Report

by the Comptroller
and Auditor General

Cross-government

Investigation into government travel expenditure

HC 947 Session 2014-15 11 MARCH 2015

Our vision is to help the nation spend wisely.

Our public audit perspective helps Parliament hold government to account and improve public services.

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 820 employees. 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 £1.1 billion in 2013.

Report by the Comptroller and Auditor General

Ordered by the House of Commons
to be printed on 10 March 2015

This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act

Sir Amyas Morse KCB
Comptroller and Auditor General
National Audit Office

6 March 2015

We investigated concerns about central government travel expenditure raised in the national media, and by Parliament and the public.

Investigations

We conduct investigations to establish the underlying facts in circumstances where concerns have been raised with us, or in response to intelligence that we have gathered through our wider work.

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10567 03/15 NAO

The National Audit Office study team consisted of:
Mark Bisset, Liam Blanc and Kirsten Payne, under the direction of Keith Davis.

This report can be found on the
National Audit Office website at
www.nao.org.uk

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What this investigation is about

1 In 2013 the Cabinet Office released information about nearly 236,000 flights taken by central government officials.1 Public scrutiny resulted in allegations that some travel was unnecessary, unreasonably expensive and used non-standard class rail travel and non-economy class air travel excessively.

2 The Cabinet Office withdrew these data, stating that they were inaccurate and released in error. Following national media reporting of the allegations above, and Parliamentary and public interest, we decided to investigate:

central government travel expenditure, including how and where officials
travel; and

policies and controls over central government travel expenditure, and whether they deter, prevent and identify inappropriate spending.

3 This report analyses government travel expenditure. We would expect to see variation in how much departments travel, and how much they spend, depending on their responsibilities. This investigation does not seek to identify the reasons for this variation, but presents the facts to increase transparency and public and Parliamentary accountability.

4 Our fieldwork took place between April and November 2014.

5 Our methods are set out in Appendix One.

1 In this report, the term ‘official’ refers to civil servants, ministers and service personnel.

Summary

Key findings

6 Travel expenditure is a small proportion of central government expenditure, but is of high public interest and misuse can cause serious reputational damage. The government has introduced measures to reduce travel costs and, in 2013-14, the overwhelming majority of officials travelled standard class by rail and economy class by air. We found little evidence that departments are actively managing demand and the centre of government does not consider this to be part of its role. The numbers of individual rail journeys and flights recorded by central government departments have increased between 2009-10 and 2013-14, despite advancements in video and teleconferencing technology and headcount reductions, although the number of overnight hotel bookings has decreased over the same period.

Findings on what central government spends on travel

7 Although it has put systems in place to capture travel data, government has incomplete knowledge of what it spends on travel. In 2013-14 central government identified £546 million of travel expenditure through travel contracts, and some government procurement card expenditure. However, this analysis does not routinely capture expenditure claimed by officials as expenses. Analysis of central government data suggests that travel expenditure has increased by at least 11% in real terms since 2010-11.2 We found that publicly-available travel expenditure data are not complete and prepared on an inconsistent basis.

Findings on how and where officials travel

8 Most central government travel is standard class by rail and economy class by air.3 In 2013-14:

Rail

Central government departments booked 1.2 million rail journeys costing £75.7 million, of which 99% were standard class. However, 41% of rail tickets were anytime flexible tickets, the most expensive standard-class tickets available.

Flights

Central government departments booked 304,000 flights costing £105.4 million, of which 94% were economy class. The most common international flight destinations were the USA and Germany (together 25% of all international flights). The Foreign & Commonwealth Office used business class most often (25% of its international flights). Of only 259 first-class flights in 2013-14, 207 (80%) were by Ministry of Defence officials.4

Hotels

Central government departments made international and domestic hotel bookings worth £57.6 million. Of the 621,000 hotel room nights costing £41.1 million booked in the UK, the average cost was £66 a night. However, average hotel costs vary by department, even for the same location. For example, £82 to £127 for hotels booked in London.

Findings on how government seeks to control travel expenditure

9 Travel expenditure is a small proportion of central government expenditure, but is of high public interest and misuse can cause serious reputational damage. In 2012-13 central government recorded £489 million of travel expenditure. This is 0.3% of the £163 billion government spent on goods and services. Although it represents only a small proportion of overall government spending, inappropriate travel expenditure can seriously damage reputations. Parliament and the public expect officials to travel cost-effectively, and for this public spending to be carefully controlled.

