Select committee inquiry
Inquiry into Government accounts
Closed
What the inquiry looked at
“Report: Accounting for democracy: making sure Parliament, the people and ministers know how and why public money is spent Report: Accounting for democracy: making sure Parliament, the people and ministers know how and why public money is spent (PDF 1.06 MB) Government Response The government financial reporting review (PDF 7.9MB) The report concerns the published Departmental Annual Reports and Accounts (designed for Parliament and the public) and the Management Accounts (designed for the use of Ministers and officials in managing their Departments). In most cases Annual Reports and Accounts appear to be currently failing in their purpose of explaining to the public and Parliament the effectiveness of Government spending. In 2015–16, the Treasury instructed Departments to adopt a new framework for their Annual Reports and Accounts: whilst we welcome this framework, we do not believe it goes far enough. It is disappointing that the Treasury have not monitored any changes in the way that accounts have been used since their reforms of 2015–16. The Treasury should monitor the use of accounts to identify good practice. The Committee identifies that the published Annual Report and Accounts should provide information about value for money and commitments made to Parliament in a credible way.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
In the committee's words, from the summary of 14th Report - Accounting for democracy: making sure Parliament, the people and ministers know how and why public money is spent ↗
The House of Commons is supreme in matters of finance. Parliament however can only exercise this supremacy if it understands how the Government spends money and on what it spends money. Ministers and their Departments can only give Parliament this information if they too know what their Departments spend money on and why. For these reason, this report concerns both the published Departmental Annual Reports and Accounts (hereafter simply referred to as Annual Reports and Accounts), designed for Parliament and the public, and management Accounts, designed for the use of Ministers and officials in managing their Departments.
Citizens should be able to use Annual Reports and Accounts to assess the effectiveness of Government spending. Parliamentarians should be able to use Annual Reports and Accounts to scrutinise the Government’s commitments and hold the Government to account for its policies. Both citizens and Parliamentarians should be able to rely upon and be able to understand the information which is published. The Government itself should become better at using financial information to manage its business.
In recent years, the Treasury has made reforms to published Annual Reports and Accounts. However in our view, whilst the reforms are in the right direction, they do not go far enough. While Government accounting has improved, and the UK is a world leader in accruals accounting and the adoption of international standards, accounts are still not being read or used by MPs or citizens as much as they should be. What we currently have is a good base of solid reporting: the Treasury now needs to take the next step and make these documents a cornerstone of democratic accountability, both to citizens and Parliament.
This report lays out a number of steps that the Government should take to make accounts central to accountability in the public sector. Our vision is that accounts should report on the value for money of government services, the commitments made to Parliament by Government and provide a credible record of expenditure and the balance sheet.
Currently we believe that they are only meeting the last requirement.
We have made a series of recommendations which we believe will improve government accounting. To ensure citizens are able to work out the value for money of policies and services, we have recommended that Departments report separately about each policy or service that they offer the public (so that we can tell how much was spent on individual services like Child and Adolescent Mental Health). We recommend that they report the unit costs of those services (so that citizens could see the cost of a school place or a police officer visit). To ensure Parliamentarians are able to hold ministers to account, we recommend that the accounts include a statement which sets out ministerial promises of funding and saving and what was achieved against that. To improve the credibility of the accounts, we recommend that the Government should make sure that the performance information in the accounts is independently audited. Lastly we recommend that the Government should ensure that its management Accounts reforms last for more than a single Parliament by ensuring that the political and bureaucratic leadership of all Departments are focused on improving it.
Financial accountability lies at the heart of Parliamentary sovereignty and of democratic government. Parliament can only be what Gladstone described it as - the real authoritative steward of the public finances - if the Government improves the accounts.
What the government said
No government response is linked to this report.
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 23 February 2016 to its close on 25 October 2017.
- Oral evidence 3 sessions
- Report 27 Apr 2017
- Correspondence 13 Dec 2016
What it recommended 15 recommendations · 37 conclusions
1The public require good quality, well presented financial information to hold the Government to account.
