The new radicals - how the Treasury can drive government change

Its a pleasure to be delivering my first policy speech as Chief Secretary to the Treasury, ahead of the Spending Review this autumn.

Today I will be speaking about how the Treasury can be an accelerator of change in government.

And so it is fitting to be hosted by Onward, who for the past year-and-a-half, have been leading the renewal of ideas on the centre-right of British politics.

A Spending Review is a significant moment in the lifecycle of any government.

We must not only conduct this review against the backdrop of the most challenging peacetime economic circumstances in living memory.

We must do so as a government re-elected a little over seven months ago with a strengthened majority and an emboldened mandate.

Now, these two factors are not mutually exclusive.

Over the past few weeks the Prime Minister, Chancellor and Chancellor of the Duchy of Lancaster have each delivered speeches outlining how our recovery from this pandemic can be a moment for national renewal.

But as Chief Secretary, my role is to talk less about the what and to focus more on the how.

So, today I want to explore how the Spending Review can act as the mechanism to deliver the Prime Ministers ambition to level up our country.

Now this practical approach is rooted in my experience at different stages of my political career.

As a constituency MP, I have on many occasions run up against a system that is slow and siloed.

In frustration, Ive found myself asking why there is a seven year gap between funding being agreed for a road scheme and the first digger arriving.

Or why it takes a decade to decide to produce a full business case on whether to reopen eight miles of railway track - taking twice the length of time of the second world war.

Before becoming a minister, I sat on the Public Accounts Committee for four years, where reports repeatedly showed schemes where the outcomes did not reflect the inputs.

As an example, nine regional fire control centres were built at a cost of three quarters of a billion pounds. Not one of them worked.

The lack of upfront clarity on outcomes, the slow speed of delivery and the variable quality of data have been familiar themes during these years.

The Spending Review is an opportunity to challenge this.

But first, its worth considering the context for what will be the first multi-year review since 2015.

Given my previous role, it wont surprise you if I start with Brexit.

For me, Brexit was a vote for change by people who felt the status quo was not delivering for them.

But now we must deliver, particularly for those who at the election lent us their vote for the first time.

And we must deliver differently in the wake of a crisis that has accelerated many trends within our economy and our society.

Take healthcare.

Before coronavirus, around 95% of GP consultations were face to face. By the end of April, this had almost reversed with more than 85% taking place remotely, either by phone or online.

And few GPs now say they want to return to the old approach.

Whitehall has also had to change.

The Furlough Scheme was announced by the Chancellor on 20 March and opened for applications just one month to the day later

Likewise, the Self Employment Income Support Scheme opened almost a whole month ahead of schedule.

Normally such schemes take months years even to deliver.

And HMRC achieved this with more than 80% of their staff working from home.

Id like to put on record my thanks to the civil servants in the Treasury, HMRC and elsewhere for the speed and focus with which they have tackled these extraordinary challenges.

But if the wheels of government can be made to spin this fast in a crisis, with all the added pressures of lockdown, why cant it happen routinely?

For example, why did it have to take a pandemic to collect the right information to understand who the most clinically vulnerable people in our society are?

Indeed, would we have been able to collate the necessary data without the backdrop of a health emergency?

Answering these questions will not only help us to deal with the consequences of COVID-19.

It also cuts to the heart of this governments defining mission - to level up investment and opportunity across the UK.

I think most people understand that the action we are taking to support businesses and jobs during this pandemic is the right thing to do, even though it comes at a cost.

Indeed, as the OBR have made clear, the cost of inaction would have been far greater.

The Prime Minister has made it clear that austerity is not the answer to navigating the changed economic landscape.

But departments will have to make tough choices in the months ahead.

These choices will be shaped by our commitment to review the Green Book.

To properly level-up the country we must ensure that Treasury decision-making reflects our countrys economic geography.

Spending decisions cannot be based solely on cost-benefit ratios that are assessed in silos. There must be room for more balanced judgements which take account of the transformative potential of investment to reduce inequality and drive localised growth.

Levelling up also must be more than a mere shifting of resource from Lon-don to other large metropolitan cities.

It needs to work for the entire United Kingdom, including as part of our enduring commitment to the Union.

