Source · Select Committees · Public Accounts Committee
57th Report - Government services: Generating income
Public Accounts Committee
HC 890
Published 10 December 2025
Recommendations
2
Rejected
Introduce an annual review cycle and targeted deep-dives for charged services missing cost recovery targets.
Recommendation
The Treasury has been too passive in its oversight of fees and charges resulting in large surpluses and deficits which unfairly impacts taxpayers and potentially future service users. The Treasury’s current oversight of fees and charges is through its spending …
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Government Response Summary
The government disagrees with the recommendation, rejecting an annual review cycle and targeted deep-dives. Instead, it will update the Financial Reporting Manual (FReM) with clearer guidance and embed oversight through bi-annual Spending Review returns.
HM Treasury
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5
Rejected
Publish a plan to embed efficiency incentives within the fee-setting framework to reward productivity improvements.
Recommendation
The Treasury’s system for fees and charges has failed to incentivise cost reduction or productivity improvements, leading to missed opportunities to improve services. Where charged services aim to recover all costs, any potential savings would be passed on to the …
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Government Response Summary
The government rejects the recommendation, stating its existing Government Efficiency Framework and Spending Review targets already provide adequate incentives for departments to drive efficiencies in fee-funded services and track performance.
HM Treasury
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22
Rejected
Cost-recovery models offer little incentive for departments to achieve efficiencies or innovate.
Recommendation
Most services are designed to recover their costs, meaning any efficiencies achieved would be passed onto fee-payers rather than retained by the department. Conversely rising costs can simply be transferred to users without challenge.45 The NAO highlighted the challenges of …
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Government Response Summary
The government disagrees with the recommendation but states that the Government Efficiency Framework (GEF) already provides extensive guidance for efficiency in the fee-setting framework. They state that departments are incentivised to drive efficiencies in their fee-funded services as this will count towards their bespoke technical efficiency targets agreed at the 2025 Spending Review.
HM Treasury
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23
Rejected
Departments struggle to identify efficiencies due to inconsistent cost-modelling and insufficient data.
Recommendation
Departments and arm’s-length bodies struggle to identify opportunities to improve efficiency and value for money as they do not maintain detailed cost information. The NAO found charging bodies use different methods to calculate costs including a range of cost models …
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Government Response Summary
The government disagrees with the recommendation but states that the Government Efficiency Framework (GEF) already provides extensive guidance for efficiency in the fee-setting framework. They state that departments are incentivised to drive efficiencies in their fee-funded services as this will count towards their bespoke technical efficiency targets agreed at the 2025 Spending Review.
HM Treasury
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Conclusions (1)
24
Conclusion
Rejected
We heard evidence that some organisations have demonstrated how efficiencies can be achieved. The DVLA told us it has held its fees at 2014 levels by absorbing inflation through digitisation and process redesign, while improving customer service.52 It operates under a 5% efficiency target during current spending review period and …
Government Response Summary
The government disagrees with the recommendation but states that the Government Efficiency Framework (GEF) already provides guidance for efficiency and that departments are incentivized to drive efficiencies in their fee-funded services, which will count towards their technical efficiency targets.