Concluded (the committee's words)
The public require good quality, well presented financial information to hold the Government to account. As our witnesses, the Treasury and others have said, the public and Parliament want to use this information in order to assess the performance of Government Departments. To perform this function, Annual Reports and Accounts must be clearly presented so that non-accountants can read and make use of them.
2The consensus of evidence to our inquiry makes it clear that many Government Departments’ Annual...
Concluded (the committee's words)
The consensus of evidence to our inquiry makes it clear that many Government Departments’ Annual Reports and Accounts remain badly written and difficult to understand or follow, despite recent reforms, and despite being prepared to a high technical standard (as we discuss in Chapter 5). Organisations like the King’s Fund and the Taxpayer’s Alliance say they find the Annual Reports and Accounts difficult to use and do not automatically turn to them to find out about the Government’s actions. Academics have told us that the format and content of Accounts has not been designed for the purpose of democratic scrutiny. Most of the available evidence suggests a very limited community of people actually use the Annual Reports and Accounts. In most cases Annual Reports and Accounts appear to be currently failing in their purpose of explaining to the public and Parliament the effectiveness of Government spending. We believe Accounts would be better used if they were prepared more often with the ultimate readers in mind, for example commentators on public policy, peers and MPs and their researchers.
3Some Annual Reports and Accounts within the public sector are clearly currently better than others.
Concluded (the committee's words)
Some Annual Reports and Accounts within the public sector are clearly currently better than others. For instance, witnesses to our inquiry pointed to the presentation of performance data by DWP in its Annual Report and Accounts as a good example of what all Departments could and should do. Whilst no Department’s Accounts are perfect, the Treasury should identify good practice, and share and encourages its adoption by other Departments.
4It is clear that Annual Reports and Accounts are hard to follow.
Recommended (the committee's words)
It is clear that Annual Reports and Accounts are hard to follow. Non-accountants and commentators like the King’s Fund and Taxpayer’s Alliance do not find them as useful as they should be. Professor Prowle and Dr. Harradine are right to call for more systematic information about who is using Accounts, what figures and facts they are using from them and what they think about the documents. We recommend that the Treasury carries out research to identify how many people are buying and downloading Annual Reports and Accounts, who current readers are, what those readers think and who the potential readership is likely to, or should, include. We further recommend that the Treasury should regularly seek to find out what potential users of the Annual Reports and Accounts (including those who submitted evidence to our inquiry) think about how they could be improved to make it easier to assess the effectiveness of Government spending.
5We welcome the Treasury’s reforms (contained in Simplifying and Streamlining the Statutory Annual Report and...
Concluded (the committee's words)
We welcome the Treasury’s reforms (contained in Simplifying and Streamlining the Statutory Annual Report and Accounts) and the intention behind them to make Accounts simpler and more user- friendly. Departments and the Treasury should consider always that the demands of public sector users of financial information differ from those of private sector users and therefore they may need to provide them with additional explanations and information.
6Whilst the Treasury’s reforms are a good first step, the way they have been implemented...
Concluded (the committee's words)
Whilst the Treasury’s reforms are a good first step, the way they have been implemented by different Departments, within a broad framework, currently varies widely. It is clear from the evidence provided to us that, on their own, the reforms as currently implemented will not necessarily provide Annual Reports and Accounts that completely fulfil the needs of potential users. Departments should make concerted efforts to present financial data in a way that clearly links measurable outputs and outcomes, and is useful to readers.
7It is disappointing that the Treasury have not monitored any changes in the way that...
Recommended (the committee's words)
It is disappointing that the Treasury have not monitored any changes in the way that accounts have been used since the reforms of 2015–16. As we recommend above, the Treasury should monitor the use of accounts to identify good practice. Where good practice already exists, Departments should be encouraged to learn from it. We also believe further reform is needed to address more directly the need for greater transparency and address needs of users.
8The Treasury should update its guidance to Departments setting out that Annual Reports and Accounts...
Concluded (the committee's words)
The Treasury should update its guidance to Departments setting out that Annual Reports and Accounts should include statistics on staff turnover within the Department and also the staff engagement scores for the Department from the latest Civil Service People Survey. The average figures for the Civil Service should also be included.