10 Despite the reputational risk, the centre of government has little oversight of official travel although it does seek to manage the price of travel purchased. It lacks comprehensive travel expenditure and usage data, and makes limited use of the data it does have to monitor and analyse trends and variation both between departments and for government as a whole. It developed a set of Business Travel Policy Principles (the Principles) to inform departmental travel policies, but we found varying degrees of awareness of the Principles at the 10 government organisations we spoke to. The Principles were not integrated with other cross-government initiatives such as the Greening Government commitments. The centre of government focuses on managing the price of travel purchased and has achieved savings through the introduction of central procurement frameworks for goods and services. It does not monitor overall demand for travel as it sees this as departments’ responsibility.

11 Based on our interviews with officials in 5 departments, we conclude that departments are not managing demand for government travel sufficiently actively. We would expect departments to have a sophisticated understanding of what level of travel is required for them to conduct their business, but found that in general departments have focused on reducing costs rather than actively managing overall demand. The numbers of individual rail journeys and flights recorded by central government department increased between 2009-10 and 2013-14, despite headcount reductions and advancements in video and teleconferencing technology. We note, however, that the number of overnight stays has decreased over the same period.

12 There is considerable variation between departmental travel policies and between travel expenditure controls. For example, there is no standardisation among departments as to when officials can travel non-standard class by rail and non-economy class by air. Hotel rate-caps vary in the same location, for example from £110 to £150 a night in London. Departments employ a range of preventative, detective, payment and deterrent controls over travel expenditure. Preventative controls may be minimised to facilitate travel. However, flexibility is not consistently balanced with robust detective controls to identify off-policy or fraudulent travel, or both.

13 We found that 4 out of the 100 transactions we tested at central government organisations did not comply with travel policies, which suggests that these organisations need to strengthen controls. Our limited testing at central government organisations identified 4% of transactions as non-compliant with travel policies, indicating controls were absent or not operating as intended. This suggests that several central government organisations need to strengthen their controls.

2 Figures have been adjusted by the government’s GDP deflator to account for inflation.

3 The figures quoted below show travel booked by the 17 central government core departments through Crown Commercial Services (CCS) framework contracts. Throughout the report we have focused on expenditure on hotels, rail and air tickets as these are the main areas of government expenditure.

4 A significant portion of Ministry of Defence first-class flights were internal flights in the USA and Middle East, where only first and economy class is offered. These first-class tickets are equivalent to business class on international flights. Owing to the manner in which the data is presented, we are unable to quantify the exact number of these flights.

Central government travel expenditure, and how and where officials travel

The facts

What central government spends on travel

1.1 There is limited transparency of central government travel expenditure:
publicly-available data are incomplete and prepared inconsistently.

Departmental annual reports and accounts

Out of 17 central government departments, 16 publish some information on travel expenditure in annual reports and accounts. However, published costs are inconsistent, making comparisons difficult.

Data.gov and gov.uk

Travel expenditure data hosted on these websites typically cover only some aspects of travel expenditure, such as expenses incurred on departmental business by senior civil servants and ministers. It does not give information about total central government expenditure on travel.

Whole of government accounts

The whole of government accounts do not disclose travel expenditure as a separate category showing how much the government has spent on travel.

1.2 Even including non-published data sources, the government has limited knowledge of what it spends overall on travel and lacks comprehensive expenditure information. Bravo Solutions runs the Cabinet Office analytics tool to capture procurement information from across government. It estimates that it captures approximately 92% of total government expenditure, but does not know what proportion of travel expenditure it captures. Bravo Solutions’ data captures all travel expenditure through the Crown Commercial Service (CCS) frameworks and most travel expenditure booked through government procurement cards. However, the quality of data is reliant on departments providing accurate and detailed information from their accounts payable systems. Bravo Solutions’ data therefore are unlikely to identify travel expenditure claimed back as expenses by officials, and there is a risk that non-travel expenditure may be misallocated by departments to travel costs.

1.3 In 2013-14 Bravo Solutions’ data identified £546 million of central government travel expenditure through travel contracts, and some government procurement cards. Of this, £407 million was through central government travel management framework contracts. The largest framework accounted for £327 million (80%) of this expenditure (Figure 1).

1.4 Bravo Solutions’ data suggest that government travel expenditure has increased by 25% since 2010-11 in real terms (Figure 2).

1.5 Bravo Solutions’ data have become more complete over time, with expenditure included from more sources and in greater detail.5 This makes comparing figures difficult, as later years’ data contain information from more government bodies. Figure 3 gives a more consistent picture, capturing only those organisations that submitted data in all 4 financial years (2010-11 to 2013-14). These figures also suggest that government travel expenditure has risen since 2010-11, although the increase is lower at around 11% in real terms.

