Recommendations & Conclusions
46 items
2
Recommendation
57th Report - Government services: Gene…
Rejected
The Treasury has been too passive in its oversight of fees and charges resulting in large surpluses and deficits which unfairly impacts taxpayers and potentially future service users. The Treasury’s current oversight of fees and charges is through its spending teams and during Spending Reviews. This arrangement is ineffective, as …
Government response. The government disagrees with the recommendation, rejecting an annual review cycle and targeted deep-dives. Instead, it will update the Financial Reporting Manual (FReM) with clearer guidance and embed oversight through bi-annual Spending Review returns.
HM Treasury
3
Recommendation
57th Report - Government services: Gene…
Accepted
The Treasury and Department processes for changing fees are too slow and complex, which makes it harder for bodies to manage effectively their service costs and fee revenues. The case study services took an average of 63 weeks to change their fees. This results in long periods where their fees …
Government response. The government accepts the recommendation and will implement new arrangements to reduce the time and complexity involved in amending fees.
HM Treasury
4
Recommendation
57th Report - Government services: Gene…
Accepted in Part
Charging bodies do not publish adequate or consistent information on their fees and charges to allow for effective public scrutiny and accountability. The Treasury sets out in both Managing Public Money (MPM) and the Financial Reporting Manual (FReM) the information departments must disclose on fees and charges in their annual …
Government response. The government disagrees with the specific recommendation for standardised reporting but commits to updating the Financial Reporting Manual (FReM) by Spring 2026 with clearer reporting guidance for fee-charging public bodies. They will also consider if further reporting requirements are necessary.
HM Treasury
5
Recommendation
57th Report - Government services: Gene…
Rejected
The Treasury’s system for fees and charges has failed to incentivise cost reduction or productivity improvements, leading to missed opportunities to improve services. Where charged services aim to recover all costs, any potential savings would be passed on to the fee- payers, while the risk associated with business change remains …
Government response. The government rejects the recommendation, stating its existing Government Efficiency Framework and Spending Review targets already provide adequate incentives for departments to drive efficiencies in fee-funded services and track performance.
HM Treasury
1
Conclusion
57th Report - Government services: Gene…
Not Addressed
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Treasury (the Treasury), the Driver and Vehicle Licensing Agency (DVLA), and Ministry of Justice (MoJ) on the financial management of fees and charges across government.1
Government response. The government's response discusses a plan to support fee-charging public bodies and a working group to issue operational guidance, which does not address the actual text of this introductory conclusion.
HM Treasury
6
Recommendation
57th Report - Government services: Gene…
Accepted
The NAO reported that Treasury places primary reliance on individual department’s accounting officers to monitor their fees and charges. Accounting officers are responsible for maintaining effective governance and internal controls, including ensuring that fees are set appropriately and disclosed in-line with Treasury guidance.7 The Treasury highlighted that one of the …
Government response. HM Treasury will create a cross departmental working group to set out a comprehensive time-bound plan to be more systematic in supporting fee-charging public bodies, which will be shared with the Committee. The working group will discuss issuing operational guidance …
HM Treasury
7
Recommendation
57th Report - Government services: Gene…
Accepted
The NAO highlighted that government bodies would like practical examples of how to address common operational problems, such as forecasting user demand, or when and how to reflect inflationary pressures, so they can consider options on how best to handle them.11 The Treasury recognises that charging bodies face issues and …
Government response. HM Treasury will create a cross departmental working group to set out a comprehensive time-bound plan to support fee-charging public bodies, to be shared with the Committee, which will discuss issuing operational guidance and establishing a mechanism to share good …
HM Treasury
8
Conclusion
57th Report - Government services: Gene…
Accepted
We heard charging bodies would value more signposting of where to go for expert advice and support and to learn from others’ experience. DVLA told us that more can be done to share good practice and that it is important to get those responsible for fees together to talk about …
Government response. HM Treasury will create a cross departmental working group to set out a comprehensive time-bound plan to be more systematic in supporting fee-charging public bodies, which will be shared with the Committee. The working group will discuss issuing operational guidance …
