Source · Select Committees · Public Accounts Committee
Recommendation 7
7
Accepted
Incentivise departments to collect detailed service cost data and clarify Permanent Secretaries' responsibilities.
Recommendation
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
Government Response 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 reviewed.
Government Response
Accepted
HM Government
Accepted
1.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2026 1.2 The Treasury will issue an updated Dear Accounting Officer letter that explicitly sets expectations for Accounting Officers and senior leaders to identify, use and continuously improve service‑level cost information, focusing on understanding cost drivers and productivity opportunities. 1.3 For efficiency, this letter will be issued in tandem with the forthcoming fees and charges Dear Accounting Officer letter, reflecting the close link between understanding the cost base and setting fair, transparent fees and charges. Both letters will reinforce requirements under Managing Public Money and the government’s Value for Money guidance. 1.4 Compliance will be monitored through end‑year finance assessments coordinated by the Government Finance Function, drawing on departmental evidence of service‑level costing, benchmarking and benefits realisation. Findings will inform Permanent Secretary objectives and functional performance discussions. 1.5 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. 1.6 Where systemic issues are identified (for example, legacy systems or fragmented service ownership), the Treasury will work with departments to agree remediation plans and timelines, with progress reviewed through existing business planning and stocktake processes.