Written evidence submitted by Mr. Hleb Buziuk (GFC0004)

S1. The NAO (Sep 2025) finds that missing and inconsistent cost data hinder productivity and calls for urgent action to build a consistent, granular view of service costs.
S2. The “Top 75” programme closed with 29/75 services rated “great” (below the ≥ 50 ambition), underlining the need for sustained sponsorship and shared data standards.
S3. In NAO (Jun 2025) case studies (n = 7), none of the charged services consistently broke even; among the six with a 100% target, mean cost recovery in 2023–24 was 88% (a £340 million shortfall); changing fees took about 63 weeks on average. HM Passport Office recorded £223 million under‑recovery (2023–24) and £916 million over five years. (Visa fees are excluded from the 88% mean.)
S4. Managing Public Money (MPM) sets full cost recovery (FCR) as the default and requires Annual Report and Accounts (ARA) disclosures including unit costs and statutory authority; significant surpluses should usually be refunded.
S5. Practice gap: in NAO’s sample, 0/7 services fully met HMT disclosure requirements on fees and charges for 2023–24.
S6. Illustrative management guides (not MPM rules): where used, thresholds (for example, a ± 5% recovery corridor, de minimis lower of £1 million or 1%, 20–30 working‑day SLAs) are for internal prioritisation only and subject to HMT/Parliament agreement; timelines depend on secondary legislation and parliamentary scheduling; justified policy deviations from FCR require approval and transparent § 6.11 disclosures.

About the author and reason for submitting evidence

0.1 I am Hleb Buziuk, an independent policy researcher and human‑rights advocate. I submit this evidence to support the Committee’s scrutiny with practical, system‑level recommendations grounded in NAO 2025, MPM (Jun 2025) and Parliament’s oversight.

0.2 This submission is original, created for this inquiry, and not published elsewhere. Contact details are provided via the portal, per House of Commons guidance.

0.3 Scope note (UK central government). The evidence addresses UK central government.

0.4 Devolved adaptation. Scotland, Northern Ireland and Wales operate their own frameworks (for example, the Scottish Public Finance Manual, MPMNI/Northern Ireland FReM pro formas, Managing Welsh Public Money). The principles, templates and recommended controls are conceptually compatible and should be adapted via local reporting preferences, enabling powers and audit expectations.

A. Identifying the costs of government services and boosting productivity

Context and diagnosis

1.1 The PAC’s call seeks insights on how better cost information and fee practice can improve productivity and value for money across key services.

1.2 NAO (Sep 2025) finds a lack of reliable, usable cost information, calling for urgent action to build a consistent, granular understanding of service costs.

1.3 Delivery against the 2022–25 digital and data roadmap was uneven: 29 of the Top 75 reached “great” (below the ≥ 50 ambition), evidencing the need for consistent data foundations and senior sponsorship.

Why cost baselines matter

2.1 Without granular, activity‑based unit costs (by channel/process/outcome), departments cannot identify avoidable cost drivers or target transformation for maximum value; NAO links robust cost data to productivity and better investment choices.

2.2 Cost visibility underpins fair fees (Section B), comparisons of delivery models (in‑house vs outsourced), and capital prioritisation (for example, legacy‑IT run‑cost drag). NAO (Jun 2025) shows that bodies vary fees by service type/speed/quality and must balance simplicity, fairness and recovery, reinforcing the need to understand cost drivers by channel or variant before setting charges.
What works (example): NAO notes improvements at HMCTS, where enhanced costing supported clearer fee bases and processing of refunds disclosed in ARAs — a useful precedent for other services.

Example A (no user fee).
Baseline: a high‑volume benefit claim process with rising rework and long waits; no fee to users; unit cost by stage unknown.
Intervention: light‑touch ABC (time‑driven sampling) shows rework concentrated in manual checks and paper submissions; cost per paper case more than twice digital; avoidable contacts about 30% of effort.
Result: simplified evidence rules, front‑door triage, assisted‑digital uptake; unit cost falls and waits shorten.

