The Politics of Efficiency
Value for money (VFM) auditing and the use of performance indicators are two subjects currently commanding considerable attention within local government. Despite this recent interest, VFM appraisals are not new and various forms of evaluation have been used for some time throughout the public sector. During the 1960s and up until the late 1970s, Programme Planning and Budgeting Systems, Management by Objectives and Zero- Based Budgeting were developed and applied in some local authorities to allow better appraisal. A number of committees reporting between 1967 and 1976 (the Maud, Bains and Layfield Committees), stressed the importance of obtaining value for money in local services and considered stringent financial controls essential if this objective were to be met. The result of these reviews and with central government's general concern about efficiency, is the statutory obligation now imposed on external auditors of local authority accounts, to ensure that proper arrangements for achieving value for money have been made. This chapter reflects the revival in interest in the efficiency field and the need for research into a number of key issues. We begin by outlining the background to the introduction of this type of auditing and consider the legislative basis of VFM and the role played by the Accounts Commission. We then consider the operationalisation of the efficiency strategies. A preliminary survey of local authorities' responses to the auditors new duties has been conducted and the findings of this are summarised. Finally, we conclude by highlighting some of the problems which have impeded the development of value for money auditing and the use of performance indicators to date.
The need for efficiency in the public sector has been a central theme of the 1980s. As Graham Mather has said (of):
the Thatcherite commitment to better value for money. It is a straightforward concept, based on the underlying premise that monopoly services provided free at the point of consumption and untested by competitive forces are unlikely to be efficient in the medium and long-term; that they