Recommendations & Conclusions
19 items
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 …
Read more
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 do not align with current costs, making effective cost-recovery difficult. Parliamentary scrutiny is required for secondary legislation which, while vital for accountability, adds complexity and uncertainty to the timeline that is outside of departmental control. The decision-making process is cumbersome, with multiple layers of approvals from parent departments and the Treasury which are not always proportionate to the risk or scale of change, such as routine inflationary adjustments. Timeliness is further hindered in some cases when departments do not provide sufficient detail in their proposals, making it harder for the Treasury to assess them effectively. The Treasury recognises the need to simplify this process and plans to introduce a standardised template to support the completeness of submissions for informed decision making. Once the Treasury has made improvements to 4 streamline the process while maintaining appropriate safeguards for over- recovering services, they should also consider consolidating legislation and deregulating parts of the process to enable routine adjustments. recommendation The Treasury should write to the Committee within six months setting out a detailed plan to reduce the time and complexity involved in amending fees. A new system should encourage proportionate and incremental changes to fees and not disincentivise departments from making efficiencies which would enable fixed or reduced fees. This plan should indicate when the new arrangements will be in place and include: a. Standardised approval templates and timelines; risk-based consultation and oversight principles, and b. A legislative review to remove unnecessary barriers and enable pro
Show less
Government response AI summary
The government accepts the recommendation and will implement new arrangements to reduce the time and complexity involved in amending fees.
Read full response →
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 …
Read more
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 challenges with this approach is that everyone is doing things in silos resulting in inconsistency across government.8 We asked the Treasury what it is looking to do to help strengthen the arrangements to improve oversight of fee setting.9 The Treasury told us it intends to do more to help accounting officers by regularly assessing and looking at the system, as well as help departments navigate it using best practice.10
Show less
Government response AI summary
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 to government bodies and establish …
Read full response →
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 …
Read more
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 need to make trade-offs, and stated that it is important Treasury shares best practice on how to manage these from its perspective.12 The Treasury told us it has since strengthened its guidance in Chapter six of MPM, and will provide more clarity about what should be considered when looking at setting fees. The Treasury believes these 5 C&AG’s Report, para 1.4, 2 6 C&AG’s Report, para 3 7 C&AG’s Report, para 2.25 8 Qq 29, 46 9 Q 28 10 Qq 6, 26 11 C&AG’s Report, para 3.3 12 Q 48 8 improvements will also allow its spending teams to guide departments though the process with clarity on the guidance and to provide constructive challenge and timely change.13
Show less
Government response AI summary
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 practice.
Read full response →
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 …
Read more
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 what they are doing and some of the challenges.14 We asked the Treasury, given it has oversight across all the bodies that are setting the fees and charges, how it can help them learn from each other by sharing good practice. The Treasury told us that it has recently set up a working group in the Government Finance Function to share best practice on fees and charges and to be a feedback mechanism for the Treasury. The Treasury agreed that learning from best practice is helpful in terms of setting out things that departments should consider as standard.15 Strengthening oversight to improve financial management
Show less
Government response AI summary
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 to government bodies and establish …
Read full response →
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 …
Read more
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 from their parent department and then the HM Treasury before preparing secondary legislation for Parliamentary scrutiny. The absence of standardised data requirements also leads to a ‘back and forth’ between departments, arm’s-length bodies and the Treasury, which prolongs the process and limits transparency over whether fees reflect the true cost of services.27
Show less
Government response AI summary
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.
Read full response →
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 …
Read more
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 annual reviews incorporating routine inflationary adjustments.29 The Driver and Vehicle Licensing Agency (DVLA) described a multi-stage review and approval stages before changing fees using legislation, which it explained is time-consuming. It highlighted its use of the section 102 order of the Finance (no 2) Act 1987 referenced in Managing Public Money (MPM)30, which provides a degree of flexibility to balance costs across services and reduce the need for frequent fee changes.31
Show less
Government response AI summary
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.
Read full response →
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 …
Read more
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 delays caused by incomplete information 27 C&AG’s Report, paras 2.13, 2.14 28 C&AG’s Report para 2.14 29 Q 10 30 HM Treasury, Managing Public Money, June 2025 31 Q 12 12 and help spending teams to have better conversations with departments about the justification for different levels of fee charging.32 The DVLA and MoJ support moving towards more standardised reporting, suggesting that clearer templates would help streamline the process.33 Following the evidence session, Treasury wrote to us to share a draft of the template it plans to distribute formally via a Dear Accounting Officer letter.34
Show less
Government response AI summary
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.
Read full response →
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 …
Read more
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 an option it can look into as it agrees there is scope to streamline the process in terms of speed and efficiency without compromising accountability. Another consideration the Treasury highlighted is the section 102 order of the Finance (no 2) Act 1987 that the DVLA use to pool fees together to allow for greater flexibility.35 Improving external reporting
Show less
Government response AI summary
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.
Read full response →
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 …
Read more
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 delivery. The Treasury told us that departments are driven by both incentives and ongoing obligations to encourage them to adopt efficiency measures. Therefore, the Treasury stated that they intend to adopt a more proactive approach to embedding efficiency incentives across government.54 53 Qq 72-73 54 Qq 70, 74 16
Show less
Government response AI summary
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 efficiency.
