The Home Office has made good progress in improving its financial management since 2009 when the National Audit Office last evaluated its financial capability. The Department is delivering value for money in terms of exercising financial control over its core business activities.
However, today’s report also concludes that, while financial control is good, the Home Office could do more to integrate its financial and operational planning and thereby understand better the link between resources and performance. In addition, many of the strengths which the Department demonstrates in its core business are much less apparent in its ‘change programmes’ which it must manage more effectively.
According to the NAO, the Department is starting to benefit from its new governance structures. There are qualified professional finance staff at senior levels and clearer information is relayed by senior management. There are stronger control mechanisms in place over capital spending and the key elements of financial control – good planning, monitoring and reporting – are being carried out well.
However, today’s report highlights current challenges to financial management in the Home Office. The Department has clear plans to reduce costs in its core activities but business areas have not fully considered efficiency and effectiveness when evaluating where cuts should be made. The Department will need to achieve further savings of £1.1 billion a year by 2014-15 but a third of this sum remains uncertain.
Reductions in funding from the Home Office mean that police forces must make savings worth around £1.5 billion by 2014-15 through efficiency improvements; but, in 2011, around two-thirds of forces had shortfalls in their cost reduction plans, amounting to £500 million in total. The Department will shortly be in a position to confirm how far this savings gap has been covered in the plans.
There are risks to the successful delivery of the Department’s change programmes, specifically in respect of the development of the National Crime Agency (NCA) and Disclosure and Barring Service (DBS) and the phasing out of the National Policing Improvement Agency (NPIA). The Department needs to control costs, especially transition costs, more strongly and explicitly.