5 questions to ask about a budget
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5 questions to ask about a budget
Gary Bandy5 December 2012
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Fiveq u e s t i o n s you can ask about the budget
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What is a budget?
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It's clearly a budget.It's got a lot of numbers in it.
George W. Bush
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Bernard:
Sir Humphrey:
Surely we want to save money?
Bernard, you know perfectly well that there has to be some way to measure success in the Civil Service. [...] we have to measure our success by the size of our staff and our budgets. By definition, Bernard, a big department is more successful than a small one.
Yes Minister, ‘The Economy Drive’ (1980)
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A budget tells a story using numbers instead of words
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“The budget is a representation in monetary terms of government activity. If politics is regarded in part as conflict over whose preferences shall prevail in the determination of policy, then the budget records the outcomes of this struggle.”
—Wildavsky, 1984
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The ritual of budget preparation helps to establish “how things are done here.”
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11How has the budget been made?
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Hopefully, not like this ...
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Incremental budgeting
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Relatively easy to do
Understandable
Stable
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Focus on departments
Focus on inputs
Over-estimation
Little review of base budget
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and it can lead to this ...
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salami slicing
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Increments are not always best
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Zero-based budgeting
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Focus on priorities
Challenges service delivery
Budget adapts quickly to policy changes
Encourages ownership of budgets
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Difficult to do
Time consuming
Resistance from losers
Many budgets “locked-in” by legislation
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“rational incrementalism”
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22What outputs will it deliver?
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Budgets are about inputs but we need to think about outputs and outcomes
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Policy-led budgeting?
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Objective? Extinguish fires or save lives
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Output Budgeting: Put out fires or save lives?
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Community Budgets: complex families in Little Hulton
£0
£40,000
£80,000
£120,000
£160,000
Now Future?
Welfare BenefitsPlannedReactive
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Focus on outputs/outcomes
More corporate than departmental
Multi-year view
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Complex — e.g. some activities serve multiple outputs
Requires clear, consistent objectives
Harder to reach agreement than with incremental changes
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33Who has been consulted?
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In my experience it left nobody happy
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The law and culture of consultation is stronger in some other countries.
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Participatory Budgeting
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Credibility and ownership by the public
Transparency
Good for rationing capital schemes
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Risk of over-simplification of issues
High interest in some issues, none in others
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44What assumptions is it based on?
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Budget assumptions need to be clearly stated and understood
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55How robust is the budget?
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The chief finance officer has to make a statement about this
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“It’s not the plan that’s important, it’s the planning.”
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How was the budget made?What outcomes will it lead to?Who has been consulted?What assumptions is it based on?How robust is the budget?