Holding managers to account for the resources they have been allocated is key to improving financial management at the Department for Environment, Food and Rural Affairs, according to a report out today by the National Audit Office.
This need has been recognised by the Department and reflected in a programme to improve its financial management, but the Department’s Management Board recognises that establishing a culture of tighter control over its expenditure will take time. This initiative must remain a top priority and managers throughout the organisation will need to produce more reliable estimates of costs to justify their bids for resources and track the cost effectiveness of work done. Without these key factors, resources may not be utilised in the most cost effective manner in support of the Department’s strategic objectives.
The budgets agreed by the Management Board at the outset of 2006-07 and 2007-08 exceeded the funds available. In early 2006-07, increased spending to remedy difficulties with the Single Payment Scheme led to a risk of overspending in that year and the Department instigated a review which identified savings of £170 million against its original budget of £3,854 million.
During the early part of 2007-08 further commitments above the agreed budget allocations led the Management Board to conclude that the Department was at risk of exceeding its spending limit by £140 million. In July 2007, the Management Board identified savings which partially balanced the budget and continues to work towards a balanced budget for the year end.
Effective monitoring by the Department’s Management Board and greater integration between the Department’s systems for monitoring performance delivery and financial expenditure would help the Department to better manage its budgets.
The NAO recommends that the Department’s Management Board set budgets from 2008-09 onwards that balance with the 2007 Comprehensive Spending Review and develops benchmarks to test the rigour of proposed budgets and to provide confirmation that these resource bids accord with the Department’s strategic objectives.