HM Treasury
9
Recommendation
57th Report - Government services: Gene…
Accepted in Part
The NAO reported that of the seven services examined, six aimed to achieve 100% cost-recovery, but these six averaged only 88% recovery in 2023-24, leading to a shortfall of £340 million.16 The Treasury acknowledged that it has perhaps been too passive, relying primarily on accounting officers. Treasury accepted that it …
Government response. The government disagrees with the specific recommendation. However, the Treasury will update the Financial Reporting Manual (FReM) to align to 6.11 of Managing Public Money (MPM) to include clearer reporting guidance for fee-charging public bodies and will embed oversight through …
HM Treasury
10
Conclusion
57th Report - Government services: Gene…
Acknowledged
Over the five-year period from 2019-20 to 2023-24, none of the seven government services reviewed consistently met their cost-recovery targets. Poor cost-recovery persisting over time results in a build-up of surplus and deficits in some services. Both passports and family court fees have repeatedly missed their cost-recovery targets by more …
Government response. The Treasury acknowledged the challenge of potential inequities for users when government bodies under or overcharge for services and hopes to address this through stronger incentives for departments to encourage lower costs through efficiencies.
HM Treasury
11
Conclusion
57th Report - Government services: Gene…
Acknowledged
Significant imbalances between fees and costs pose risks to the financial resilience of public services and create unfairness for the public. The NAO reported that the passport service has been underrecovering since 2017-18 without explicit approval from Home Office Ministers or HM Treasury. This has led to a deficit of …
Government response. The Treasury acknowledged the challenge of potential inequities for users when government bodies under or overcharge for services and hopes to address this through stronger incentives for departments to encourage lower costs through efficiencies.
HM Treasury
12
Conclusion
57th Report - Government services: Gene…
Acknowledged
The NAO report highlighted that persistent imbalances can also create potential inequities for users. When government bodies undercharge for services, cumulative losses are often recouped through higher fees for future users. Conversely, when services over-recover, current users end up overpaying.22 We were interested to hear how the Treasury make sure …
Government response. The Treasury acknowledged the challenge of potential inequities for users when government bodies under or overcharge for services and hopes to address this through stronger incentives for departments to encourage lower costs through efficiencies.
HM Treasury
13
Conclusion
57th Report - Government services: Gene…
Accepted in Part
The Treasury told us it manages its fees and charges through periodic spending reviews (typically every two years) and expects accounting officers to follow its guidance. The Treasury described the spending review as a mechanism for departments to assess their cost base and funding needs, including their approach to fees …
Government response. The government disagrees with the recommendation but will update the Financial Reporting Manual (FReM) to align to Managing Public Money (MPM) to include clearer reporting guidance for fee-charging public bodies and embed oversight through the Spending Review returns every two …
HM Treasury
14
Recommendation
57th Report - Government services: Gene…
Accepted
The process for amending fees across government is slow and complex as certain public bodies took an average of 63 weeks, with the longest case taking over two years. This undermines financial sustainability because it makes it harder to recover costs. This delay is because bodies must first secure approval …
Government response. The Treasury will write to the Committee by May 2026 to set out proposals indicating the new arrangements to reduce the time and complexity of amending fees.
HM Treasury
15
Recommendation
57th Report - Government services: Gene…
Accepted
The NAO reported that the current timing of the process can result in fees that fail to keep pace with changing costs, particularly during periods of high inflation.28 The Ministry of Justice (MoJ) informed us that its latest fee change took around six months to complete and it is exploring …
Government response. The Treasury will write to the Committee by May 2026 to set out proposals indicating the new arrangements to reduce the time and complexity of amending fees.
HM Treasury
16
Recommendation
57th Report - Government services: Gene…
Accepted
The Treasury acknowledged that the decision-making process is time-consuming and disproportionate for low-risk, routine adjustments like inflation-linked increases. It told us it will introduce a standardised template, adopted from the Environment Agency’s approach, with the aim of improving completeness and consistency of departmental proposals. This change is intended to reduce …
Government response. The Treasury will write to the Committee by May 2026 to set out proposals indicating the new arrangements to reduce the time and complexity of amending fees.
