Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Accepted
Government major programmes are experiencing significant challenges, such as skills gaps and inflation, which will...
Recommendation
Government major programmes are experiencing significant challenges, such as skills gaps and inflation, which will impact on their feasibility and value for money. HM Treasury is clear that a new AO assessment should be completed where changing circumstances have led to a departure from the original plan. All our witnesses acknowledged that programmes faced some significant challenges in the future. For example, the IPA identified a skills gap of some 3,000 people across the programmes it monitors. And HM Treasury considered that departments were struggling to assess the impact on increasing inflation on their programmes. Government is also looking to reduce the number of civil servants by 20%. Recommendation: HM Treasury and IPA should outline the extent to which current challenges may significantly change major programmes to help accounting Improving the Accounting Officer Assessment process 7 officers determine when an AO assessment is required. They should then use these assessments to understand the impact of these challenges on programmes being delivered in line with the standards set out in Managing Public Money. 8 Improving the Accounting Officer Assessment process 1 Ensuring compliance
Government Response Summary
The government agrees with the recommendation and states that AOs must consider the challenges posed by high inflation, materials shortages, labour market disruption, and high interest rates in light of their ongoing duties to consider feasibility and value for money. Updated AO assessments should be produced following a case conference when a project receives a red stage gate assessment.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented It is important to consider that the AO assessment process is owned by the AO and the departments, and it is for the AO and SRO to decide what they consider important and must defend that decision to Parliament The government considers that challenges posed by high inflation, materials shortages, labour market disruption, high interest rates or other events likely to have significant impact on delivery can signal extended periods of volatility and uncertainty. It is unlikely that the supply chain and pricing disruption will quickly settle back into the stable, low interest rate, low inflation environment that has been seen for the past decade and a half and as such AOs must consider this in light of their ongoing duties to consider feasibility and value for money. Meeting these challenges will require departments to plan and deliver projects in ways that can address this turbulence and maintain delivery outcomes. IPA continuously monitors its assurance and support activities in light of the impact that market conditions can have on project and programme performance. The government agrees with common AO practice that having defined thresholds such as advice from an investment committee or IPA assurance ratings are sensible to have as a trigger to update AOAs. As part of the IPA’s ‘Response to Red’ process, updated AO assessments should be produced following a case conference when a project receives a red stage gate assessment. This updated AO assessment should be provided to HM Treasury to support TAP or MPRG decision making as part of the escalation process.