The incentives on departmental Accounting Officers (usually the Permanent Secretary) to safeguard value for taxpayers’ money are weak compared to those associated with the day-to-day job of satisfying Ministers, according to today’s report from the National Audit Office.
Accounting Officers (AOs) have always had to balance the priorities, risks and pressures associated with these dual accountabilities, but, over time, the emphasis appears to have shifted in a way that potentially undermines accountability to Parliament. The NAO finds that AOs appear to lack confidence to challenge Ministers where they have concerns about the feasibility or value for money of new policies or decisions, not least because standing up to Ministers is seen as damaging to a civil servant’s career prospects.
Contributors to this situation are: the more ‘executive’ role of Ministers in specifying the detail and timing of policy implementation (and consequently AOs being held responsible for implementation decisions not directly under their control); Ministers seeking greater involvement in the selection of civil servants appointed to senior posts; and concerns over the influence of special advisers to Ministers.
Today’s report finds that the AO’s power to request a formal ‘ministerial direction’ is not being used effectively as an accountability control to safeguard value for money. Where an AO has serious concerns about value for money, he or she can flag the concern to Parliament by formally (and publicly) requesting a direction to proceed from the Minister. The threat of this can prevent poor decisions about use of taxpayers’ money, and discussions about possible directions can have ‘invisible’ positive influence on decision-making.
However, the evidence suggests the mechanism is not being used effectively. Major projects where there were clear value for money concerns, such as the FiReControl Project (2004-2011 which had cost £635 million when it was cancelled) or the National Programme for IT in the NHS (costing £11.4 billion between 2002 and 2011), were not the subject of directions.
AOs are expected to put in place effective assurance and controls to support their personal accountability to Parliament and these arrangements have evolved. But they need to keep pace with fundamental changes to the way government carries out its business and delivers public services, including greater local devolution. Progress during the last parliament included Treasury making senior responsible owners of major projects (SROs) directly accountable to Parliament for project implementation, and improvements in transparency of government’s finances such as the Whole of Government Accounts.
The creation of accountability system statements was another positive development, but they are not comprehensive and often are little more than a compliance exercise. The NAO concludes that ensuring the essentials of accountability in some areas of government still seems to be an afterthought. Furthermore, HM Treasury has not asserted its own key role in setting the overall framework for AO accountability and providing clarity about expectations on AOs.
Overall, the NAO concludes that a robust, accountable system of decision-making, that safeguards taxpayers’ money effectively, needs much more transparency than is currently the case. Among the NAO’s recommendations is that the Treasury should introduce a new requirement on AOs to provide positive, on-the-record assurance ahead of key implementation decisions. This would help ensure that appropriate, informed judgements are made before public resources are committed.
“Accounting officers are responsible for the delivery of value for money – the economy, efficiency and effectiveness of public projects and programmes. In this they converge closely with the Committee of Public Accounts and, of course, the NAO. AOs have always had to balance this role against other duties to execute policy and support Ministers. I think that these ministerial and policy goals have come to weigh more and more heavily. The ever-increasing influence of Special Advisers, and Ministers’ greater involvement in policy implementation and Civil Service appointments, is pressing down on the ‘Ministerial’ end of the see-saw further and further, while considerations of value for money and public value rise steadily into the air.”Amyas Morse, head of the National Audit Office
Notes for editors
- Accountability to Parliament for taxpayers’ money is an inextricable part of good public management and democratic government. Both Ministers and civil servants are accountable to Parliament for the spending and performance of government departments.
- An accounting officer or AO is a civil servant to whom HM Treasury formally delegates personal responsibility for the stewardship of resources used by a government body, including making sure there are high standards of governance, decision-making and financial management in their departments, and any arm’s length bodies they sponsor. In a government department, the permanent secretary is normally the principal AO. If required, the AO must attend Parliament and be held to account in public, usually by the Committee of Public Accounts. The role of the AO is therefore one of the key checks and balances in the parliamentary system for safeguarding taxpayers’ money.
- Accountability system statements were introduced in 2012 in response to demands from Parliament to clarify accountability arrangements for departments with locally devolved spending, and explain how AOs get assurance that resources allocated to them by Parliament are being spent appropriately and are securing value for money. So far, seven of 17 departments have published accountability system statements alongside their annual reports and accounts.
- Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
- The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO, which employs some 810 people. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of £1.15 billion in 2014.