Recommendations & Conclusions
4 items
7
Conclusion
44th Report - Governance and decision-m…
Deferred
We asked the Treasury about when major and mega projects are given the approval to proceed and who makes these announcements. The role the Treasury plays in decisions about whether and how to proceed with a mega- project, its purpose and how to fund it is particularly important. At the …
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We asked the Treasury about when major and mega projects are given the approval to proceed and who makes these announcements. The role the Treasury plays in decisions about whether and how to proceed with a mega- project, its purpose and how to fund it is particularly important. At the time of our session, government approved an overall funding envelope for a mega-project’s whole-life cost, and then issued shorter-term commitments for a mega-project’s annual funding profile, often for a spending review period. Whole-life costs of large and complex projects can be significant and span years, even decades. However, annual budgets can be changed if a sponsor department needs to reprofile their spend.12
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Government response AI summary
The government refers to the OVFM study published in June 2025, setting out a new bespoke approach to funding and governance for mega projects, and states the Treasury will provide an update on its effectiveness.
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HM Treasury
8
Conclusion
44th Report - Governance and decision-m…
Deferred
The Treasury told us that, following from the OVFM’s report, for mega- projects it proposes to fund a feasibility stage which will be necessarily long enough to clarify objectives and go through the various business case processes, before setting out publicly what the project intends to do. It explained this …
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The Treasury told us that, following from the OVFM’s report, for mega- projects it proposes to fund a feasibility stage which will be necessarily long enough to clarify objectives and go through the various business case processes, before setting out publicly what the project intends to do. It explained this stage would be more substantial than it is currently, and we noted this could take months or even years.13 It also told us that there will be a staged approvals process as recommended by the OVFM, where funding will only be provided from the Treasury to get to the next stage of approval once the mega-projects decision panel is satisfied that the project is able to proceed.14 The Treasury told us that a “go slow to go fast” approach would encourage both faster and more reliable delivery of projects.15
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Government response AI summary
The government refers to the OVFM study published in June 2025, setting out a new bespoke approach to funding and governance for mega projects, and states the Treasury will provide an update on its effectiveness.
Read full response →
HM Treasury
10
Conclusion
44th Report - Governance and decision-m…
Deferred
We asked how government will prevent projects being announced too early, noting that politicians are a factor. The OVFM told us that this feasibility stage will try to address this by setting out how governance is going to work, with publication of the strategy and delivery plan for a mega-project …
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We asked how government will prevent projects being announced too early, noting that politicians are a factor. The OVFM told us that this feasibility stage will try to address this by setting out how governance is going to work, with publication of the strategy and delivery plan for a mega-project that defines the stages it will go through. The OVFM and the Treasury also emphasised the importance of flexibility and that cost and schedule estimates should be very broad ranges in the early stages.18 NISTA told us that when there is uncertainty, projects will follow the NISTA guidance on cost estimating, which has a broad range at the start, then comes down as maturity develops.19 The Treasury told us that when the mega-project is ready it will enter a construction phase, which would have its own budget with flexibility within it where things are not expected to change, as a result of the work done during the feasibility stage. The OVFM added that for mega-projects categorised by their definition, the Prime Minister, Chancellor and the relevant Secretary of State will be responsible for making the final investment decision.20
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Government response AI summary
The Treasury will write to the Committee with an update on the effectiveness of the new bespoke approach to funding and governance as set out in the Office for Value for Money (OVFM) study.
Read full response →
HM Treasury
11
Conclusion
44th Report - Governance and decision-m…
Deferred
We asked the Treasury to outline what its new supervisory role is going to be for mega-projects. The Treasury explained that it will have a greater role in the governance of mega-projects by requesting a seat at the board and, in its role as financial shareholder, will have far greater …
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We asked the Treasury to outline what its new supervisory role is going to be for mega-projects. The Treasury explained that it will have a greater role in the governance of mega-projects by requesting a seat at the board and, in its role as financial shareholder, will have far greater accountability for the mega-project’s success.21 We also asked how risks and uncertainties at the beginning of a project would be better understood. NISTA told us that the mega projects decision panel that the OVFM recommended is being created. It said that the Permanent Secretary of the Cabinet Office, a director general within the Treasury and the CEO of NISTA will sit on this panel and advise the Chancellor, Chief Secretary and Prime Minister on the approval decision points. At these points a significant amount of assurance would be done, identifying the risks.22 17 HM Treasury, Value for Money (VfM) study on the governance and budgeting arrangements for mega projects, 19 June 2025 18 Q 11 19 Q 12 20 Q 5 21 Q 7 22 Q 12 10 Defining a mega project
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Government response AI summary
The Treasury will write to the Committee with an update on the effectiveness of the new bespoke approach to funding and governance as set out in the Office for Value for Money (OVFM) study.
Read full response →
HM Treasury