Read full response →
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 …
Read more
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 inconsistently across departments. There is limited practical guidance and systematic support, with some progress in granular costing seen in local frontline services like schools and hospitals, which are easier to benchmark than unique central government services. Forums such as the Finance Foundations Group aim to share best practice. The Government Finance Function (GFF) is conducting a skills assessment and working to improve its understanding of cost drivers. It recognises the need for a significant shift, aligning with its new strategy that prioritises better use of data to enhance value for money. Departments are receptive to this push, especially given the efficiency targets set in the 2025 Spending Review. GFF acknowledges it does not have all the answers and is seeking to co-produce guidance with departments demonstrating good practice. To support this, GFF will work through the Finance Foundations Group to explore what can be done in more detail. recommendation HM Treasury and the Government Finance Function should set out concrete ways in which departments must start to identify and record service costs within six months. This should include setting out what needs to be improved and practical guidance on how to make improvements.
Show less
Government response AI summary
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 capability development, with departments piloting …
Read full response →
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 …
Read more
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 of end-to-end service costs and weakens incentives to reduce them, as focus remains on individual components rather than the whole process. Achieving larger benefits requires deeper service understanding and, in some cases, re-engineering of those services. The SSO role is not well understood across departments compared to other senior roles, and more can be done to raise its profile. There is an opportunity to build on the existing community of Service Owners and the methodology from the Top 75 programme, which included industry benchmarks for segmented digital services. Permanent Secretaries should be responsible for appointing SSOs with appropriate skills and talent, though the Cabinet Office has not set a timeframe for this. recommendation a. The Cabinet Office should, within the next six months, require Permanent Secretaries to appoint Senior Single Service Owners for all remaining services identified by the Cabinet Office and the Government Digital Service which do not yet have one in place. b. The Cabinet Office should set out a deadline by which Permanent Secretaries must complete the identification and appointment of SSOs for their remaining services. 5
Show less
Government response AI summary
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.
Read full response →
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), …
Read more
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), but legacy systems remain a major barrier, limiting access to the data needed for effective implementation. Despite this, departments are already experimenting with AI. Resource constraints at the centre of government mean less support is available compared to previous initiatives like the Top 75 programme. Although the digital pay framework has been revalorised, it still falls short of industry rates in London and the South East, affecting recruitment and retention. Addressing data and legacy issues requires sustained effort and resilience. AI offers potential to connect disparate data sources, but progress must be focused and purposeful–trying to solve everything at once risks losing momentum. Prioritisation and clear milestones are key to avoiding drift and ensuring that artificial intelligence delivers meaningful value. recommendation As part of its response to this report, DSIT should set out how it will take the lead on systemic data and systems improvement across government in order to exploit new technologies such as AI. At the same time, the department should set out what further steps it will take to ensure it can both secure and retain board level CDIOs and senior specialists of the right calibre given it cannot match industry pay rates in all areas of the country. 6 1 Accountability, support and guidance Introduction
Show less
Government response AI summary
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 boards by 2026, refine pay …
Read full response →
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 …
Read more
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 and how they evolve, the level of sophistication is often insufficient.9 Departments should be better incentivised to collect the information that is currently lacking. HM Treasury told us this could be done through clarifying accounting officers’ responsibilities for understanding their detailed costs and following this up through end of year financial assessments.10 The Treasury plans to clarify expectations for permanent secretaries in an upcoming “Dear Accounting Officer” letter.11 Providing central visibility of departments’ maturity levels would also help by shining a light on what others are doing across government.12 5 C&AG’s Report, para 1.4 6 Qq 84, 106 7 Q 84 8 Qq 105, 106 9 Qq 86, 89, 90, 94, 106 10 Q 107 11 Q 93 12 Q 110 8
Show less
Government response AI summary
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 and timelines agreed, with progress …
Read full response →
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 …
Read more
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 would sharpen focus; while this would require a significant cultural shift, we were told that this would be “pushing at an open door”.15 Helping departments with the practical steps they can take
Show less
Government response AI summary
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.
Read full response →
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 …
Read more
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 services delivered locally.18 Such services are replicated across many organisations and largely similar in nature. They are therefore intrinsically easier to benchmark for cost of delivery compared to services delivered once by a single central government department.19
Show less
Government response AI summary
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.
Read full response →
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 …
Read more
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 will work through the Finance Foundations Group to explore what can be done in more detail.29 24 Qq 126, 127, 128 25 Qq 93, 141 26 Qq 93, 139 27 Q 157 28 Qq 105, 110, 113, 141 29 Qq 98, 109, 158 10 2 Legacy systems, single service owners and overall leadership Addressing the barriers posed by legacy systems
Show less
Government response AI summary
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.
Read full response →
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 …
Read more
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 despite many systems offering time recording capability, its use remains optional.39 A shift in mindset is needed to better understand how time is spent and to use the data collected for meaningful insights on where the costs of services are high and potential efficiencies and productivity improvements can be made.40 Appointing Single Service Owners
Show less
Government response AI summary
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.
Read full response →
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 …
Read more
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 addressing the challenge is not keeping up with what is needed in today’s world and that despite this, departments are already experimenting with AI.49
Show less
Government response AI summary
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 set targets for boards to …
Read full response →
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 …
Read more
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 sector. Government has attempted to address this through the digital pay framework, which DSIT told us has recently been uplifted to market rates.51 However, we are concerned that it still falls short of industry rates in London and the South East, and this will affect the recruitment and retention of people with sufficient seniority and calibre to lead the transformation required.52
Show less
Government response AI summary
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 taken to attract, retain, and …
Read full response →
HM Treasury