Example B (charged service).
Baseline: a licensing service with a growing deficit; unknown channel costs; rework about 20%.
Intervention: ABC shows roughly 70% of rework from paper/postal channels; cost per paper case more than twice digital.
Result: assisted‑digital, simplified checks, published fee basis by variant; deficit addressed via a glide path (efficiency plus phased fee change) with ARA § 6.11 disclosures.

What “good” looks like

3.1 Mandate ABC for priority services, integrating finance and case‑management data so costs roll from tasks to services.

3.2 Define minimum cost‑data standards (cost by channel; rework/error handling; waiting time; legacy‑IT run‑cost per transaction) with quarterly reporting to departmental Audit and Risk Committees and to HMT.

3.3 Tie cost baselines to transformation roadmaps: for each initiative, quantify expected unit‑cost impacts and track benefits realisation post‑deployment.

3.4 Build capability: establish a small cross‑government cost analytics hub (HMT with GFF) to coach teams, share models and peer review major service costings before fee or investment decisions.

3.5 — Comparability and baseline. To avoid inter‑departmental incomparability of unit costs, agree a single cost‑allocation baseline aligned to MPM Annex 6.1 (overheads, depreciation, cost of capital) and require reconciliation for any deviations.

3.6 — When full ABC is not proportionate (checklist).
• Low‑volume/unique or highly volatile services → time‑driven sampling and rolling estimates.
• Narrow change hypothesis → targeted time‑and‑motion.
• High data‑integration cost → start with manual logs plus management accounts reconciliation.
• Guide rails: aim for ABC overhead ≤ 2–3% of annual run cost or payback ≤ 12–18 months; otherwise use lighter‑weight capture.

Implementation caveat. The thresholds above are illustrative management guides and do not amend MPM standards.

B. Fees, charges and levies: aligning practice with Managing Public Money

Principles and expectations

4.1 MPM (HMT): charges should recover full costs on an accruals basis, including overheads, depreciation and cost of capital (Chapter 6; § 6.2.1; Annex 6.1).

4.2 — ARA/Estimates/FReM disclosure checklist (§ 6.11). For each charged service, ARAs should disclose:
• Amounts charged and total income; • Full cost and unit cost; • Subsidy/over‑recovery; • Financial objectives and performance; • Statutory authority; • Variance narrative and remediation plan. Presentation should follow the latest FReM (2024–25) requirements.
§§ 6.11.2–6.11.3 also link disclosures to Supply Estimates and FReM.

4.3 — Practice gap (2023–24). Zero of the examined services met all HMT disclosure requirements.

Findings from NAO (2025)

5.1 — Case‑study results (n = 7). None consistently broke even; among the six with a 100% target, mean recovery = 88% (leading to a £340 million shortfall); fee changes about 63 weeks on average. HMPO: £223 million under‑recovery (2023–24) and £916 million over five years. (Visa fees excluded from the 88% mean.)

5.2 NAO concludes insufficient HMT oversight, challenge and guidance, causing inconsistent practice and missed value‑for‑money opportunities.
Representativeness caveat. Case‑study evidence (n = 7) should not be over‑generalised, though patterns are material for risk management.

Legality and transparency

6.1 The Secondary Legislation Scrutiny Committee (SLSC, 8 Jan 2025) highlighted cases of fees charged without, or with doubtful, statutory authority and criticised weak explanatory material, setting expectations for full, candid disclosure (numbers affected, sums involved, remediation, litigation risk).

Implications, trade‑offs and budget coupling

7.1 Persistent deficits shift costs to taxpayers or future users; persistent surpluses risk de facto taxation without explicit approval. Both undermine the spirit of MPM.

7.2 — Policy trade‑offs. MPM permits justified deviations from FCR with approvals and transparent disclosures; significant surpluses should usually be refunded to payees.

7.3 — Process constraint. The about 63‑week fee‑change cycle stems from multiple stages (departmental costing, HMT approvals, secondary legislation and parliamentary timetabling). Streamlining must preserve Parliamentary control.