9Witnesses to our inquiry said that the public need information about spending on individual services...
Concluded (the committee's words)
Witnesses to our inquiry said that the public need information about spending on individual services from the Accounts. However, Departments’ current reporting is primarily based around their organisational structure. While this enables Parliament to hold senior officials to account for their budgets, in many cases, such as the Department of Health (see paragraph 38), these breakdowns do not clearly reflect the services offered to the public. For an area such as Child and Adult Mental Health Services, for instance, it is almost impossible for the public to find out from the Department of Health’s Annual Report and Accounts how much is being spent on this, or other types of service, and therefore to assess the value for money of that spending.
10We recommend that the Treasury explore how Annual Reports and Accounts can be made more...
Recommended (the committee's words)
We recommend that the Treasury explore how Annual Reports and Accounts can be made more useful by requiring Departments to report not just by organisational unit but also by policy area. This could be achieved by, for instance, restructuring the Estimates subheads or providing additional spending breakdowns of spending within the notes to the Accounts. Senior officials would remain accountable for the money they have spent through reporting by organisational unit. Audited statements for policy area should include both performance and financial data so that citizens can evaluate how effectively Departments are spending money.
11Departments should disclose both financial and performance information about significant programmes in their Annual Reports...
Concluded (the committee's words)
Departments should disclose both financial and performance information about significant programmes in their Annual Reports and Accounts and clearly relate Fourteenth Report of Session 2016–17 61 spending to outputs, outcomes and performance. Annual Reports and Accounts should disclose useful information about each programme, such as its planned duration, its current and forecasted cost and its current performance. This information, which should be audited, should be disclosed for all financially material or politically significant programmes within the Departmental boundary.
12Departments should also report data about significant projects, such as Trident and HS2 (which is...
Concluded (the committee's words)
Departments should also report data about significant projects, such as Trident and HS2 (which is the largest infrastructure project in Europe), in their Annual Reports and Accounts. This data, which should also be audited, should include spend to date for each project, spend in the year for each project, milestones met or not met and forecasted end date for the project. It should be provided for all projects that are significant in terms of the delivery of the Government’s priorities or that have a lifetime budget that is above materiality. Some of this data may be similar to the data held in the Annual Report on Major Projects, in which case the Department should clearly identify links to the Major Projects report within individual Departmental Annual Reports and Accounts so that the reader can swiftly access the data concerned.
13Alongside information on the effectiveness of its services, Departments should publish the costs of basic...
Recommended (the committee's words)
Alongside information on the effectiveness of its services, Departments should publish the costs of basic elements of those services. We recommend that Departments in future publish the full public sector unit costs (on a consistent basis) for key services (including those mentioned in their Single Departmental Plan and Annual Report) - for example the cost of a prison place, a court hearing, a school place or a hospital stay - on a consistent basis over time. Collecting and publishing comparative unit cost data across regions, and over time, and perhaps also against international comparators, would enable Government and public alike to assess how cost effective Government policies and programmes are, to understand how cost effective service delivery is, and identify where action is needed to address poor value for money.
14In addition to the “core tables” which are already published, Annual Reports and Accounts should...
Concluded (the committee's words)
In addition to the “core tables” which are already published, Annual Reports and Accounts should expand reporting of other information, wherever possible to show longer time series of other data. In each case this should be accompanied with narrative, to explain to the reader information, such as explanations for spending variations over time, which might not be evident from the figures alone. Time series and accompanying trend analysis should cover a rolling period of five years past: for income, assets, liabilities and expenditure. Where possible, projections of future spending should also be extended forward into the remainder of the Spending Review period. Expenditure and balance sheet trends should be shown broken down between different policy areas and programmes and accompanied by helpful narrative explaining the main causes of changes and impacts on service activity. Information should be adjusted for any changes in the responsibilities of Departments (such as the movement of the Office for Civil Society from the Cabinet Office to the Department of Culture, Media and Sport) or accounting policies, so that it is comparable across a number of years.
15Annual Reports and Accounts should routinely be published in Excel or another similar usable format,...
