Spending Reviews in Ireland: Methodology and Process for Advanced Countries

Spending Reviews in Ireland Technical Methodology and Process for Spending Reviews in Advanced Countries P draic Reidy and John Burke 6 November 2019

Irish Spending Reviews Background and Context Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 2 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

The Adoption of Spending Reviews in Ireland Ireland aligns with European-wide adoption of spending review following the Global Financial Crisis. In total,there have been four spendingreviewssince2009: 1. TheSpecial GroupReport2009; 2. TheComprehensive Review ofExpenditure (CRE)2012-2014; 3. TheComprehensive Review ofExpenditure (CRE)2015-2017; and 4. TheSpending Review2017-2019. Initial spending reviews were conducted in response to the crisis period and the need for expenditure reductions, more recently spending reviews have been used to promote spending efficiencyand effectivenessin the contextof public expenditureincreases. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 3 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Economic context matters 70% Spending Review 2017- 2019 Special Group Report 2009 CRE 2015-2017 CRE 2012-2014 60% 50% 40% 30% 20% 10% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(f) 2019(f) General Government Expenditure as a % of GNI* General Government Revenue as a % of GNI* Previous reviews focussed on deficit reduction, cutting expenditure to meet fiscal targets. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five Latter reviews now focus on re-prioritisation within increasing spending base. Focus in normal economic environment should be on the totality of spending and not just the additional incremental amounts each year 4 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Spending Review 2017-2019 High Level Approach Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 5 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Characteristics 3 year review cycle aiming to cover a third of current expenditure each year. Supported and signed off at Ministerial Level and agreed by Government. Managed by a senior level steering group (and subgroups when needed) in the Department of Public Expenditure and Reform which is supported by a dedicated Spending Review Secretariat. Transparent approach with all analysis published (as staff papers, not necessarily representing the views of the relevant Minister). Process was aligned with the annual Budget process with most papers published in July each year ahead of Budget negotiations in September/October. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 6 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Objectives Create a larger stock of relevant analysis and evaluation across all Departments and Offices, and maintain momentum over a three year period. Assess efficiency and effectiveness of expenditure programmes and identify areas of expenditure that require ongoing analysis if issues are emerging. Ensure that the spending review is more firmly embedded within the budgetary process. Provide the evidence base for reform efforts across Departments and the wider public service. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five Spotlight areas of innovation and good practice, both in programme design and service delivery, that will be of wider interest and applicability. 7 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Spending Review 2017-2019 Detailed Approach Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 8 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Timeline 8. Submission of Draft Analyses for Review by Subgroups (May) 1. Initial Briefings on the Process (Dec) 16. Preparations for Following Review (Nov/Dec) 9. Further Detailed Analysis (May/Jun) 2. Engagement on Topic Selection (Dec/Jan) 10. Ongoing Internal Review and Sign Off (Jun) 15. Spending Review Seminar (Oct/Nov) 7. Ongoing Internal Review 11. Presentation of Final Papers to Steering Group (Jun) 3. Establishment of Individual Review Structures (Optional) 14. Budget Negotiations (Sept/Oct) 6. Detailed Analytical Stage (Mar/Apr/May) Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 13. Publication of Papers (with MYER) with Press Conference or Press Release (Jul) 4. Presentation of Scoping Papers to Steering Group (Feb) 12. Submission to Minister for PER Prior to Publication 5. Spending Review Conference (Mar) 9 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Roles and Responsibilities Analytical Phase Governance and oversight steering group, subgroups and secretariat. Varied approach applies in Ireland. All reports are produced internally (no consultants) and can be authored: Centrally within the Department of Public Expenditure and Reform; By policy Departments; or Produced jointly. Level of engagement varies as a result, but, in general, there is always some level of engagement throughout the process. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five In some cases, to guide the analysis, a steering group is formed with representation across both Departments (exception rather than norm). 10 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Role of the Irish Government Economic and Evaluation Service (IGEES) A key post-crisis public service reform was the establishment of the Irish Government Economic and Evaluation Service (IGEES) in 2012. Initially centralised in the Department of Public Expenditure and Reform, IGEES units are now in all policy departments and provide economic services, including producing and reviewing business cases, undertaking policy analysis, spending review papers and other evaluations. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five IGEES economists and analysts have significant involvement in the spending review process including in topic selection, producing reports and presenting analysis internally and externally. 11 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Role of Department of Public Expenditure and Reform Key role for Vote (Sectoral) Sections and IGEES Vote (Sectoral) Sections: Sign off on selection of topics by end-January; Liaise with policy Departments in developing evidence base, providing data and producing and/or providing comments/observations on papers; If necessary, liaise with Central IGEES in DPER for internal consultancy; and Produce analysis based on available data/evidence which is presented to the Steering Group at both the evidence gathering and final drafting phases. Central IGEES Unit: Support through internal consultancy (for smaller Vote Sections); and Embedding skillsets within Vote Sections. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 12 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Role of Policy Departments Engage in the process. Collaborative approach but not one-size-fits-all. Enhanced role for Finance Officers and departmental IGEES units. Sharing of data / information. Existing and planned analysis by Departments will also play a key role. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 13 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Methodology Methodological approach draws from Ireland s longstanding Value for Money Review (VFMR) Framework. VFMRs assess rationale, efficiency, effectiveness, impact and continued relevant. Savings targets? Review context Scope Timeline Generating evidence for a more comprehensive review Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 14 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Coverage Initial aim of the process was to assess all current expenditure (approx. 