1.6 Figure 4 shows travel expenditure by departmental group in 2013-14, as captured by Bravo Solutions. The Ministry of Defence was the largest procurer of travel in central government in 2013-14, accounting for 44% of travel expenditure.

1.7 It is not possible to extract reliable data from Bravo Solutions in more detail, for example to show the proportion of travel expenditure on flights or rail tickets. Bravo Solutions relies on departments and associated public organisations to give supplementary expenditure data, and to classify it correctly. Government bodies do this inconsistently. Therefore, any further analyses using these data would be incomplete and potentially misleading.

How officials travel

1.8 The CCS receives information from travel management companies on all bookings made through its framework contracts. These frameworks cover hotel, air and rail bookings, but not taxis. We analysed a subset of the £407 million spent through CCS frameworks (Figure 1). We analysed this data set, as opposed to departmental data, as it is prepared on a consistent basis across government, making in-depth cross-government comparisons possible. Our analyses focused on travel booked by the 17 core departments. It excludes other organisations’ bookings within the same departmental group – most departments do not have access to, or control, this expenditure. This is consistent with our review of travel policies, which only examined core departmental policies.

1.9 The CCS data differ from that held by departments as they show booked, rather than invoiced, travel. This means that the data include travel bookings that have been cancelled and never charged to departments. The CCS collects these data in order to track booker intention and behaviour. While this means that the data are likely to be overstated, the data available on invoiced travel are less detailed. The difference between the two sets is approximately 19%: in 2013-14 the CCS recorded £503 million of travel booked through the frameworks, compared with £407 million invoiced.

1.10 The 17 core departments booked travel worth £238.7 million in 2013-14. Air was the largest category of expenditure, accounting for 44% of total bookings (Figure 5).

Rail

1.11 During 2013-14 central government departments booked rail travel costing £75.7 million. The Department for Work & Pensions, HM Revenue & Customs and the Ministry of Defence accounted for nearly two-thirds of this expenditure. This is as expected as they are the three largest departments by headcount (Figure 6).

1.12 During 2013-14 departments booked 1,189,656 rail tickets at an average cost of £64. Of these, 1,174,448 (98.7%) were standard-class and 13,654 (1.1%) were first class. The proportion of standard-class rail bookings booked by departments varied between 100% and 94.6% (Figure 7).

1.13 There was considerable variation in the number of advance and anytime train tickets departments booked (Figure 8). Departments booked 492,177 anytime rail tickets (41.4% of all tickets) in 2013-14. Anytime rail tickets are normally the most expensive. By contrast, advance tickets are generally the cheapest, but have to be booked several days before travel. Departments booked 281,385 (23.7%) advance tickets in 2013-14. Our analysis of several intercity train journeys suggests that anytime fares are typically between two and five times more expensive than the cheapest advance fares. Advance tickets are often available only for longer rail journeys, so departments with significant volumes of short rail journeys are likely to book a lower proportion of advance tickets.

Flights

1.14 During 2013-14 government departments booked flights costing £105.4 million. The Ministry of Defence accounted for 65% of these bookings by value (Figure 9).

1.15 Departments booked 304,418 flights in 2013-14 at an average cost of £346. Of these, 145,339 flights were domestic and 159,079 were international. Of the domestic flight bookings, 144,870 (99.7%) were economy class, while 140,840 international flights (88.5%) were economy class. There was considerable variation between departments in the proportion of economy and non-economy class international flights booked (Figure 10). Most departments allow non-economy class air travel for flights over a certain duration (Figure 22). Departments with a higher proportion of intercontinental flights are more likely to have a higher proportion of non-economy class air travel.

1.16 In 2013-14 departments booked flights to many international destinations. Given the Ministry of Defence accounts for 73% of all international flights, the results correlate strongly with where the department has bases or carries out training for service personnel. The USA and Germany were the most common destinations (Figure 11), together accounting for 25% of international flights.

Hotels

1.17 During 2013-14 government departments booked hotels costing £57.6 million. The Ministry of Defence accounted for more than half of the bookings by value (Figure 12).

1.18 The CCS data show that 620,820 UK hotel room-nights were booked by officials through its travel framework contracts in 2013-14. In total, these hotel bookings cost £41.1 million, with an average cost of £66.18 per room per night.