Concluded (the committee's words)
Annual Reports and Accounts should routinely be published in Excel or another similar usable format, so that analysts (whether inside Parliament, for which see below in Chapter 4, or outside in civil society) can swiftly extract the data and make 62 Fourteenth Report of Session 2016–17 use of it. The Treasury, working with Departments, should strive to improve Annual Reports and Accounts against the open data ranking system devised by Full Fact and endorsed by the Public Administration Select Committee in 2014.
16The Government should use modern technology to make the Accounts useful to outsiders, for example...
Recommended (the committee's words)
The Government should use modern technology to make the Accounts useful to outsiders, for example making them touchscreen friendly so that the data can be organised in different ways. The accompanying narrative should be shorter, written in plain English and accompanied by summary data and insightful graphics.
17The Financial Reporting Advisory Board mainly includes representatives of those who prepare Accounts, and the...
Concluded (the committee's words)
The Financial Reporting Advisory Board mainly includes representatives of those who prepare Accounts, and the accountancy profession. They advise the Treasury largely from a technical perspective on the application (and possible adaptation) of international reporting standards to the core financial statements. Their work is not focused on the coherence of the Annual Reports and Accounts document as a whole and its usefulness to users. Apart from the parliamentary observer, there are no consumers of Accounts represented on the Board. At present, Parliament itself has no formal role in setting accounting standards.
18We recommend that the Treasury make FRAB more representative of the consumers of Accounts and...
Recommended (the committee's words)
We recommend that the Treasury make FRAB more representative of the consumers of Accounts and more attuned to users’ requirements, by increasing representation on the Board of users or user groups. We further recommend that Treasury and FRAB should consider how, within the framework of recognised accounting standards, Accounts could be made more useful and responsive to the needs of users, providing the sort of information we have proposed within this report.
19Select Committees should consider the suggestion made by the Director of Full Fact that they...
Concluded (the committee's words)
Select Committees should consider the suggestion made by the Director of Full Fact that they should have an annual hearing not simply on the Annual Report and Accounts, but on the information published by Government Departments (including Accounts) more generally. Departments should take note of what select committees have to say on how Annual Reports and Accounts of individual Departments could be made more useful to their readership, within the general requirements of accounting standards, audit and consistency. The Treasury should also influence Departments to follow the example of the Department of Health in consulting specialist think tanks and researchers about what information they would like the Department’s Annual Reports and Accounts to disclose (in addition to the information the Treasury mandates to maintain consistency between Departments).
20Annual Reports and Accounts should be a cornerstone of Parliamentary accountability.
Concluded (the committee's words)
Annual Reports and Accounts should be a cornerstone of Parliamentary accountability. The House of Commons should, through the Accounts, have the ability to hold the executive to account for its spending, against plans announced in the Estimates and Spending Review.
21The Annual Reports and Accounts should continue to report on spending against the Estimates.
Concluded (the committee's words)
The Annual Reports and Accounts should continue to report on spending against the Estimates. The Treasury should consider whether future Annual Reports and Accounts need to be adjusted to reflect any changes suggested by the Procedure Committee Fourteenth Report of Session 2016–17 63 in its report on the Estimates process. Given that the Accounts report against what the Government promised to do in the estimates, it is vital that the link between the two documents is completely clear. The Treasury should continue to review how the Estimates and Accounts can be made more consistent with each other (greater “alignment”).
22The Estimates and Accounts process only works if the House of Commons has sufficient time...
Recommended (the committee's words)
The Estimates and Accounts process only works if the House of Commons has sufficient time for scrutiny. We support the Public Accounts Committee and its Chair in their intention to take evidence from senior civil servants about excess votes where the Committee deem it necessary. We urge the Government to consult with the Public Accounts Committee to ensure it has enough time to do this.
23The House of Commons is responsible for the scrutiny of public expenditure.