55bn - 60bn) over a three year period (one third approach). Key sectors to be covered included health, education, justice and policing, social welfare expenditure, pay bill expenditure including staffing / workforce planning. The one third requirement was applied flexibly to promote engagement from policy Departments and to provide scope for revisiting important areas of expenditure. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five Some elements of capital expenditure were also reviewed, i.e. ongoing capital grants to companies, etc. 15 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Implementation Spending Review 2017-2019 generated a large evidence base (nearly 80 papers published), aligned the process to the budget and increased engagement from policy Departments in each year. The economic context and the design of the 2017-2019 process, i.e. no explicit requirement to set out savings targets, limited the degree to which implementation has been a key focus. However, there continues to be opportunities for this evidence to inform decision making going forward, i.e. internal communications. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five Future CRE? 16 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Conduct of Spending Reviews Points to Consider Economic and fiscal context influences the nature of spending reviews. Political engagement / backing is a pre-requisite. Aligning / integrating the process into budget cycle is important provides an audience for the analysis, aids topic selection and enhances the process. Early and continued engagement / communication with all stakeholders is also key governance, timelines, roles and responsibilities, methodologies. Implementation an important but challenging piece, early consideration is important. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five Ex-post review to support ongoing reform of the process. 17 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Spending Review & the Justice Sector Justice Sector consists of approx. 2.7bn about 5% of Government current expenditure Includes high profile areas of Policing, Courts, Prisons and Accommodation for Asylum applicants Unit in Department of Public Expenditure & Reform that deals with all expenditure for Justice sector consists of 6 people So how did we decide on the Spending Review topics to choose?? (i) Context /political environment was an important driver (ii) Expenditure related to a high profile citzen-centred service delivery -Policing Body Level One Body Level Two Body Level Three Body Level Four Body Level Five (iii) Could plot a direction for likely recommendations 18 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Justice Sector Spending Review Papers 7 Papers in total, 4 in the area of Policing 2017 Challenges to Investment in Policing A Public Expenditure Perspective 2018 Policing & Civilianisation, Lessons from International Experience Review of Overtime in Policing 2019 Multi Annual Budgeting: Considerations for Police Service Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 19 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Policing & the Spending Review Process Choosing and agreeing a Topic can be problematic Both the Justice Deptand Police Service were defensive fear of criticism How do you overcome this? (1) Choose area that links Government commitment to better outcomes for citizens For example, Government committed to more police officers in response to rural crime But need to ensure Frontline Policing is boosted and overtime budgets are controlled (2) Put Infrastructure in place for each paper a Spending Review Group (Expenditure Dept, Justice Deptand Police Service) Try to create a collegiate environment FOCUS ON CITIZENS Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 20 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Policing & 2017 Spending Review Paper Challenges to Investment in Policing A Public Expenditure Perspective Aimed at highlighting the cost from Government commitment to recruitment while noting the slow pace of reform that was impacting delivery (e.g. civilianisation) which could yield what citizens want VISIBILE FRONTLINE POLICING Wanted to convey a simple message to Ministers be wary about committing investment in areas where existing resource allocation decisions are sub-optimal Body Level One Body Level Two Body Level Three Body Level Four Body Level Five In light of this, Minister for Public Expenditure & Minister for Justice established new monthly group of high level officials the Reform & Resources Group 21 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Policing & 2018 Spending Review Papers Policing & Civilianisation, Lessons from International Experience Ireland well behind other countries, more outward looking approach required from top police management. A renewed focus on Workforce Planning Need to focus on the benefits that can accrue, e.g. professionalization and getting more police out of back office admin tasks and out into frontline policing Review of Overtime in Policing Consistent budgetary mgmt. issue even with additional numbers Highlighted future areas of attention: Better control procedures More focus on demand analysis Set Target of Overtime as % of Paybillto match international norms Body Level One Body Level Two Body Level Three Body Level Four Body Level Five Importantly these issues were to be further progressed in new Resources & Reform Group & this Group agreed to seek an External Review of Finance Function in Policing Service 22 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Policing and 2019 Spending Review Paper Multi Annual Budgeting: Considerations for Police Service New International Review of Policing In Ireland recommended that the Policing Service should move to multi-annual budgeting to support a CEO approach Paper noted that this was desirable but required a number of Pre-Requisites to be in place where weaknesses were very evident Upskilling of Financial Capability within Police Service was now urgent External Review of Finance Function now due to report (November 2019) Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 23 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform

Final Reflections on Policing & Spending Review process It is a Journey, an Incremental Process, requires Patience, Important early on to Create a NEW narrative. Prepare to respond to Vested Interests. POLICE circa 2017: if we had more resources/money, people would feel safer, we are underfunded New Narrative: Investment must deliver greater visibility in FRONTLINE POLICING, this means less trained officer in admin jobs, more civilians. Targets for redeployments. Investing in inefficient organisations wastes taxpayers money. Investment dependent on reform. Greater emphasis on establishing new indicators such as patrol hours and visible policing and demand analysis in order to get better at resource allocation. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 24 An Roinn Caiteachais Phoibl agus Athch irithe | Department of Public Expenditure and Reform