1.19 The Cabinet Office’s Principles suggest that departments should have separate rate-caps for hotel bookings in London, other major UK cities, and the rest of the UK. Figures 13, 14 and 15 set out the average cost of a hotel room night in these 3 locations. There is considerable variation between hotel rates that departments pay in each location. Hotels in London are considerably more expensive than those in the rest of the UK.

5 Between 2010-11 and 2013-14 Bravo Solutions captured increasingly detailed expenditure data, and data from more public organisations.

Controlling travel expenditure

The facts

Central oversight of government travel

2.1 In 2010-11 the Cabinet Office announced measures to reduce government spending, which could influence government travel.

Civil service staff reductions

In March 2014 there were 405,070 full-time equivalent civil servants, a reduction of 73,060 (15%) since the 2010 spending review.6

Budget reductions

Departmental budgets have been tightened considerably since 2010, creating pressure to reduce costs.

Video- and teleconferencing

Technology is increasingly available across government.

Greening Government commitments

In February 2011 the government set goals and associated reporting requirements for departments to tackle carbon emissions, water use, waste and supply chain impacts.7

2.2 The Cabinet Office and HM Treasury have tried to influence central government procurement of travel in several ways:

Restricting first-class travel

In May 2010 the Chief Secretary to the Treasury announced that “first class fares are very expensive and should be avoided by all public servants wherever possible”, and that HM Treasury would monitor this closely. However, a ban on first-class travel was never implemented as policy. HM Treasury does not monitor first-class travel across government.

Business Travel Policy Principles

In 2011 the Cabinet Office and the CCS (formerly Buying Solutions), in consultation with several departments, developed the Business Travel Policy Principles. These Principles included guidance for departmental travel policies and set aspirational targets for travel bookings. Despite obvious synergies with the Greening Government commitments, the Principles did not mention environmental issues.

The Cabinet Office established the travel category governance board to encourage departments to take up the Principles. Departments remain responsible for travel policies, and there remains scope for departments to set their own travel policies to match their business requirements, for example reflecting the frequency and duration of travel required of their staff.

The status of the Principles is not well understood. The Principles have never been formally withdrawn, and no new guidance has been issued to replace them. However, we found little awareness of the Principles at the 10 government organisations we spoke to and there was confusion as to whether they remained current.

Central travel management framework contract

In 2011, the Cabinet Office and HM Treasury required all departments to use the central government travel management services framework. This was also made available to other central government organisations. The framework set guaranteed prices and management fees. Call-off contracts were signed by 162 central government organisations, including all departments, to use these travel management services. Over the past two years, the proportion of travel expenditure procured through CCS frameworks has increased from 70% to 74% of central government travel expenditure recorded by Bravo Solutions (Figure 16).

2.3 Not only has more travel been booked using central frameworks, expenditure is increasingly concentrated in one framework with two travel management suppliers: Redfern Travel and Hogg-Robinson Group. These are the largest suppliers, accounting for more than 80% of government travel expenditure through CCS frameworks in
2013-14 (Figure 17).

2.4 In 2013-14 the CCS reported savings of £138.5 million on travel expenditure through 10 central government travel frameworks, compared with the 2009-10 baseline. This saving is for travel expenditure made through the framework contracts that the CCS negotiated. The government is making savings because it is procuring cheaper travel in real terms, even though central government booked more travel in 2013-14 than in 2009-10 (Figure 18). In 2014 we reviewed the 2013-14 savings reported by the Efficiency and Reform Group. We concluded the methodology the Group used to calculate travel savings was reasonable.8

2.5 The CCS focuses on managing the price of travel. It aims to make a range of travel options available, at competitive prices. The CCS negotiates framework contracts and manages other initiatives such as the Crown Hotels Programme, which guarantees terms and prices at hotels across the UK. The CCS collects data on the overall demand for travel, but considers responsibility for managing travel expenditure to lie with departments.

2.6 The CCS previously collected data from travel management companies to review how departments performed against the aspirational targets in the Principles. It still gathers these data but it stopped analysing this during 2013-14 when it became clear there was little departmental appetite for comparing performance. The centre of government therefore does not have a detailed view of how travel procurement differs between departments, whether departments are getting value for money, and whether travel looks reasonable overall given wider cross-government initiatives (paragraph 2.1).

Departmental oversight of government travel

2.7 Departments have delegated responsibility for controlling and overseeing their own travel expenditure. We would expect departments to have a sophisticated understanding of what level of travel they need to conduct their business. This should form the basis of departmental travel policies and controls over travel expenditure.