HM Treasury
17
Recommendation
57th Report - Government services: Gene…
Accepted
The Treasury highlighted that the legislative scheduling adds uncertainty, particularly where secondary legislation must compete for Parliamentary time. We asked if the process could be simplified without diminishing parliamentary scrutiny, such as through consolidation of primary legislation to remove the need for secondary legislation. The Treasury told us this is …
Government response. The Treasury will write to the Committee by May 2026 to set out proposals indicating the new arrangements to reduce the time and complexity of amending fees.
HM Treasury
18
Recommendation
57th Report - Government services: Gene…
Accepted in Part
The Treasury requires departments to disclose information on their fees and charges in their annual reports and accounts, as set out in MPM and the Financial Reporting Manual (FreM). However, the Treasury noted there are inconsistencies between these documents. This has created ambiguity about what departments must report and at …
Government response. The Treasury will update the Financial Reporting Manual (FReM) to align to 6.11 of Managing Public Money (MPM) by Spring 2026 to include clearer reporting guidance for fee-charging public bodies. They will also keep this under review and consider if …
HM Treasury
19
Recommendation
57th Report - Government services: Gene…
Accepted in Part
Poor reporting limits the Treasury and Parliament’s ability to monitor fees and hold departments to account. The NAO found that none of the seven services it examined complied fully with all of the Treasury’s disclosure requirements in their respective 2023-24 annual report and accounts.37 Accounting officers are responsible for ensuring …
Government response. The Treasury will update the Financial Reporting Manual (FReM) to align to 6.11 of Managing Public Money (MPM) by Spring 2026 to include clearer reporting guidance for fee-charging public bodies. They will also keep this under review and consider if …
HM Treasury
20
Conclusion
57th Report - Government services: Gene…
Acknowledged
The NAO reported the charged services it examined did not fully fulfil their disclosure requirements on areas such as unit costs, the cost-recovery targets, objectives, the extent and explanation for over or under-recovery.39 The lack of transparency affects public confidence and understanding of what they are paying for. The Treasury …
Government response. The Treasury will update the Financial Reporting Manual (FReM) to align to 6.11 of Managing Public Money (MPM) by Spring 2026 to include clearer reporting guidance for fee-charging public bodies to ensure more effective Parliamentary scrutiny and will continue to …
HM Treasury
21
Conclusion
57th Report - Government services: Gene…
Acknowledged
The NAO report highlighted the importance of proportionate financial reporting requirements, particularly for smaller bodies.43 We asked how the Treasury will make sure its disclosure requirements are proportionate. The Treasury told us that it is mindful of the administrative burden, and it intends to do more to help departments improve …
Government response. The Treasury will update the Financial Reporting Manual (FReM) to align to 6.11 of Managing Public Money (MPM) by Spring 2026 to include clearer reporting guidance for fee-charging public bodies to ensure more effective Parliamentary scrutiny and will continue to …
HM Treasury
22
Recommendation
57th Report - Government services: Gene…
Rejected
Most services are designed to recover their costs, meaning any efficiencies achieved would be passed onto fee-payers rather than retained by the department. Conversely rising costs can simply be transferred to users without challenge.45 The NAO highlighted the challenges of digital 38 Q 29 39 C&AG’s Report, para 2.27 40 …
Government response. The government disagrees with the recommendation but states that the Government Efficiency Framework (GEF) already provides extensive guidance for efficiency in the fee-setting framework. They state that departments are incentivised to drive efficiencies in their fee-funded services as this will …
HM Treasury
23
Recommendation
57th Report - Government services: Gene…
Rejected
Departments and arm’s-length bodies struggle to identify opportunities to improve efficiency and value for money as they do not maintain detailed cost information. The NAO found charging bodies use different methods to calculate costs including a range of cost models with varying levels of detail. As a result, some bodies …
Government response. The government disagrees with the recommendation but states that the Government Efficiency Framework (GEF) already provides extensive guidance for efficiency in the fee-setting framework. They state that departments are incentivised to drive efficiencies in their fee-funded services as this will …
HM Treasury
24
Conclusion
57th Report - Government services: Gene…
Rejected
We heard evidence that some organisations have demonstrated how efficiencies can be achieved. The DVLA told us it has held its fees at 2014 levels by absorbing inflation through digitisation and process redesign, while improving customer service.52 It operates under a 5% efficiency target during current spending review period and …
Government response. The government disagrees with the recommendation but states that the Government Efficiency Framework (GEF) already provides guidance for efficiency and that departments are incentivized to drive efficiencies in their fee-funded services, which will count towards their technical efficiency targets.
