Public Servant Magazine: Make public finance an open book

The fact that expenses, allowances, pay and bonuses are so opaque has implications for good management. Without transparency, accountability is impossible, writes Matthew Elliott

Transparency has been the word on everyone’s lips lately – and for good reason. On the back of numerous scandals, from Sir John Bourn resigning from the National Audit Office to Derek Conway MP losing the Conservative Whip, the pressure has been building for public expenditure to be made far more open.

Expenses, allowances, pay and bonuses are attracting particular attention. The roll call of those who have abused taxpayers’ enforced generosity grows at an alarming rate, and it is right that those involved have been punished for their misdemeanours. But it should not be allowed to rest there. The extreme examples of abuse of public money are a symptom of a much wider problem – the worrying lack of transparency in public sector remuneration.

Even where there is no deliberate abuse, the fact that salaries, bonuses, expenses and pensions are so opaque has much deeper connotations for the management of the public sector and the delivery of good services. Without transparency, which requires proper disclosure of who is being paid how much and for what, accountability is impossible. Accountability is essential to organisations running efficiently and performing well. The shareholders of any company need to see how staff are performing and what their pay is in order to assess whether they have succeeded and can be rewarded further, or have failed and need to be held to account by having bonuses and salary increases restricted.

A company also benefits from the pressure of competition. Performance is measured by whether customers are attracted or lost, meaning that there are two impetuses to good performance. In the public sector, where the shareholders – taxpayers – have no choice about investing their money, and the customers – service users – have no choice about their service provider, transparency and accountability are doubly important. Without competitive pressure, transparency is the main way for taxpayers to hold the public sector to account.

The current situation is not working. Managers who are failing – for example, those at HMRC who have reportedly continued to ignore data security rulings despite repeated data loss – continue to be rewarded, while successes elsewhere go unrewarded.

Most financial reporting by public bodies is done in wording so obscure that it is almost impossible for laymen to glean where the bulk of their own money is spent. Even when one has trawled through inscrutable accounts, the amount most bodies are willing to reveal is very limited. The pot-luck approach to disclosure based on well-aimed Freedom of Information requests, whistleblowers and tactical leaks is no good for anyone. It does not give the full picture. It results in information being selectively revealed for personal and political reasons and it leads to a culture in which openness is viewed with suspicion.

The tone of the public debate is poisonous, with widespread suspicion among taxpayers that they are being taken advantage of. That suspicion may well be unfair, but as long as public spending remains largely a closed book, it will continue to hang over everyone on the public payroll.

If we were to make full disclosure the norm, we could draw the poison from this debate. The public would be able to judge for themselves whether they get value for money, rather than being left to assume they get poor value. There would be a good mechanism for rewarding success and dealing with failure, and public sector efficiency would improve. The opacity of public spending benefits no one. We would all gain from more openness. What is there to lose?

Matthew Elliott is Taxpayers’ Alliance chief executive