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The reports published as HC 1627 (ISBN 9780215040183), HC 1617 (ISBN 9780215040480), HC 1659 (ISBN 9780215041487), HC 1695 (9780215041524), HC 1796 (ISBN 9780215041586), HC 1696 (ISBN 9780215041593)
The reports published as HC 1398 (ISBN 9780215561848), HC1469 (ISBN 9780215561862), HC 1468 (ISBN 9780215038548), HC 1502 ((9780215038585), HC 1530 (ISBN 9780215038913, HC 1565 (ISBN 9780215039910), HC 1444 (ISBN 9780215038968), HC 1566 (9780215039941), HC 1531 (9780215040077)
This report is a follow-up to the Committee's report on Accountability for Public Money (HC 740, session 2010-11 (ISBN 9780215559029)) an issue at the core of the relationship between Parliament and government. Accounting Officers remain accountable to Parliament for funds voted to their departments but the policy intention is that local bodies will have significant discretion over the services they deliver. In the Government's response, 'Accountability: Adapting to Decentralisation', Sir Bob Kerslake drew a distinction between those services that government delivers directly and those that it may fund but are delivered in more decentralised arrangements. He proposed that Accounting Officers set out, in Accountability System Statements, the arrangements they have in place to provide assurance about the probity and value for money of funds spent through devolved systems. All departments are expected to produce Statements by summer 2012. Departments have made a genuine effort to develop arrangements which reconcile accountability and localism but the Statements so far are unwieldy and considerably more needs to be done to improve their clarity, consistency and completeness. There is concern that accountability frameworks must drive value for money and, critically, are sufficiently robust to address the operational or financial failure of service providers. Departments are placing increasing reliance on market mechanisms such as user choice to drive up performance and value for money, but there are limits to what these mechanisms can achieve. The Treasury needs to take ownership of the system and ensure that the Comptroller and Auditor General has the necessary powers and rights of access to examine the value for money of funds spent through devolved systems
In November 2011, HM Treasury published the first audited Whole of Government Accounts (WGA), covering the year 1 April 2009 to 31 March 2010 (HC 1601, ISBN 9780102975192). The Committee welcomes this major step forward in improving transparency and accountability and highlights some of the information it contains: at 31 March 2010 the government's public service pensions liability was around £1,132 billion; the present value of its future commitments under PFI schemes was £131.5 billion; the government wrote off £10.9 billion in unpaid taxes and expected to have to pay £15.7 billion for outstanding clinical negligence claims; cost of future nuclear decommissioning (£56.7 billion); the need for stronger accountability systems to secure effective responsibility for cost and value for money at local levels - academies, Free Schools, Foundation Trusts and GP consortia. But the WGA will only serve its purpose- showing what the government owns, owes, spends and receives - if it is timely and robust. The figures in the first audited WGA are too dated because Treasury took 20 months to prepare and publish the report. Treasury must address the issues that led the Comptroller and Auditor General to qualify his audit opinion on the WGA 2009-10. A key issue is Treasury's decision to deviate from accounting standards, by omitting Network Rail, the publicly owned banks, and various other government-controlled or owned bodies from the WGA. The Committee sets out a set of principles that future accounts should follow.