And it must recognise that that within a single bus journey different neighbourhoods in the same area can often be worlds apart.

Accelerating the UKs economic recovery.

Levelling-up opportunity throughout our country.

Improving our public services.

And making the UK a scientific superpower.

These are the priorities the CSR must drive forward.

And to do so, I am focussing on three areas which will shape our approach to the Spending Review.

The first is outcomes.

I want this Review to tie expenditure and performance far more closely together than has been the case up to now.

For decades the most innovative companies have made a habit of setting clear objectives and then relentlessly tracking, measuring and evaluating the outcomes of their work.

This approach should not just be confined to Silicon Valley.

We must not forget that the public will judge success not by how much is spent, but by what they experience in their daily lives.

The state of local roads.

The time taken to get a hospital appointment.

How safe the neighbourhood feels.

If funding decisions are to improve over time, we in the Treasury need to have clearer sight of both the intended outcomes and subsequently evaluation of their delivery.

Well be publishing details on these outcomes at the Spending Review, thereby setting the priorities across government for the remainder of this Parliament.

Another key challenge to measuring outcomes is the divide between policy and delivery.

Bridging this divide is made even more difficult by the fact that some of the most complex policy challenges sit across multiple departments and arms- length bodies.

At last years Spending Review, the government announced a new Shared Outcomes Fund to test innovative ways of bringing together the public sec-tor.

The aim was to address cross-cutting issues in a way that improves out-comes and ensures value for money.

Im pleased to announce today that I have approved the first round of pilots from this fund.

These pilots will use innovative approaches to address a wide variety of issues.

From tackling drug misuse in some of the worst-affected areas by better joining up local law enforcement agencies, healthcare and prisons.

To planting trees outside woodlands to help meet our climate change targets.

Or supporting GPs and other healthcare professionals to refer patients to outdoor activities in their local community to help manage complex health and social challenges, like mental health and loneliness.

While the various pilot schemes may seem eclectic, the one thing each successful bid has in common is that each is backed by a robust method to track and measure the delivery of outcomes.

Im hoping we can learn from the success of these projects.

Indeed, we can learn from them even if theyre not successful, because well have better data to understand why.

Closely connected to outcomes is speed, my second area of focus.

Speed is a hallmark of the digital era. Over half of mobile internet users will leave a site that takes longer than three seconds to load.

The early response to CBILS, and the delivery of Bounce Back loans shows government can adapt and deliver schemes that work at speed.

When it comes to infrastructure we must not only foster a culture of pace, agility, and strong leadership.

We must also learn from the work of the Infrastructure and Projects Authority and the National Audit Office.

Programmes need to start with robust goals and we have to resist the temptation to repeatedly change plans.

Our maxim should be measure twice and cut once.

That way we can better address the sobering fact that our capital costs are typically between 10 and 30% higher in this country than in other European countries.

This is why a new Infrastructure Delivery Task Force has been established known as Project Speed.

Led by the Chancellor, Project Speed will aim to cut down the time it takes to develop, design and deliver vital projects.

Another key element of building faster is utilising modern construction techniques linked to clearer standardisation across projects.

I want to explore how the same principles of standardisation and modularisation that delivered the first Nightingale Hospital, one of the largest in the world, in just nine days can now help deliver the governments flagship commitment to build forty new hospitals.

Its not that government doesnt innovate when it comes to construction.

Its just that the innovation is unevenly distributed.

For example, how many of you are aware that the Department for Education has - over the last seven years - brought the cost per metre squared of a new school down by a third?

Yet government as a whole still has a long way to go in optimising the speed and value for money of our construction spend.

Take housing.

Eighty-four per cent of detached housing in Sweden use prefabricated timber elements.

Here by contrast the figure is just 5%.

No doubt it is still associated in peoples minds with spartan post-war housing stock.

But the modern reality is very different, as typified by the so-called Japanese dream factories where a single factory can deliver around 20,000 units in a year.

Customers are able to personalise their future home to match their individual needs and aspirations - making buying a home closer to the experience of buying a car.

This is what we should be seeing in the UK.

Yet too often housing construction would look familiar to Victorian eyes.

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Chief Secretary to the Treasury delivers his first speech in the role to thinktank Onward - GOV.UK