Concluded (the committee's words)
The House of Commons is responsible for the scrutiny of public expenditure. The Procedure Committee has recently conducted an inquiry into the Estimates process and we expect that the Government will accept and implement its recommendations for reform. Currently the Accounts report back against the totals in the Estimates. We think Annual Reports and Accounts should go further, showing also how actual spending related to the original plans in the Spending Review and how those plans changed over time. While it may be possible, as the Treasury argues, to trace how spending plans have altered from Spending Review to Estimates through to Accounts under the current arrangements, the entire story is not an easy one to follow and is contained in a number of different documents. Annual Reports and Accounts do not directly report against the Spending Review and show how plans have evolved through to final actual spending reported in the Accounts, or what might be the causes of those variations.
24In our view, the Annual Reports and Accounts should enable the reader to see how...
Recommended (the committee's words)
In our view, the Annual Reports and Accounts should enable the reader to see how final outturn compares to the original plans, set out in the Spending Review as the Institute for Government has suggested. To do this currently involves tracking figures between several documents (the Spending Review, Main Estimates, Supplementary Estimates and Accounts) and is complicated and technical. Annual Reports and Accounts should provide a simple summary of why the figures have changed from the Government’s original plans in the Spending Review or the Budget. This should be incorporated into the annual analysis that we recommend above. This will enable the House of Commons to hold the Government to account for changes to its spending plans.
25Parliamentary scrutiny of the Government’s commitments to Parliament should not be limited to the announced...
Concluded (the committee's words)
Parliamentary scrutiny of the Government’s commitments to Parliament should not be limited to the announced spending limits. The House of Commons should be able to scrutinise, through the Annual Reports and Accounts, how actual spending and activity compared to any financial commitments announced to Parliament, in press releases, or through the media to spend on or cut particular programmes or policy priorities. The Annual Report and Accounts should include an audited statement reconciling, as far as reasonably practicable, the financial commitments made with what eventually happened. This would include financial commitments 64 Fourteenth Report of Session 2016–17 made in ministerial announcements to Parliament (either in select committees or in debates), the Spending Review, the Budget, the Manifestos of the elected parties and Departmental press releases.
26Current Parliamentary scrutiny of Government’s annual reports and Accounts is limited.
Concluded (the committee's words)
Current Parliamentary scrutiny of Government’s annual reports and Accounts is limited. While committees frequently engage in correspondence with Departments on the Annual Reports and Accounts, based on Scrutiny Unit advice, the focus of hearings held is often only loosely connected to the Annual Reports and Accounts themselves. Where committees do refer to the information in these documents, the Committee interest is strongest where Annual Reports and Accounts show clear evidence of failure, for instance through being qualified - often indicative of deeper underlying problems. Committees’ reluctance to conduct detailed analysis of Annual Reports and Accounts is likely to stem, in part, from the nature of the information those documents provide, and the difficulties of using them as they stand to, for instance, monitor performance over time, value for money, or how efficient and effective the Department has been.
27In-house specialists like the Scrutiny Unit and external experts in the National Audit Office have...
Concluded (the committee's words)
In-house specialists like the Scrutiny Unit and external experts in the National Audit Office have a key role to play in explaining and helping Members understand what financial documents like the Annual Reports and Accounts can tell us. Members may not have the time to carry out detailed examination of all that the Annual Reports and Accounts contain, and will continue to require the support of specialist accountants, economists and others like the Scrutiny Unit to provide detailed analysis, training and to direct them to matters of potential interest.
28Many Members of Parliament will wish to continue to rely upon the work of the...
Concluded (the committee's words)
Many Members of Parliament will wish to continue to rely upon the work of the National Audit Office and the Scrutiny Unit to alert them to issues in the accounts. However, it is also clear that Members have welcomed the opportunity to understand more about what information is available within these documents and how they and their staff can use them. We therefore encourage the National Audit Office and Scrutiny Unit to continue to publicise the information contained in the accounts and to offer training to Members, their staff and other Parliamentary staff in how to use the accounts.
29When Government statistics are published, the publishing Department names a statistician that MPs and journalists...
Recommended (the committee's words)
When Government statistics are published, the publishing Department names a statistician that MPs and journalists can approach with queries about the meaning of the published data. A similar practice should be brought into effect with Annual Reports and Accounts. We recommend that every published Annual Report and Account should in future contain the contact details of named individuals within the Department’s finance function whom journalists, MPs, House staff and members of the public can approach with queries about how the accounting data can be used for example to illuminate how much is spent on a particular policy priority or how much a department owes on a Private Finance contract.
