PLANNING AND CONTROLLING PUBLIC EXPENDITURE IN THE UK, PART II: THE EFFECTS AND EFFECTIVENESS OF THE SURVEY

Part I of this article [spring 19921 examined and explained the processes by which the Treasury plans and controls public expenditure through the Public Expenditure Survey. This second part analyses the survey's effects and effectiveness. Throughout we assess the survey by the extent to which the principal functions of planning, allocating, controlling and evaluating public expenditure are articulated and performed. We use four sets of criteria. Firstly, the survey is assessed as a means of regulating the interdependent relationships of the principal participants. Secondly, as a system for making decisions about public expenditure, the survey is judged by the extent to which it has enabled governments to achieve their broad spending objectives. Thirdly, the survey is assessed b the extent to which it provides directly for the participation of ministers collectively in tie process of decision-making, and how they decide the relative priority of both the total of public expenditure and its composition. And fourthly, its effects are measured by analysing the outputs of the system - the allocation of spending to departments and agencies. In the concluding section we address directly the question of whose interests are best served by the survey.     

The Credit Rating Agencies and Their Contribution to the Financial Crisis

The credit rating agencies that dominated the ratings of mortgage‐backed securities were Moody's and Standard & Poor's. The two agencies rated some 4.3 trillion dollars of bonds as triple AAA, yet within a period of 18 months these same rating agencies downgraded these bonds to below investment grade. This paper seeks to show that the ratings agencies business model, the issuer pays approach, led to major conflicts of interest with both the ratings agencies unable to walk away from a rating. The evidence given by analysts to Congressional Inquiries confirms a cultural revolution within the rating agencies, with analysts feeling unable to question the quality of a rating. Analysts who were described as being awkward by issuers were removed from the rating process. In the meantime, the income for the rating agencies increased from 3 billion dollars to 6 billion dollars, with the CEOs of the rating agencies receiving incomes comparable to the incomes to the CEOs of investment banks.