Departmental travel policies

2.8 Departments are responsible for creating travel policies setting out what type of travel is available to officials, and the circumstances when travel is acceptable. We analysed how 5 departments had set their travel policies. They told us that the Cabinet Office’s Principles had influenced recent travel policy revisions, as did the Civil Service Employee Policy framework. However, the main consideration for revisions had been having to find efficiencies and reduce costs rather than managing overall demand. Some departments indicated that they needed flexibility, which prevented them from making travel policies too restrictive.

2.9 Although the status of the Principles is ambiguous, they remain the most recent guidance the centre of government has issued. We have therefore used them to review the travel policies at central government departments (Figure 19). We aimed to assess how consistent travel policies are, and to highlight important areas of difference. Our review looked only at departmental travel policies. A number of departments include additional guidance on booking travel on their intranets. We have not referred to this additional guidance in our work.9

2.10 All departments include some of the Principles in their travel policies (see Figure 20). Departments differ in how far they have adopted the Principles. These differences partly reflect the different business needs and business models of the departments to which they apply.

2.11 Figure 19 has the full wording of the Principles and identifies those Principles most and least widely adopted by departments.

Variation in travel policies: hotel rate-caps

2.12 In line with the Principles, most departmental travel policies include a nightly rate-cap for hotel bookings in different locations. However, rate-caps vary by department, even for the same location: for example, £110 to £150 for hotels booked in London (Figure 21).

2.13 Departments told us that it was often challenging to find suitable hotel accommodation within the rate-cap, particularly in London. Some departments use a ‘flexible’ rate-cap to increase the choice available in any location. The system will allow accommodation bookings above the rate-cap within certain limits (for example, up to £20 above the policy rate-cap). Other departments encourage staff to seek accommodation in peripheral areas (including commuter hubs such as Croydon or Watford) and then travel onwards the following day (for example, into central London).

2.14 These approaches have different cost implications, which are comparable only if including the cost of the entire trip. Departments do not collect these data, so it is not possible to say which approach is more cost-effective. It is the view of the CCS that some departments may see the hotel rate caps as targets to be aimed for rather than absolute maximums, and that greater reduction in spend could be made by departments procuring the best value hotel available rather than the hotel nearest to the hotel cap. Our discussions with 5 departments suggest that departments can find it difficult to book hotel rooms within the rate caps, particularly in central London.

Variation in travel policies: non-standard class rail travel and non-economy class air travel

2.15 All departmental travel policies contain exceptions for officials to travel non-standard class by rail, and non-economy class by air. Often these exceptions are for staff disability, illness or security, but 13 policies also allow non-standard class travel by rail, and/or non-economy class travel by air, dependent on journey duration. Policies differ in how long a journey must be before officials can upgrade from standard or economy class (Figure 22).

2.16 A number of departments told us that they are contractually obliged to allow non-standard class travel by rail and non-economy class travel by air for officials with retained rights. This can be reflected in the relevant travel policy (for example, HM Revenue & Customs and the Ministry of Defence).10

2.17 Departmental travel policies also varied considerably in whether officials had to seek approval for non-standard class rail, or non-economy class air travel. Out of 17 departments, 11 require officials to seek manager approval for any non-standard class rail travel. Seven departments require manager approval for any non-economy class air travel.

2.18 Despite the Chief Secretary to the Treasury’s announcement in May 2010 about public servants travelling first class, HM Treasury did not ban such travel (see paragraph 2.2). However, the Principles suggest that departmental travel policies should not allow first-class air or rail travel under any circumstances.

2.19 All departmental travel policies contain exceptions so officials can make first-class rail journeys. However, departments have taken a much more varied approach to first-class air travel. Five departments allow first-class air travel, 4 do not mention first-class air travel in their policies, and 8 departments do not allow first-class air travel (Figure 23).

How officials procure travel

2.20 Figure 24 shows the three most common ways central government officials book or pay for travel, which are as follows:

Travel management services company

Either using a self-service online portal, or by specifying travel requirements by email or phone. Travel management services are provided through framework contracts negotiated by the CCS.

Government procurement card or corporate credit card

In either case, the organisation is billed by the card company.11

Private funds

Officials reclaim these through an expenses system.

2.21 In 2013-14 central government spent £407 million on travel booked through travel management service companies. This is approximately 74% of all travel expenditure captured by Bravo Solutions (£546 million; see Figure 1). There is no complete data source for the whole of central government showing the value of travel purchased using government procurement cards or repaid to officials as expenses, although some departments do collect these data.