30Currently, in terms of accruals accounting, timeliness, standards of preparation, technical standards, and audit, UK...
Concluded (the committee's words)
Currently, in terms of accruals accounting, timeliness, standards of preparation, technical standards, and audit, UK Government Accounts meet international standards for good practice- indeed they are recognised as amongst the best in the world. The Government is right to manage public spending and publish its Accounts Fourteenth Report of Session 2016–17 65 on an accruals basis, enabling consistency between in-year budgets and end year Accounts and discouraging the use of cash movements to distort in year spending patterns. Accruals accounting has allowed Parliament and the public to gain a better understanding of how the Government uses its resources and manages its assets and liabilities. Accruals accounting is therefore a good basis for the further work we believe the accounts also need to do (described in other parts of this report).
31International standards can assist transparency, by ensuring that Government accounts reflect all the results of...
Concluded (the committee's words)
International standards can assist transparency, by ensuring that Government accounts reflect all the results of Government policy. However, it is important that the Treasury recognises that Accounts in the public sector do very different things to Accounts in the private sector and their design should reflect the different group of people that use them. Given that, it is important that although the accounts currently meet the international standards, the Government makes additional disclosures (discussed in Chapter 3 and 4 for example about spend on particular policies) above and beyond standard corporate accounting. Otherwise both Parliament and citizens will be unable to use these documents to hold the government to account.
32Professor Heald argues that Accounts give us assurance that the Government knows what it spends...
Recommended (the committee's words)
Professor Heald argues that Accounts give us assurance that the Government knows what it spends money on, and can measure it accurately. At the moment, we do not have summarised data that enables us to check how many of the Government’s published Accounts are either accurate or properly compiled. The National Audit Office should publish an annual report which identifies how many Accounts are qualified, why they were qualified and what that tells us about the Government’s ability to manage its finances effectively.
33It is crucial that Accounts are accurate, so that MPs, the public and others can...
Concluded (the committee's words)
It is crucial that Accounts are accurate, so that MPs, the public and others can take decisions on the basis of good quality information. The low numbers of qualified Accounts is an important index revealing that in the vast majority of cases the public and Parliament can and should have confidence in the accuracy of the figures reported by Government in published Accounts.
34Materiality for Government Accounts should be disclosed.
Concluded (the committee's words)
Materiality for Government Accounts should be disclosed. Whilst witnesses to our inquiry raised concerns about interest from the media and others pushing down materiality, this has not happened in the private sector where materiality is already disclosed. Materiality helps people understand how detailed the audit of the Accounts has been and how far they should rely upon the auditor’s assurance about the accuracy of the figures.
35The Government’s support for the Comptroller and Auditor General and the NAO is welcome and...
Concluded (the committee's words)
The Government’s support for the Comptroller and Auditor General and the NAO is welcome and important. The NAO’s role is constitutionally vital, both as the auditor of value for money in the public sector and as the auditor of the Accounts. As Government’s independent auditor, the NAO assures Parliament that it can rely upon the financial data published in unqualified Accounts to scrutinise the Government. Irrespective of the format or the contents of Annual Reports and Accounts, the NAO’s valuable role must be protected.
36Annual Report and Accounts must impartially describe the activity of the Department during the year.
Concluded (the committee's words)
Annual Report and Accounts must impartially describe the activity of the Department during the year. Parliament can take comfort from the work of the National Audit Office and its vital constitutional role as an independent guardian of financial fact in auditing the financial statement parts of the Annual Reports and Accounts. However, there is no audit of the performance information presented in the Annual Report and Accounts, and narrative often appears to be too open to positive, rather than fully balanced, presentation. The Annual Reports should include an honest assessment of the Department’s performance to aid scrutiny. Government seeks to present itself in a favourable light, but it is missing the opportunity to present fully credible performance information. It is unacceptable that the Annual Report parts of Annual Reports and Accounts are, in the opinion of Professor Heald, the Institute for Chartered Accountants of Scotland and the NAO, often spun or subject to political bias.