7.4 — Legal architecture (section 102). A section 102 order (Finance (No. 2) Act 1987) may extend/variate powers in existing primary law and specify fee‑setting factors; it cannot create new charging powers or override primary law; Treasury consent is essential.

7.5 — Distributional impacts and equalities. Fee‑setting should include distributional analysis and Public Sector Equality Duty (PSED) assessment, including digital exclusion risks where channel strategies shift costs.

7.6 — Demand and price sensitivity. Departments should analyse elasticity of demand and behavioural responses (timing, deferrals, channel switching) to avoid missed revenue or unintended burdens.

7.7 — Budget coupling (ARA ⇄ Estimates ⇄ CBG). Disclosures under § 6.11 should reconcile to Supply Estimates (expected income from charges) and budget treatment under Consolidated Budgeting Guidance (CBG). Presentation should follow the latest FReM requirements.
Compliance check. The § 6.11 ARA note should cross‑reference the FReM fees and charges note and reconcile to Supply Estimates; any divergence should be explained.

Mini‑mapping table (illustrative):

Ex‑post assurance and escalation for fast‑track adjustments

●        Sampling: review 10–20% of fast‑track fee changes each quarter (risk‑based plus random).
 

●        Scope: verify statutory authority, cost/volume assumptions, unit‑cost allocation, and § 6.11 compliance.
 

●        Escalation (illustrative): in any rolling quarter, if fast‑track changes exceed 15 cases or 10% of fee lines (whichever is lower) or the cumulative net income effect exceeds the lower of £5 million or 2% of annual fee income → switch to the full route until Accounting Officer/HMT sign‑off.
 

●        Transparency: publish SLA compliance and ex‑post findings (summary) in ARAs.
 

C. Recommendations

For HM Treasury (HMT) and the centre

8.1 Mandate cost baselining. Require standardised unit costs and cost‑driver breakdowns for priority services; methodology peer‑reviewed by GFF; publish an annual cross‑government summary.

8.2 Strengthen oversight of fees. Create a small HMT Fees and Charges Panel to review balances, challenge proposals and share tooling for demand/cost forecasts.

8.3 Streamline routine adjustments (fast‑track).
• Bands: pre‑approved index‑linked bands for routine updates;
• Delegations: de minimis/materiality (for example, lower of £1 million or 1% of annual fee income) — illustrative thresholds, to be refined with Parliament/HMT;
• SLA: HMT approval window 20–30 working days; publish SLA compliance;
• Panel throughput and resourcing: target time to decision ≤ 25 working days; capacity 40–60 cases per quarter; publish SLA compliance; set staffing/IT plan and pause thresholds; conduct a public six‑month review of throughput and adjust thresholds if needed;
• Pause rule: temporarily suspend fast‑track if incoming flow exceeds 10% of fee lines per quarter or exceeds 60 cases per quarter (whichever is lower), with a “green corridor” for critical services;
• Green corridor — criteria and publication: services with public‑safety/critical‑identity/border functions (for example, passports, border controls, core civil registries), services with statutory hard deadlines, or with extreme seasonality. The list is published by HMT with written justification, reviewed annually, and does not waive § 6.11 disclosure requirements.
• Ex‑post and escalation: sample‑audit 10–20% quarterly (as above).
Disclaimer: thresholds are illustrative management guides, not MPM rules; they apply only by HMT/Parliament agreement and do not alter § 6.2.1 or § 6.11.

8.4 Enforce disclosure discipline. Ensure § 6.11 compliance (with FReM/Estimates links): publish amounts charged; full and unit costs; surpluses/deficits; objectives; statutory authority plus a variance narrative and remediation plan; CFOs attest that § 6.11 reconciles to the FReM note and Supply Estimates.

8.5 Legal basis audit. Instruct departments to audit statutory authority for each charge; report to Accounting Officers and committees; remediate transparently per SLSC (refunds/credits or legislation).

8.6 Capability and tooling. Fund a shared cost‑model library and light‑touch peer review for major fee changes or transformations.

