Abstract
On the one hand, the system of resource allocation described in the first three chapters may be seen as approaching the ideal. The cycle of events is annualised so that account may be taken of the rapidly changing economic circumstances affecting departments; the confrontation between departments and Treasury teases out the ordering of essential priorities; there are sufficient nonpartisan voices in Cabinet to provide a balanced cross-departmental view of value for money; Parliament is given ample opportunity to question the use of resources; and the whole process is smoothly knitted together by the professionals in the Treasury.
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Notes and References
B. Castle, The Castle Diaries (London: Weidenfeld & Nicolson, 1980), p. 481. The political memoirs of ex-Cabinet member Jim Prior make clear that the July Cabinet is mainly concerned with the balance of macroeconomic policy. See ‘Margaret As Manager’, The Observer, 28 September 1986, p. 21.
J. Barnett, Inside The Treasury (London: André Deutsch, 1982), p. 59.
L. Pliatzky, Paying and Choosing (Oxford: Basil Blackwell, 1985). Chapter 1 expounds this argument at some length.
A similar tabulation appears in the 1986 PEWP, Cmnd. 9702-I, p. 20.
Apart from the sources already noted this chapter draws upon the following: D. Wass, Government and the Governed: BBC Reith Lectures 1983 (London: Routledge & Kegan Paul, 1984); Sir D. Henley, et al., Public Sector Accounting and Financial Control (Wokingham: Van Nostrand Reinhold, 1983); L. Pliatzky, Getting and Spending (Oxford: Basil Blackwell, rev. edn, 1984); H. Young and A. Sloman, But Chancellor (London, BBC, 1984); Sir S. Goldman, The Developing System of Public Expenditure Management and Control (London: HMSO, 1973); C. Ham, Health Policy in Britain (London, Macmillan: 1985, rev. edn).
See Third Report from the Treasury and Civil Service Committee, 1980/81, Monetary Policy, vol 1, Report, 24 February 1981, (London: HMSO, HC 163-1) pp. xxxii–xliii, for a description of four schools of thought on economic policy.
See the remarks of Sir Anthony Rawlinson and Nicholas Monck in H. Young and A. Sloman, But Chancellor, p. 44, and p. 45.
More formally (where MV = Marginal Value and MC = Marginal Cost in a two good world) if: MV1/MC1 is greater than MV2/MC2 total value can be increased by buying less of good 2 and more of good 1. If however, MV1/MC1 = MV2/MC2 it is not possible to increase value by rearranging purchases.
See Peter Middleton’s remarks in Young and Sloman, But Chancellor, p. 62.
S. Jenkins, ‘The Star Chamber, PESC and the Cabinet’, Political Quarterly, vol. 56, no. 2, 1985.
On this and related issues see Diana Seammen in Young and Sloman, But Chancellor, p. 49; Frank Cooper, loc. cit. p. 47; Lord Bridges, The Treasury (London: Allen and Unwin, 1964) pp. 51–3; H. Heclo and A. Wildavsky The Private Government of Public Money, pp. 82–4; Sir S. Goldman, The Developing System of Public Expenditure Management and Control, p. 39.
First Report, Treasury and Civil Service Committee, Session 1984/85 The Government’s Economic Policy: Autumn Statement (London: HMSO, HC 44) p. 45, para. 312.
J. Barnett, Inside the Treasury, p. 155; and D. Healey in Young and Sloman, But Chancellor, p. 64.
L. Pliatzky, Paying and Choosing, p. 42. Such reviews are also alluded to in HM Treasury, The Management of Public Spending, para. 74.
L. Pliatzky, Ibid., pp. 52–55. During the early 1970s the CPRS prepared a joint paper with Treasury on public expenditure priorities at the start of each PES round. Between 1974/79 this paper was
prepared by CPRS alone. The Cabinet’s inability to take an informed view on departmental priorities is thoroughly discussed in: P. Hennessy Cabinet (Oxford: Basil Blackwell, 1986) pp. 189–91.
L. Pliatzky, Paying and Choosing, pp. 47–51.
It is symptomatic of Pliatzky’s treatment that to support his argument he recalls one CBA (of the forestry programme) conducted in 1972.
There are several useful CBA primers: E. J. Mishan, Cost-Benefit Analysis (London: Allen and Unwin, 3rd. edn, 1982); L. G. Anderson and R. F. Settle, Benefit-Cost Analysis: A Practical Guide (Lexington Books, 1978); D. W. Pearce (ed.) The Valuation of Social Cost (London: Allen & Unwin, 1978); D. W. Pearce, Cost-Benefit Analysis (London: St. Martin, 1983). The use of CBA in the public sector is outlined in HM Treasury, Investment Appraisal In the Public Sector: A Technical Guide for Government Departments (London: HMT, 1984).
G. H. Mooney, Economics, Medicine and Health Care (Brighton: Wheatsheaf, 1986) pp. 58–71. See Note 8 above. If the equality MV1/MC1 = MV2/MC2 holds then the equality MV1/MV2 = MC1/MC2 also holds. Thus if marginal costs are known the relative order of values is known. Of course, inspection of such ratios illuminates whether programme managers have arrived at the optimal allocation of resources.
D. Pearce, G. Mooney, R. Akehurst and P. West, ‘Rational Establishment of Air Quality Standards’, Environmental Health Perspectives, vol. 52, 1983.
G. Davies and D. Metcalf, ‘The Cost of Generating Jobs’, The Economics Analyst (London: Simon & Coates, 9 April 1985).
That is: (a) Do the stated benefit-cost ratios hold if inter-dependent projects are undertaken? (b) Do the stated benefit-cost ratios hold if £x or 10£x is spent?
For a lively survey of this and related issues: S. E. Rhoads, The Economist’s View of the World (Cambridge: Cambridge University Press, 1985). Also D.W. Pearce and C.A. Nash, The Social Appraisal of Projects (London: MacMillan, 1981); and J. A. Sinden and A. C. Worrell, Unpriced Values (New York: John Wiley, 1979).
See A. T. O’Donnell and T. E. Rhodes, Risk, Uncertainty and Public Sector Investment Appraisal, HM Treasury, Government Economic Service W. P. no. 63, September 1983, p. 33 ff; and HM Treasury, Investment Appraisal in the Public Sector 1984, paras. 3.49–3.52.
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© 1987 Grahame Walshe
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Walshe, G. (1987). The Role of the Treasury. In: Planning Public Spending in the UK. Palgrave, London. https://doi.org/10.1007/978-1-349-18606-8_5
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