HM Treasury
25
Recommendation
57th Report - Government services: Gene…
Accepted
The Treasury acknowledged that its system is largely reactive rather than strategic, relying on accounting officers’ general duty in respect of value for money, and periodic spending review targets to drive efficiency. It recognised the potential of emerging technologies, such as Artificial Intelligence, to reduce administrative costs and improve service …
Government response. The government claims that the Government Efficiency Framework (GEF) already provides extensive guidance for efficiency in the fee-setting framework and endorses public sector organisations to use the framework as a guiding set of principles on how they progress and track …
HM Treasury
2
Recommendation
58th Report - Government services: Iden…
Accepted
Most departments lack a sufficient understanding of their service costs and departments need help from HM Treasury and the Government Finance Function on the practical steps they can take to improve and upskill. While standards for service costing and financial management exist, they lack the necessary sophistication and are applied …
Government response. The government agrees with the recommendation and will produce new costing guidance with departments to set a consistent standard for identifying and recording service costs. This includes defining scope, data sets, benchmarking, and integrating risk, supported by new systems and …
HM Treasury
3
Recommendation
58th Report - Government services: Iden…
Accepted in Part
Legacy IT systems are a significant contributory factor in the cost of government services and an impediment to being able to gather better data to bring about improvements. Departments face major challenges in collecting and analysing cost data due to legacy IT systems and siloed data structures. These outdated systems …
Government response. The government accepts part of the recommendation, agreeing to share available legacy system data with the Committee chair by March 2026 (privately). However, it rejects the second part, stating it will not prioritize identifying specific systems for further cost investigation …
HM Treasury
4
Recommendation
58th Report - Government services: Iden…
Accepted
The lack of Single Service Owners with accountability for all aspects of an end-to-end service inhibits departments’ ability to identify the visibility of a service’s end-to-end cost and the incentive to reduce it. The absence of Single Service Owners (SSOs) with the right mandate and visibility prevents a full view …
Government response. The government agrees with the recommendation and will issue a letter requiring Permanent Secretaries to complete an assessment of Single Service Owner gaps within six months and appoint SSOs within twelve months, with potential for acceleration.
HM Treasury
5
Recommendation
58th Report - Government services: Iden…
Accepted
There is a lack of urgency and clear leadership for resolving the legacy systems and poor data issues that inhibit the realisation of benefits through greater productivity and efficiency that departments will reap from new technology such as AI. Government transformation and efficiency efforts increasingly rely on artificial intelligence (AI), …
Government response. The government accepts the recommendation, stating GDS will develop a long-term plan for public data governance to exploit new technologies like AI. To secure and retain talent, they will mandate digital leaders on executive committees and digital non-executive directors on …
HM Treasury
1
Conclusion
58th Report - Government services: Iden…
Acknowledged
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Cabinet Office, HM Treasury and the Department for Science, Innovation and Technology on improving government’s productivity through better information on the costs of services.1
Government response. The government acknowledges the committee's work and outlines plans to enhance government productivity by setting expectations for Accounting Officers to improve service-level cost information, issuing new guidance, monitoring compliance via finance assessments, and fostering best practices through cross-government forums.
