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New measures needed to safeguard scrutiny of public spending

4 May 2016

The Public Accounts Committee report warns that poor data and increasing complexity are undermining Parliament's ability to hold the Government to account.

Report findings

It also finds there are "too many examples" of departmental Accounting Officers allowing projects and initiatives such as funding to the charity Kids Company "to proceed unchallenged, despite strong evidence of poor value for money".

The Committee's report is informed by evidence taken from senior civil servants Sir Jeremy Heywood, Sir Nicholas Macpherson and John Manzoni.

The Committee describes a lack of cost and performance data across government as a long-standing problem, weakening the ability of Accounting Officers "to hold delivery bodies to account and intervene effectively where required".

Complex methods not accompanied by clarity

The Report cites the example of the Committee's recent inquiry into acute hospital trusts, where three-quarters of such trusts were found to be in deficit "but departmental targets for trusts to make savings were based on flawed data and had a damaging effect on trusts' finances".

On complexity, the Report states: "The growing use of complex delivery methods, such as devolution to local areas, outsourced contracts, government companies and cross-cutting initiatives, has often not been accompanied by clarity over accountability arrangements."

"Damaging lack of transparency"

Formal ministerial directions are not being used effectively as an accountability control, the Committee says, resulting in a "damaging lack of transparency" about concerns over the use of public money.

In its recommendations to government the Committee proposes a series of measures to strengthen accountability.

These include the Treasury ensuring all departments prepare accountability system statements with their next annual report and accounts, "making clear who is accountable for what at all levels".

Chair's comment

Meg Hillier MP, Chair of the PAC, said:

"Taxpayers are entitled to know how their money is spent and whether they are getting good value. Poor decisions in government waste public money. Serious errors waste far more.

Any threat to effective scrutiny requires serious attention as it risks weakening Parliament's ability, on behalf of the public, to hold the Government to account for its spending.

We are particularly concerned that accountability arrangements have lagged behind changes in the way government conducts its business. Data is persistently inadequate and there is an urgent need for greater clarity on lines of responsibility.

We also believe that notwithstanding their responsibility to government ministers, departmental Permanent Secretaries and other Accounting Officers could and should be more robust in standing up for taxpayers' interests.

The recommendations in our Report represent an important step towards addressing these concerns. We urge the Government to demonstrate a commitment to transparency and value for money by acting on them."

Report summary

Departmental Accounting Officers (AOs) are a crucial element in Parliament's ability to hold the Executive to account.

They are personally responsible and accountable to Parliament for their department's use of public money and the stewardship of its assets. They have to balance these responsibilities to Parliament with their other responsibilities as Permanent Secretaries to serve their Ministers.

However, increasingly complex delivery methods and the continuing lack of good cost and performance data are undermining accountability.

Projects proceed unchallenged

There are also too many examples of AOs allowing projects and initiatives, such as funding to Kids Company and the e-Borders programme, to proceed unchallenged, despite strong evidence of poor value for money.

Where an AO has serious concerns about value for money, he or she can flag the concern by formally (and publicly) requesting from the Minister a 'ministerial direction' to proceed. But directions are not being used effectively as an accountability control: they are few and far between, despite AOs having concerns about the value for money or feasibility of policies.

There is consequently a damaging lack of transparency as AOs' concerns about the use of public money are not brought to Parliament's attention.

We intend to return regularly to issues of accountability in our work, to ensure government can properly be held to account for the spending of taxpayers' money.

Further information

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