37Several of our witnesses have suggested that there is bias or spin in the Annual...
Recommended (the committee's words)
Several of our witnesses have suggested that there is bias or spin in the Annual Report sections of Annual Reports and Accounts. The Government should move to address this by adopting the same principles to which National Statistics are subject (frankness, impartiality, objectivity and accessibility) for all the data in the Annual Report and Accounts. The new revised UKSA statistical Code of Practice should be extended to all accounting data within Departments. The National Audit Office and UKSA should work together to ensure that the code is adopted by Departments and to notify Parliament and the public where Annual Reports and Accounts are currently falling short of its requirements.
38Departments should also subject the performance data and commentary in their Annual Report to an...
Concluded (the committee's words)
Departments should also subject the performance data and commentary in their Annual Report to an authoritative audit of the accuracy, completeness and objectivity of the data and statements made, to enable citizens and their representatives to obtain a full and unbiased view of the Department’s performance. This audit should go further than the NAO’s current audit of the annual report for consistency with the accounts. This audit should be conducted by an independent body, potentially the NAO, if it considers it appropriate, or UKSA. This audit should assess the accuracy of the statistics used in assessing performance, whether the Department has used a complete set of statistics in that assessment, and how true and fair the commentary provided in the report is.
39There is a consensus that management information in the public sector has been poor for...
Concluded (the committee's words)
There is a consensus that management information in the public sector has been poor for a number of years. This relates to costs, forecasting and performance. Management information has often in the past been unfocused and not helpful to senior officials and politicians in making decisions.
40Poor management information has consequences both for the success of individual policies and the success...
Concluded (the committee's words)
Poor management information has consequences both for the success of individual policies and the success of any overall fiscal strategy. During a period in which public finances are constrained, it is even more vital that the Government knows what it is spending money on, what effect that has and what impact a cut or a change in spending is likely to have.
41Governments of different complexions have made repeated efforts to reform management information.
Concluded (the committee's words)
Governments of different complexions have made repeated efforts to reform management information. Most of these efforts have concentrated on obtaining performance information and matching it to financial information. While many of these reforms were positive, as we shall see below, most appear to have been abandoned, often because of the departure of key individuals, lack of consistent leadership and focus from the Treasury and Cabinet Office.
42The Government must give priority to improving management information.
Recommended (the committee's words)
The Government must give priority to improving management information. This will mean ensuring the political and administrative leadership of all Departments is committed to good management information. This commitment should be included in the appraisal of the work of Permanent Secretaries and Executive Departmental Board members. The Government should make clear that it expects the Single Departmental Plan framework to last for the long term.
43The Treasury’s and Cabinet Office’s plans to improve management information are welcome.
Concluded (the committee's words)
The Treasury’s and Cabinet Office’s plans to improve management information are welcome. Reporting against the new unpublished Single Departmental Plans contain many of the features of the MINIS system recommended by Lord Heseltine in his report No Stone Left Unturned (2012). The adoption of a system like MINIS will allow Departments to understand the links between resources and people and outcomes and outputs. To be of real value Single Departmental Plans will need to be used both as a way for Departments to measure their own performance, and to report progress to a wider public audience. Single Departmental Plans have potential but clearly need to be used and published in order to fulfil that potential. The Treasury’s additional commitments through the Financial Management Review to share best practice and train staff in producing management information are also welcome.
44A good management information system links together financial data and performance metrics.
Concluded (the committee's words)
A good management information system links together financial data and performance metrics. Such a system would map spending plans and forecasts, against the priorities of the Department. Such a system would be regularly updated and give a snapshot of the Department’s delivery of value for money, and forecasts for its future delivery of value for money to the taxpayer. Whilst the Government intends to do this, performance on this is varied. Forecasting is unreliable and still has an optimism bias. Some Departments are not planning for the medium term. It is disappointing that there is still a long way to go before either the Government or the taxpayer can see what money has been spent on a given objective and what value has been delivered.