HM Treasury
6
Conclusion
58th Report - Government services: Iden…
Not Addressed
Responsibility for holding departments to account for improving their cost information is joint between the Cabinet Office and HM Treasury. The Cabinet Office sets the overall performance management framework expectations, including financial minimum standards.6 However, it does not systematically enforce compliance, relying instead on departments and internal auditors. HM Treasury’s …
Government response. The government repeats the response from ID 2039, which does not address the specific observation of the committee.
HM Treasury
7
Recommendation
58th Report - Government services: Iden…
Accepted
However, current obligations are focused on wider overall value for money and there are no specific objectives or accountability for Permanent Secretaries or senior leaders to collect detailed data on costs at the service level.8 Although the Cabinet Office and HM Treasury expect permanent secretaries to understand their cost drivers …
Government response. The Treasury will issue an updated Dear Accounting Officer letter that explicitly sets expectations for Accounting Officers and senior leaders to improve service-level cost information, and compliance will be monitored through end-year finance assessments; systemic issues will have remediation plans …
HM Treasury
8
Recommendation
58th Report - Government services: Iden…
Accepted
The Cabinet Office told us that political sponsorship and support is considered essential as well as that of senior leaders within departments.13 This aligns with government’s goal of creating a more “productive and agile state”.14 Introducing targets for getting processes and systems in place to identify the costs of services …
Government response. The Treasury will issue an updated Dear Accounting Officer letter by July 2026 that explicitly sets expectations for Accounting Officers and senior leaders to identify, use and continuously improve service‑level cost information.
HM Treasury
9
Recommendation
58th Report - Government services: Iden…
Accepted
Some standards for service costing and financial management exist.16 However, we repeatedly heard that they lack the necessary sophistication and are applied inconsistently across departments.17 We heard examples of where costing activities were taking place at a more granular level, but these mostly related to front line health and education …
Government response. The government will implement practical costing guidance by July 2026, sitting alongside Managing Public Money and Value for Money and providing a common approach to service costing, and set a consistent standard for service costing.
HM Treasury
10
Conclusion
58th Report - Government services: Iden…
Acknowledged
We found that there is limited practical guidance and systematic support for people in departments who own the services and are responsible for identifying their costs.20 Forums such as the Finance Foundations Group aim to share best practice.21 While we heard a good description of the theory of sharing best …
Government response. Treasury will use cross‑government forums (including the Finance Foundations Group) to share best practice, address barriers, and support departments to embed cost ownership in service governance, aligned to the Government Finance Function Strategy.
HM Treasury
11
Conclusion
58th Report - Government services: Iden…
Acknowledged
We were pleased to hear that the Government Finance Function (GFF) recognises the need for a significant shift.23 It told us that it has conducted an internal skills assessment and will recruit additional experts to help 13 Qq 147, 148 14 Qq 123, 146 15 Q 140 16 Q 85 …
Government response. Capability will be strengthened through the Government Finance Academy and peer support via the Finance Foundations Group, with departments piloting the standard and sharing lessons learned.
HM Treasury
12
Conclusion
58th Report - Government services: Iden…
Accepted
GFF is seeking to co-produce guidance with departments demonstrating good practice.27 Both Cabinet Office and GFF said that departments are receptive to this push, especially given the efficiency targets they are expected to meet as set out in the 2025 Spending Review.28 To support this, GFF told us that it …
Government response. HM Treasury and the Government Finance Function are co-ordinating practical costing guidance, produced with departments and informed by NAO advice, to provide a common, proportionate approach to service costing.
HM Treasury
13
Recommendation
58th Report - Government services: Iden…
Accepted in Part
Legacy systems are problematic for two main reasons. Firstly, they are a significant driver of cost, comprising around one-third of government’s technology estate but representing almost half of its costs.30 This may not include the excess costs that arise from people having to work manually around cumbersome, old systems and …
Government response. DSIT will share the available data with the chair of the Committee by March 2026, however, the department does not agree that this recommendation should be an immediate priority of the next 6 months.
