Source · Select Committees · Public Accounts Committee
Recommendation 2
2
Cabinet Office and HM Treasury’s review and challenge of business cases is not sufficiently robust.
Conclusion
Cabinet Office and HM Treasury’s review and challenge of business cases is not sufficiently robust. Of the 24 business cases submitted and approved between 2016 and 2020, not one met all the requirements set out by the Cabinet Office in its own guidance. One quarter of business cases failed to include a cost-benefit analysis of the proposed ALB, and despite the guidance that creating a new ALB should be a “last resort”, more than a third of cases did not rigorously consider the alternatives to setting up a new ALB. Failure to consider the best delivery model can lead to sub- standard governance and performance. It also raises serious questions about the robustness of the Cabinet Office’s approvals system. We would expect the Cabinet Office to refuse any business case that did not meet all of the requirements. Recommendation: The Cabinet Office and HM Treasury should revisit their checklist for new business cases by January 2022 to ensure that it is fit for purpose. It should make sure that all business cases meet these requirements before they are approved.
Government Response
Acknowledged
HM Government
Acknowledged
2.1 The government agrees with the Committee’s recommendation. Target implementation date: January 2022 2.2 The government will continue to require that proposals to establish new arm’s length bodies (ALBs) are supported by a business case. Such business cases must: • follow HM Treasury’s Green Book: appraisal and evaluation in central government, including by structuring the business case around the Five Case Model; • assess how the functions of the proposed ALB pass at least one of the government’s three tests for delivery at arm’s-length; • include a long-list options appraisal, a fuller assessment of the shortlisted options, and cost-benefit analysis of the preferred option; and • explain how the proposed ALB will be established, governed, and reviewed. 2.3 To support departments in meeting these requirements more consistently, the Cabinet Office will develop an updated internal business case checklist by Spring 2022.