45The Treasury and Cabinet Office should work together in making sure that Departments use Single...
Recommended (the committee's words)
The Treasury and Cabinet Office should work together in making sure that Departments use Single Departmental Plans internally. The Government should ensure that all their major decisions are made on the basis of a full understanding of the practically available data. They should also move forward with the other aspects of the Financial Management Review, developing, for example, better information on the costs of activity in the public sector and on realistic forecasting.
46Management information should be seen as a key function of a Department.
Concluded (the committee's words)
Management information should be seen as a key function of a Department. It should not be seen as a ‘nice to have’ nor confined to the Finance team. The Treasury and Cabinet Office should ensure that all senior civil servants are aware that it is impossible for them to deliver public services effectively or efficiently without good data linking outcomes to spending and realistic medium term plans.
47Currently the published Single Departmental Plans are not sufficient for accountability purposes.
Concluded (the committee's words)
Currently the published Single Departmental Plans are not sufficient for accountability purposes. They contain too little detail on either spending or performance. In seven of the seventeen Departments it is unclear how spending is allocated between priorities. Nor is it known at present, how often data will be updated and whether it will be possible for the user to observe progress, through seeing time series for indicators over a period of time. Parliament is unable, therefore, using the current Single Departmental Plans, to use them to hold Government to account.
48Lord O’Donnell is right to argue that earlier scrutiny of Government projects (during their operation...
Concluded (the committee's words)
Lord O’Donnell is right to argue that earlier scrutiny of Government projects (during their operation rather than after they have happened) would allow those outside Government to assist in identifying issues and avoiding mistakes. This would require information about milestones, performance and financial data and could easily be published through updates to the Single Departmental Plan. Fuller publication of Single Departmental Plans could assist outside observers in making suggestions to improve them in the future and will assist in embedding a culture of management information within Government.
49The Treasury and Cabinet Office should work with Departments to ensure that the full Single...
Recommended (the committee's words)
The Treasury and Cabinet Office should work with Departments to ensure that the full Single Departmental Plans are published, subject to necessary omissions on grounds of national security or commercial confidentiality. Departments must, on a quarterly basis, share the full un-redacted Single Departmental Plans with the Comptroller and Auditor General and his staff. Unaudited progress reports against the Single Departmental Plans (with the restrictions above and full access for the National Audit Office) should be published on a quarterly basis (as recommended by the Comptroller and Auditor General) so that Parliament is informed of Departmental progress. These should include commentary on performance and, where required, actions being taken to improve outcomes. It is disappointing that the Treasury have rejected a similar recommendation from the Public Accounts Committee; we urge them to reconsider.
50The Government should ensure that past performance information published on performance against Single Departmental Plans...
Recommended (the committee's words)
The Government should ensure that past performance information published on performance against Single Departmental Plans remains available when new information is published so they can be used as accountability documents in the future, and progress over time can be easily monitored. As with Annual Reports and Accounts, data from the Single Departmental Plans should be available in excel format so that users are able to analyse that data more thoroughly.
51The Government says it intends to integrate management information from Single Departmental Plans with the...
Concluded (the committee's words)
The Government says it intends to integrate management information from Single Departmental Plans with the Annual Reports and Accounts. This is a welcome trend. Parliament requires much of the same information that management in a Department requires. Whilst Parliamentary accountability will always mean Fourteenth Report of Session 2016–17 69 that Annual Reports and Accounts need to include more than just management information (for example, statements about the Spending Review and ministerial commitments), it is important that with respect to programmes, policies and the general activity of Departments, that everyone is looking at the same version of the truth.
52Departments should report against their Single Departmental Plan in their Annual Report and Accounts in...
Concluded (the committee's words)
Departments should report against their Single Departmental Plan in their Annual Report and Accounts in a consistent format throughout. Such reporting should provide a complete financial and performance picture of the Department’s activity for the year.
Evidence
Oral evidence sessions 3
- 6 Dec 2016No witnesses recordedparliament.uk ↗
- 6 Sep 2016No witnesses recordedparliament.uk ↗
- 24 May 2016No witnesses recordedparliament.uk ↗