8.7 Architecture and alignment. Embed the panel/hub within HMT spending teams, GFF, CDDO/GDS to avoid duplication and clarify accountability.

8.8 Efficiency incentives. Publish unit‑cost benchmarks and a public scorecard (for example, reduction in rework/errors; time to fee change; SLA compliance) to discourage “cost‑plus” behaviour under FCR.

8.9 Panel scalability (governance). Set throughput targets, staffing/IT support, and escalation thresholds to prevent bottlenecks as volumes rise (as in 8.3).

For departments and arm’s‑length bodies (ALBs)

9.1 Integrate fees with service design. Use cost‑driver data to reduce unit costs (channel shift, automation, rework reduction) before fee increases; quantify benefits in business cases and track realisation.

9.2 Resolve persistent balances. For accumulated deficits (for example, HMPO), agree a multi‑year glide path combining efficiency and phased fee changes; for surpluses, plan reductions or refunds consistent with A6.1.14.

9.3 Assurance and accountability (Accounting Officers). Make cost recovery and legal authority standing items for Audit and Risk Committees; Accounting Officers should attest to legality and disclosure completeness and apply AO tests (Regularity, Propriety, Value for Money, Feasibility) to any deviation from FCR and plans addressing balances. DAO 02/25 reminds AOs to work to the revised MPM.

9.4 Unit cost by channel/variant — template (minimum fields).
• Volume; direct time (minutes); rework (%); error‑handling time; waiting time;
• Allocated overhead (£/case); depreciation (£/case); cost of capital (£/case);
• Unit cost (£/case) and fee (£/case); variance vs FCR (%);
• Methods note — (i) overhead allocation basis; (ii) depreciation method and useful life; (iii) cost‑of‑capital rate and asset base);
• Channel/variant notes (accessibility; assisted‑digital costs).
Security/confidentiality note: where channel‑ or variant‑level unit‑cost disclosure would create security or regularity risks, departments may aggregate/mask with a clear methodological note (for example, ranges), while still meeting the substance of § 6.11.

9.5 Fees cadence — corridor (illustrative management guide, not MPM). Maintain a ± 5% cost‑recovery corridor as good practice, calibrated to typical demand volatility and model error, and to the about 63‑week process lag; deviations outside the corridor should escalate for AO judgement and, where applicable, Treasury consent.

9.6 Cost of implementation (indicative).
• Data integration: about 4–8 person‑weeks (typical high‑volume service);
• Time‑capture/sampling: about 1–3 person‑weeks;
• Peer review (GFF/Hub): about 3–5 person‑days.
(Adjust by scale/complexity; prefer light‑weight methods where ROI is marginal.)

D. Questions the Committee may wish to ask

10.1 To HMT: What concrete steps in 2025–26 will standardise unit‑cost reporting across priority services, and how will data quality be assured?
10.2 To HMT/CDDO/GDS: What lessons from Top 75 (sponsorship, data foundations) will be embedded in the next digital strategy so that cost data drive transformation choices?
10.3 To departments: For each major charged service, what is (i) unit cost by channel; (ii) cost recovery over five years; (iii) any accumulated surplus/deficit; (iv) the plan/timetable to return to break‑even? (Reference § 6.11.)
10.4 To departments/ALBs: What legal review of fee powers has been completed since the SLSC reports; what defects (if any) were found; how were users informed/remediated?
10.5 To HMT and departments: Which process options (legislative/administrative) could reduce fee‑change lead times from about 63 weeks, and what safeguards will maintain Parliamentary control?
10.6 To departments/HMT: What distributional analysis and PSED assessment accompanied recent/proposed fee changes; how were digital‑exclusion risks mitigated; what price‑sensitivity assumptions underpin revenue forecasts?
10.7 To departments/HMT: Which standards for overhead, depreciation and cost‑of‑capital allocation do you use in unit‑cost calculations and how are they validated by GFF/HMT? Alignment with MPM Annex 6.1?
10.8 To HMT (panel scalability): Expected case volume, staffing/IT support plan, throughput targets, and publication of SLA compliance.