HM Treasury
14
Conclusion
58th Report - Government services: Iden…
Acknowledged
“Quick wins” can be valuable. However, we are concerned that they often mask deeper and more persistent issues like poor data quality and entrenched cultural barriers. As the Cabinet Office has itself identified, these will need ongoing tenacity and effort if substantial progress is to be made in addressing them.34 …
Government response. The government agrees with the Committee’s recommendation. They will implement practical costing guidance by July 2026, which will sit alongside Managing Public Money and Value for Money.
HM Treasury
15
Conclusion
58th Report - Government services: Iden…
Acknowledged
The lack of common data standards across government further complicates benchmarking and granular cost analysis because it makes data more difficult to analyse and interpret.35 GFF told us that the introduction of new Enterprise Resource Planning systems and new data standards for back-office processes such as finance and human resources …
Government response. The government states that consistency will be supported by the NOVA reference model, rollout of common ERP solutions, and a common chart of accounts.
HM Treasury
16
Recommendation
58th Report - Government services: Iden…
Accepted
Departments do not generally have a good view of the additional time and people costs associated with specific business processes or different stages of the customer journey.38 We were therefore surprised to learn that there is no standard policy in the civil service on how staff time is tracked, and …
Government response. HM Treasury and the Government Finance Function are co-ordinating practical costing guidance on service costing, including activity-based techniques, overhead apportionment, staff-time capture options, and linking costs to outcomes.
HM Treasury
17
Conclusion
58th Report - Government services: Iden…
Not Addressed
It is difficult for departments to gain a full view of the end-to-end costs of a service where there is no Single Service Owner (SSO) with overall mandate and responsibility for the service concerned.41 This also weakens the incentives to identify and reduce costs overall, because the focus is on …
Government response. The government repeats the response from ID 2050, which does not address the specific observation of the committee.
HM Treasury
18
Recommendation
58th Report - Government services: Iden…
Accepted in Part
The SSO role is not well understood across departments compared to other senior roles in departments. Both Cabinet Office and DSIT told us that more can and should be done to raise its profile and ensure that an SSO is appointed for “every single service”.45 It is important to ensure …
Government response. The Government Digital Service and the Cabinet Office will issue a letter encouraging Permanent Secretaries to complete an assessment of all SSO gaps within 6 months, and to appoint SSOs within 12 months, but the implementation target is March 2027, …
HM Treasury
19
Recommendation
58th Report - Government services: Iden…
Accepted
Government transformation and efficiency efforts are increasingly reliant on newer technologies such as artificial intelligence (AI).47 Legacy systems and poor-quality data remain a major barrier to reaping the full benefits.48 We heard that addressing data and legacy issues requires sustained effort and resilience and remain concerned that the pace of …
Government response. DSIT will publish a strategic data roadmap for public sector data in Spring 2026. The Government Digital Service will set out a long-term plan for how public data should be treated as a strategic asset across government. They will also …
HM Treasury
20
Recommendation
58th Report - Government services: Iden…
Accepted
Resource constraints at the centre of government mean that less support is available to departments compared to what was available under previous initiatives like the Top 75 programme.50 We have often observed on this committee that government pay rates cannot match what highly skilled people could earn in the private …
Government response. DSIT will publish a strategic data roadmap for public sector data in Spring 2026 and GDS will set out a long-term plan for public data leaders and for boards to appoint digital non-executive directors by 2026; further action will be …
HM Treasury
21
Recommendation
58th Report - Government services: Iden…
Deferred
Progress must be focused and purposeful. We accept that trying to solve everything at once risks losing momentum, and that having a roadmap is helpful. Nevertheless, prioritisation and having clear milestones to aim for are key to avoiding drift in addressing government’s 45 Qq 132, 144 46 Q 133 47 …
Government response. DSIT will publish a strategic data roadmap for public sector data in Spring 2026 and Government Digital Service will set out a long-term plan for how public data should be managed. Further action to attract, retain, and develop digital and …
HM Treasury