Advantages and disadvantages of booking or payment methods

2.22 Each of these three ways for booking travel has advantages and disadvantages (Figure 25). In any situation, the method chosen will be determined by several factors, including: organisational policy; destination; journey duration; when travel will be taken; and how much flexibility is required. Organisations should consider which method is most appropriate given their business needs, and encourage officials accordingly. The CCS recommends the adoption of a travel management services company/system in order to improve management and increase transparency of travel spend.

Travel expenditure risks and departmental controls

2.23 As with all government expenditure, travel generates financial risks. In 2012-13 £489 million of travel expenditure12 represented only 0.3% of total central government expenditure on goods and services of £163 billion.13 However, officials normally must book their own travel, and autonomy increases the associated risk. Inappropriate travel bookings can cause financial loss, poor value for money and serious reputational damage. Figure 26 identifies examples of typical travel expenditure risks.

2.24 Organisations should design and implement expenditure controls to mitigate these risks. To design an optimal set of controls, organisations must understand their business needs, and the specific risks they face. This analysis should underpin a selection of preventative, detective, payment and deterrent controls chosen to mitigate these risks.

Preventative controls

Designed to prevent inappropriate travel bookings before they are made.

Detective controls

Designed to identify inappropriate travel bookings after they have been made.

Payment controls

Designed to ensure that departments pay suppliers the right amount at the right time.

Deterrent controls

Designed to dissuade officials from making inappropriate travel bookings.

2.25 Figures 32 to 35 in Appendix Two show the types of preventative, detective, payment and deterrent controls that might reasonably be associated with central government travel expenditure.

Travel expenditure controls at 10 organisations

2.26 We reviewed controls over travel expenditure at 10 central government organisations (Figure 27): 5 departments and 5 other central government organisations (3 executive non-departmental public bodies, and 2 executive agencies).

2.27 We compared travel expenditure controls for travel management service providers’ systems, government procurement cards and expenses systems against a hypothetical set of controls intended to mitigate against the access, booking and payment risks identified in Figure 26.

2.28 Our results identified consistency and variation among the 10 organisations reviewed (see Appendix Two, Figures 36 to 38). We consider these similarities and differences for each of the three ways of booking travel in turn (see Figures 28 to 30). We do not conclude on whether controls in place are appropriate and proportionate to the business needs of each organisation. Nor do we suggest that organisations should implement all these controls.

Travel management service providers’ systems

2.29 All 10 organisations have call-off contracts from the CCS’s framework contract for travel services. In 2013-14, £156.2 million of travel at the 10 organisations was booked through the Redfern and Hogg-Robinson Group travel management companies; 58% of this was booked online, using a web-based portal provided by the contractor. Organisations could also book travel by emailing or calling the contractor.

2.30 All 10 organisations had similar deterrent controls, with a policy that stated sanctions for misusing travel. These controls would apply equally to travel booked through travel management systems, the government procurement card, or claimed back as expenses.

Travel expenses

2.31 All 10 organisations allow officials to claim legitimate travel costs incurred while conducting their duties (Figure 29). At the 10 organisations sampled, expense claims accounted for a minority of travel costs (typically less than 10% of total travel expenditure).

Government procurement card

2.32 The number of government procurement cards (or corporate credit cards) has decreased during the current Parliament.14 These cards were introduced in 1997 for low-value, high-volume transactions. Each card has categories which organisations can enable or disable, based on the cardholder’s business needs. In our sample, 9 organisations allowed staff to pay for travel using such a card.

2.33 With the decline in the number of cards and the rise in accessible travel management company services, use of such cards for travel is now low. In 2013-14 at only one of the organisations we sampled (the National Portrait Gallery) did card use account for most travel expenditure. At the remaining organisations it accounted for less than 10%.

2.34 Controls relating to cards are more consistent than controls for the other methods of booking or paying for travel. This is partly because of government work to strengthen oversight (Figure 30).15

Variation in controls and assurance

2.35 Variation in controls is inevitable, and partly reflects some departments’ complex travel requirements. For example, the Ministry of Defence may have to move officials and equipment to remote locations at short notice. The lack of automated controls in its travel management system is deliberate, and intended to make travel easier. It is challenging to design automated controls that recognise (and prevent) undesirable travel, but allow unusual but legitimate travel.