Means testing

Great Britain: Parliament: House of Commons: Committee of Public Accounts

Published: 2012-01-12

Total Pages: 44


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The Government uses means testing to distribute at least £87 billion of benefits to claimants each year, around 13% of total public spending. The poorest fifth of households rely on means-tested benefits for a third of their net income. The planned introduction of a new means-tested Universal Credit will replace a number of existing means-tested benefits. Currently 30 different means tested benefits are managed by nine departments and 152 local authorities in England. But Departments have a limited understanding of how their design of benefits affects incentives for employment, the burden on claimants, take-up and administrative costs. Departments need to improve their understanding of how all benefits interact and how changes to eligibility rules can affect claimants. Complexity increases the burden on claimants which can harm take-up, and is likely to disadvantage the most vulnerable members of society in particular. The Government expects Universal Credit reforms to simplify the system and improve incentives to find work. The DWP's priority is to focus on the effective delivery of these reforms. However, success will also depend on proper coordination between Universal Credit and other means-tested benefits. In addition, DWP and HMRC are designing a real-time information (RTI) system for Universal Credit to reduce the risk of overpayments, with benefits being recalculated as soon as circumstances change. Both DWP and HMRC need to understand how the introduction of this system will impact on small businesses and the self-employed who may not have the necessary IT to administer it.
The Commons Public Accounts Committee publishes its 61st Report of the Session which, on the basis of evidence from the Cabinet Office and HM Revenue and Customs (HMRC), examined tax disputes. At 31 March 2011 HM Revenue & Customs was seeking to resolve tax issues valued at over £25 billion with large companies, some of which included disputes over outstanding tax. In this report, the Committee expresses concern about how the Department handled some cases involving large settlements and that there needs to be proper separation between the negotiation of tax settlements and the authorization of such settlements. The Committee also states that HMRC made matters worse by trying to avoid scrutiny of these settlements, keeping confidential the details of specific settlements with large companies. This effects Parliament's ability to establish value for money, compounded further by imprecise, inconsistent and potentially misleading answers given by senior departmental officials, including the Permanent Secretary for Tax in particular over his evidence on his relationship with Goldman Sachs, in facilitating a settlement with the company over their tax dispute. HMRC governance processes in these matters were inconsistent and it has now appointed two new Commissioners with tax expertise, and plans to introduce a new assessor role to permit independent review of large settlements before they are finalised. The Committee further states that it saw little evidence of personal accountability within the Department, and that a perception has developed that large companies are treated more favourably, receiving preferential treatment compared to small businesses and individuals.
The Committee of Public Accounts scrutinises the reasons behind individual Departments exceeding their allocated resources, and reports to the House of Commons on whether it has any objection to the amounts needed to rectify the reported excesses. The Committee may also make recommendations to Departments concerning the causes of these excesses. In 2010-11, two bodies breached their expenditure limits: The Department for Transport breached its Net Cash Requirement by £335.2 million, primarily because of weaknesses in monitoring its budget for the operation of its rail franchises; The Teachers' Pension Scheme (England & Wales) breached its Net Cash Requirement by £11.9 million because the Department for Education underestimated the number of members that would retire in 2010-11 and overestimated the contributions that would be collected from employers. On the basis of an examination of the reasons why these two bodies exceeded their voted provisions, the Committee has no objection to Parliament providing the necessary amounts by means of an Excess Vote. Nevertheless, it expects both bodies to set out what actions they have taken to improve their financial management and avoid exceeding their allocated resources in the future.
The Ministry of Defence (the Department) continues to struggle with managing its equipment programme on an affordable basis, resulting in the cancellation or deferral of major projects and a damaging impact on value for money. In 2010-11 the forecast costs to complete the 15 largest defence projects increased by £466 million. Since their original approvals the estimated costs of these 15 projects have increased by £6.1 billion and now stand at approximately £60 billion (an 11.4% increase). In aggregate these 15 projects are forecast to be completed 322 months later than originally planned. Projects approved since 2002 show significantly lower cost growth than those approved before this date, which is encouraging. Now the Department faces unpalatable decisions. Decisions to cancel or slow projects and to reduce equipment numbers have added significant long-term costs to the whole defence programme and to unit costs within the programme. Capability has been affected and this has all resulted in poor value for money. Large defence equipment projects have contributed disproportionately to overall cost growth. In the past, the Department has repeatedly failed to challenge unrealistically low estimates for the largest and most complex equipment projects from suppliers. The Department is still unable to set out openly the extent of the gap between income and expenditure it still faces, and how and by when any shortfall will be resolved. The report notes little progress in reducing the turnover of the Senior Responsible Owners (SROs), who oversee individual projects.

DFID

Great Britain: Parliament: House of Commons: Committee of Public Accounts

Published: 2012-02-03

Total Pages: 56


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The DFiD's transfer programmes deliver cash, food and assets, such as livestock, directly to people living in poverty. Transfers can be used to tackle a range of issues, such as hunger and malnutrition, or access to health and education services, in a variety of contexts. In 2010-11 the Department spent £192 million on social protection programmes, which includes its transfer programmes. The evidence heard suggests transfer programmes are effective in targeting aid, and ensuring the money goes directly to the poorest and most vulnerable people. It is therefore surprising that the use of transfer programmes has not increased. The Department only plans to support transfer programmes in 17 of its 28 priority countries. It does not have an overall strategy for the use of transfers and its decisions on where to support transfer programmes look reactive. The decision as to whether or not to propose a transfer programme is taken by staff working in the country and it is not clear why there are extensive programmes in some countries and none in others. The Department does not collect data on all the costs of the transfer programmes it supports and the Department is therefore unable to say whether it is lifting more people out of poverty for every pound spent on transfers compared to other programmes. The Department's long-term objective is for the governments of recipient countries to take on the responsibility of owning and funding transfers as part of a sustainable social security system. However, the Department has not been clear about how individual programmes will be sustained
Under European Directives, all member states are required to install 'intelligent metering systems' - smart meters - to at least 80% of domestic electricity consumers by 2020. The UK Government has opted for a more challenging programme, with plans for energy suppliers to install smart electricity and gas meters in all homes and smaller non-domestic premises in Great Britain by 2019. The Department estimates that the smart meters programme will cost some £11.7 billion. This large complex programme requires replacing around 53 million gas and electricity meters, with significant uncertainties over the estimated costs and benefits involved. Installation costs will be borne by consumers through their energy bills, but many of the benefits accrue in the first instance to energy suppliers. No transparent mechanism presently exists for ensuring savings to the supplier are passed on to consumers, and the track record of energy companies to date does not inspire confidence that this will happen. There remain significant uncertainties in a number of key areas in the programme and the Department needs to address these by conducting proper trials to identify and manage the risks associated with an IT project involving such a substantial amount of money which is financed by individuals as consumers. The Department needs to ensure that the vulnerable, those on low incomes and those who use prepayment meters also benefit from smart meters. It would be unacceptable if these consumers bore the costs of smart meters through higher charges without getting a share of the potential benefits.