Source · Select Committees · Public Accounts Committee
Recommendation 13
13
Accepted in Part
Treasury's full cost recovery principle in Managing Public Money is not effectively monitored.
Conclusion
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 and charges.24 MPM requires that where ministers decide to charge less than full cost, there should be an agreed plan to achieve full cost recovery within a reasonable period, with Treasury consent.25 This principle has not been complied with or 19 Qq 60-65 20 C&AG’s Report, para 2.25 21 Qq 51-53, 55 22 C&AG’s Report, para 2.25 23 Qq 67-69 24 Qq 26,28 61-63 25 HM Treasury, Managing Public Money, June 2025 10 monitored effectively. The Treasury told us that, where bodies are under or over-charging, it will review whether they are doing that by design and with required consent, and that it will examine the implication of this.26 26 Qq 8, 40 11 2 Supporting effective financial management Streamlining the process to amend fees
Government Response Summary
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 years.
Government Response
Accepted in Part
HM Government
Accepted in Part
The government disagrees with the Committees recommendation. 2.2 However, the government agrees with the principles behind the Committee’s recommendation that cost recovery should be a conscious and transparent choice but considers improvements can be better achieved by other means. 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 to ensure more effective Parliamentary scrutiny and rather than an annual cycle will embed oversight through the Spending Review (SR) returns to ensure departments consider the appropriate subsidies and fees which will now occur every two years.