2.36 It may sometimes be desirable to have few preventative controls. However, this must be offset by effective detective controls to identify off-policy and suspicious bookings. The Homes & Communities Agency analyses monthly travel data, identifies high-risk bookings and reports data to senior managers. Budget holders can then be held to account, which encourages active enforcement of the travel policy. Organisations that do not make any detective checks get limited assurance that travel expenditure is reasonable and is for genuine business need. In the worst case, such organisations risk unintentionally funding inappropriate or fraudulent travel.

Transaction testing

2.37 As well as reviewing controls at 10 organisations, we tested 10 travel transactions from each. Most transactions we tested were through a travel management company. However, 2 were also made using a government procurement card and 5 were claims for expenses. We tested whether each transaction met the relevant organisational travel policy and, if not, confirmed whether there was a reasonable explanation for non-compliance.

2.38 Transaction testing revealed several potentially inappropriate transactions. For example, at the Ministry of Defence we tested an economy-class return flight from London to Brunei costing more than £21,000. Further investigation revealed this to be a group booking for 14 travellers. However, this was unclear from monthly transaction summary data the travel management company provided. Inability to easily distinguish group bookings from such summary information will skew value-based stratified or spot-checking. It reduces the likelihood of identifying expensive tickets for solo travellers. Group bookings explain some journeys reported in the press in 2013.16 Of 100 transactions tested, 4 did not comply with the relevant organisational travel policy (Figure 31).

2.39 Our testing highlights the importance of controls over travel expenditure. All 4 transactions should have been identified as questionable and further scrutinised, but none were. In 3 cases this was because detective controls were in place but did not function properly, and in 1 case the relevant organisation had no detective controls.17 For the 3 cases, the organisations conducted monthly reviews of travel bookings. However, they did not identify these to be off-policy transactions. The transaction at the Department for Work & Pensions may not have been off-policy. The data available to the Department lacked detail to identify the traveller’s identity, and therefore whether they were eligible for first-class rail travel because of personal circumstances. Detailed management information is necessary for detective controls to work properly.

2.40 It is neither practical nor desirable for organisations to block officials from making off-policy travel bookings. Travel policies cannot cover every conceivable travel requirement. Organisations therefore need processes to identify and investigate unusual travel expenditure, to confirm their eligibility and get assurance over such expenditure. Our investigation considered a small number of travel bookings, but found a number of off-policy bookings. This suggests that several central government organisations need to strengthen their controls.

National Audit Office policy and performance on travel expenditure

2.41 As part of our investigation, we performed the same testing on the National Audit Office (the NAO) as the 10 organisations outlined in Figure 27. In 2013-14 the NAO spent approximately £1.65 million on a combination of domestic and international travel. The NAO publishes information relating to travel expenditure in its annual reports and accounts, and expenditure incurred by the leadership team and board members on its website. We tested 10 travel transactions with a total value of £7,070. All were compliant with the NAO’s travel policy, and none suggested controls were absent or had not functioned as intended.

2.42 The NAO’s travel policy is consistent with many of the Cabinet Office’s Business Travel Policy Principles; however, no government department has a travel policy which is exactly in line with the Principles and the NAO’s policy likewise is in some respects less restrictive than the Principles. For example, hotel rate caps are set higher than those in the Principles and, during 2013-14, the NAO’s policy allowed first class rail in certain circumstances. Compared to averages across government, the NAO therefore booked a higher proportion of first class rail tickets and our hotel costs were above average, particularly in London. The cost of hotels booked in London was on average £135 (£113 exclusive of VAT for consistency with Figure 13) and £79 outside London (£66 exclusive of VAT for consistency with Figures 14 and 15).

2.43 In terms of first class rail travel the NAO travel policy permitted first class travel where: the Director has approved the booking; the seats have been pre-booked; the employee is required to work during the journey; and where the travel time is expected to be in excess of two and a half hours for a single trip. In 2013-14, the NAO booked 93.7% of rail tickets in economy class. The policy was set because we have a requirement for a significant amount of travel between Newcastle and London. This is required for meetings with government departments and in Parliament, as well as internal NAO commitments.

2.44 In response to the comparison we have made of our travel policy to those across government, we have revisited our policy, taking account of our business requirements and have revised it in the following respects:

to remove any provision for first class rail travel; and

to reduce the hotel rate cap for London to £125.

6 These figures reflect changes in civil service FTE numbers, see Table 8 available at: www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-335605

7 Departments are required to reduce the number of domestic flights by 20% from 2009-10 levels, by 2015. Departments are not required to report carbon emissions resulting from international flights.

