area where the UK has much to learn.

To use his exact words: While we have world class, high performing businesses, in far too many UK firms of all sizes, management performance falls behind the best international standards.

Our public services are no different.

We need to move away from the idea that great leadership and management is something that you are born with. That someone is either Winston Churchill or David Brent.

Some of our most successful innovations like academies, foundation trusts and reform prisons have been about enabling and empowering leaders: giving them the freedom to lead and the accountability that comes with that.

Take the Michaela School, run by Katherine Birblesingh, that I visited in Wembley.

Katherine has reorganised the school day to eliminate the time normally lost moving from classroom to classroom.

Over time, it means hours – days – of time spent in the classroom instead of wasted in the corridor.

Taken together, seemingly insignificant changes can have a huge impact on children’s lives.

The Michaela School was recently rated ‘outstanding’ in every category by Ofsted.

Or take Worthing Hospital, where trust leader, Marianne Griffiths, has embraced the Japanese concept of Kaizen – continuous improvement.

This has been adopted by the brilliant team on Beckett Ward, led by deputy Sister Sue Grace.

Instead of lodging a complaint to senior management and waiting six weeks for a response, the team gather each day for an “improvement huddle”.

One such improvement was a nurse’s suggestion to move admin desks onto the patient bays. This would mean nurses could supervise patients while doing paperwork. Otherwise known as “BayWatch”.

Once put into practice, falls by frail patients dropped by 80 per cent.

We know our nurses are working their socks off.

The problem is, there are often too many barriers to making the small changes that have a big impact.

As a government, we must do more to empower our public servants, remove these barriers and provide them with the means and support to unlock their potential.

In the way we design frameworks and spending controls, the Treasury – whilst protecting public money – must make sure we are allowing leaders to lead and giving them freedom over how to achieve results.

Disruption is good

Finally, I want to take on this notion that the public sector should resist outside influence.

The public sector does not exist in a bubble and business should not be treated as the enemy.

Don’t critics realise that the cheap flights they take – the lattes they sip – and the smartphones they post their dubious comments from are all results of free enterprise.

Rather than ignoring or denying the virtues of enterprise we should be harnessing it for the public good.

Both of my parents worked in the public sector in Leeds, my dad as a university lecturer and my mum as a nurse and then teacher. In fact, my father is still working as a mathematics lecturer today.

The institutions that they worked in – Leeds University and the Infirmary – emerged in the city’s days as a wool town, and were paid for and heavily influenced by the industrialists of the day.

Fast forward to today, and we can easily see the huge contribution made by entrepreneurs and business people – like Lord Harris and Paul Marshall – to our public service. Both have brought their energy and drive to the academies and free schools movement, where performance is outstripping other schools in the state sector.

Public private partnerships, like the Docklands Light Railway, are some of the most effective and popular public services in the UK.

From Ask the Midwife, an app which is helping expectant mothers to access NHS services quicker and more effectively…

…to the brilliant IT company Reveal Media that supply bodyworn cameras to police, saving time and speeding up prosecutions

…to the transformative effect that digital flood information is having on coastal towns and villages vulnerable to flooding – technology only available because of the innovations of world leading software companies.

We must champion a rich, vibrant, creative, enterprising public sphere where all ideas are welcome.