E. Implementation outline (pragmatic next steps)

11.1 90‑day sprint: Identify 5–10 highest‑spend/volume services; produce first‑cut unit costs and top three cost drivers; validate with Finance and Digital leads.

11.2 180‑day uplift: Adopt a common ABC template; connect to case‑management/finance data; publish the first internal cost‑driver league table; link to transformation pipeline.

11.3 Fees cadence and scorecard. Establish a biannual fee‑review window (with HMT support) to keep services within a ± 5% corridor (good practice), consistent with §§ 6.5–6.6, § 6.11 and A6.1.14; publish a scorecard in the ARA including at minimum:
• Share of services with full § 6.11 disclosures (baseline and target clearly stated);
• Median “time to fee change” — baseline about 63 weeks (NAO 2025); first‑year orientation target: ≤ 50 weeks or −15–20% vs baseline (subject to annual review with regard to HMT capacity and the SI timetable);
• SLA compliance rate for approvals;
• Share of assisted‑digital transactions and rate of hardship remissions/waivers or affordability‑related deferrals (baseline and target, where applicable).
Where baselines are unavailable at launch, departments should populate them within the first reporting cycle.

11.4 Legal assurance. Complete a portfolio‑wide fees audit in 2025–26; where defects are found, follow SLSC transparency guidance and set out the remedy (refunds/credits or legislation) with timelines. User notification and a refund/credit calculation method should be published within 10 working days of discovery, with a follow‑up § 6.11 ARA report.

11.5 Ex‑post sampling and six‑month review. From Q1 after launch, implement 10–20% quarterly ex‑post audit of fast‑tracked changes (risk‑based plus random), publish a six‑month review of throughput and SLA performance, and adjust targets/thresholds if required.

F. Conclusion

The UK can materially improve productivity and fairness in public services by getting a grip on costs and managing fees to MPM standards. NAO 2025 provides a clear mandate: fix the data foundations, strengthen central oversight, and speed up routine adjustments while preserving Parliamentary control. Implementing these recommendations will reduce waste, stabilise services and ensure users and taxpayers pay the right price for efficient, lawful services.

Annex A — Model ARA fees and charges disclosure (example)

Fees and charges note (per MPM § 6.11; FReM presentation)
Service: [Name] Statutory authority: [Act/SI citation] Financial objective: [for example, FCR]

Annex B — ARA “snapshots” (examples)

To operationalise § 6.11, departments should emulate the structure used in recent Annual Report and Accounts “Fees and charges” notes available on GOV.UK (for example, HM Courts & Tribunals Service (MoJ), DVLA, Home Office/HM Passport Office). Typical elements include: (i) objective (FCR or approved deviation); (ii) statutory authority; (iii) volumes and unit costs by channel/variant; (iv) subsidy/over‑recovery and balances; (v) reconciliation to Supply Estimates; (vi) a brief methods note (overhead basis, depreciation, cost of capital).

Example 1 (HMCTS‑type — outline).

●        Objective: Full cost recovery; Authority: Courts Act and relevant SIs.
 

●        Presentation: separate civil, family and tribunals services; unit cost by channel where material.
 

●        Observed improvements: more robust allocation of centrally borne costs; clearer treatment of depreciation and cost of capital; reconciliation to Estimates within tolerance.
 

●        Common gap: incomplete variance narrative where recovery departs from 100% and mitigation is multi‑year.
 

Example 2 (DVLA‑type — outline).

●        Objective: Full cost recovery; Authority: Vehicle Excise/Registration legislation and SIs.
 

●        Presentation: service variants (online vs paper), with higher paper unit cost due to manual processing and legacy‑IT overheads; disclosure of assisted‑digital channel.
 

●        Strength: regular publication cadence; clear linkage between fee changes, demand and unit‑cost trends.
 

●        Common gap: brief methods note (overhead driver not always explicit).
 

Example snapshot (illustrative data):