8 Comptroller and Auditor General, The 2013-14 savings reported by the Efficiency and Reform Group, Session 2014-15, HC 442, National Audit Office, July 2014.

9 We omitted some of the Principles from our analysis as they were not all relevant to travel policies. For example, the Principles indicate that “It is recommended that departments set a monthly divisional travel budget to ensure that there is a close check kept on expenses.” Although sensible, this relates to the organisation, not an individual traveller.

10 Such benefits reflect the terms of individual contractual obligations between employers and employees, which enshrine the rights guaranteed to those officials while they conduct their duties.

11 A number of organisations do not allow government procurement cards to be used to book or pay for travel.

12 Bravo Solutions recorded expenditure on travel in 2012-13 as £489 million.

13 HM Treasury, Whole of Government Accounts year ended 31 March 2013, Session 2014-15, HC 93, June 2014. This is the most recent whole of government accounts available.

14 Four out of 5 departments included in our review used government procurement cards with the travel category enabled. In 2014 these 4 departments used approximately 11,100 cards, of which approximately 10,500 were held by the Ministry of Defence. When we reviewed usage of these cards in 2012, the number held by these 4 departments was 14,858. See Comptroller and Auditor General, The Government Procurement Card, Session 2010-2012, HC 1828, National Audit Office, March 2012.

15 HM Treasury, Government responses on the First to the Fourth and on the Sixth to the Tenth Reports from the Committee of Public Accounts: Session 2012-13, Cm 8467, November 2012.

16 See also ‘What this investigation is about’, page 4.

17 In these cases, the 3 organisations told us that they reviewed travel transaction listings to identify and follow up
off-policy bookings. However, checks failed to identify the 3 transactions in our sample.

Appendix One

Our investigative approach

Scope

1 We examined:

data to show the public how much the government spends on travel, and how officials travel;

how the Cabinet Office and HM Treasury have tried to control travel expenditure across central government;

travel policies at 17 central government departments; and

controls over travel expenditure at 10 central government organisations, and performed transaction testing to assess how these work.

2 Our investigation considers central government travel expenditure between 2010-11 and 2013-14. It focuses on expenditure for rail and air travel, and hotel bookings.

Methods

3 In examining these points, we drew on several evidence sources.

4 We interviewed officials from the Cabinet Office and the Crown Commercial Service to identify the role of the centre of government in relation to:

creating and mandating framework contracts for travel services;

collaborating with other departments to produce guidance for setting travel policies; and

reviewing travel data collated and analysed by the Crown Commercial Service.

5 We analysed data held by Bravo Solutions and the Crown Commercial Service to calculate:

central government travel expenditure from 2010-11 to 2013-14;

travel expenditure by departmental group; and

travel expenditure through the Crown Commercial Service travel management framework contracts.

6 We reviewed departmental reports and accounts from 2010-11 to 2013-14 to assess the completeness and comparability of publicly-available travel expenditure data. We reviewed departmental travel policies for consistency, using the Cabinet Office’s Business Travel Policy Principles as a framework.

7 We conducted work programmes at 10 central government organisations. Work programmes consisted of three elements:

walk-throughs of how officials book travel;

transaction testing; and

interviews covering travel expenditure and policy from the perspective of finance, procurement, internal audit and human resources.

8 The work programme was conducted with 5 departments and 5 other central government organisations:

9 These 10 organisations were selected to include a variety of:

public functions;

volumes of travel;

travel expenditure; and

types (modes) of travel required.10 We reviewed 10 travel transactions at each organisation (100 transactions in total). Each sample included the most expensive flight and train ticket booked through the travel management company, along with a selection of other tickets purchased through the travel management company. Where government procurement card and expenses claims were also available, we selected a maximum of 2 transactions from these sources.

11 We compared transactions against relevant travel policies and, where these were in breach, sought to identify why the transaction had proceeded. This might have been because controls were absent or had failed to work as intended.

12 We did online research, including:

media articles relating to the data released by the Cabinet Office in 2011; and

rail and airfare analysis, for example to calculate achievable savings if advance rail tickets are purchased instead of anytime tickets.

Appendix Two

Preventative, detective, payment and deterrent controls

1 The following Figures 32, 33, 34 and 35 represent, respectively, the types of preventative, detective, payment and deterrent controls that might reasonably be associated with central government travel expenditure. The subsequent Figures 36, 37 and 38, indicate those controls we identified at 10 central government organisations.

2 These figures reflect the types of controls we would expect to see in a functioning travel expenditure control environment. They do not include every control present in each of the organisations we reviewed.

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