This week we published our report on Accountability to Parliament for taxpayers’ money. Unusually for a National Audit Office report, it goes into the relationship between ministers and civil servants. We conclude that better incentives are needed to support permanent secretaries in challenging ministers over the feasibility or value for money of policies or decisions. In other words, we have serious concerns about how heads of departments are prioritising their duties to safeguard taxpayers’ money.
Permanent secretaries face a delicate balancing act. As civil servants, their primary responsibility is to serve their minister; but as accounting officers (AOs), they have a personal responsibility to parliament to manage public resources wisely. The two roles will usually be compatible, as both ministers and parliament want to know that public money is being spent well.
However, there will be cases where a minister’s favoured policy approach raises concerns. In these cases, the AO needs to balance meeting the minister’s wishes with challenging on the taxpayer’s behalf. Our analysis is that incentives on an AO to prioritise value for money are weak compared to the day-to-day job of satisfying ministers. Put simply, standing up to ministers can be seen as damaging to a civil servant’s career prospects.
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This state of affairs is not new, but has evolved over several decades. AOs now operate in an environment where ministers are increasingly involved in the detail of policy implementation, particularly decisions on the speed of delivery. Ministers have also sought a more active role in appointing top civil servants and have employed influential special advisers to act on their behalf. Our concern is that these developments are weakening the ability of AOs to perform their crucial role of protecting public money.
Part of the problem is that AOs have few weapons at their disposal to highlight concerns about taxpayers’ money. AOs are able to request a formal ministerial direction to proceed with a policy or course of action where they have serious concerns about the propriety, regularity, feasibility or value for money of policies. But this is often seen as the "nuclear option" and we found this power was rarely used. More often than not, ministerial directions tend to involve relatively small amounts of public money. By contrast, projects involving large sums of public investment and where there were clear value for money concerns have generally not been the subject of directions. Examples include the FiReControl project for regional fire control centres (2004-2011), which cost £635 million when it was cancelled; and the National Programme for IT in the NHS (2002-2011), which cost a total of £11.4 billion.
We think a more robust, accountable system of decision-making would involve much more transparent and visible assurance than we see happening at present. The Treasury suggests that “AO assessments” be prepared in cases where AOs have concerns about the use of taxpayers’ money. AO assessments allow AOs to set out and evaluate, in a systematic way, whether a policy would be feasible and value for money, as well as whether the spending involved would be lawful and proper. Unfortunately, this procedure is currently little-known and little-used, but could be built upon to allow AOs to raise concerns – before having to “go nuclear” with a ministerial direction.
We recognise that the role of the AO has had to adapt to wider changes in government that make accountability more complex, such as greater local devolution and cross-cutting working. AOs now commonly delegate, devolve or share delivery responsibilities. Accountability arrangements have started to catch up, but only slowly. For example, since 2014 senior responsible owners (SROs) of major projects have been directly accountable to Parliament for project implementation; while changes to public sector accounting have made government finances more transparent.
But accountability for many evolving areas of government still seems to be an afterthought. Moves to devolve powers and funding to the local level have left oversight and accountability arrangements unclear, particularly for value for money; and cross-departmental working has sometimes meant gaps in accountability (care leavers and confiscation of criminal assets being two instances).
Some departments prepare accountability system statements to explain responsibilities for locally devolved funding in sectors such as local government, education, health and policing. The system statements were a positive first step, but only 7 of the 17 main departments have prepared them and they typically do not cover all accountability relationships within a department (such as arm’s length bodies, outsourced activities and cross-cutting initiatives). There is also room to improve how they describe arrangements for AOs to oversee entire systems of delivery to secure overall value for money.
Finally, we saw only a few instances of departments using their system statements to manage their accountabilities, and Parliament has found it difficult to use the system statements to hold AOs to account.
So what is our prescription for change? The Treasury needs to provide stronger leadership and support to AOs across government, particularly by acting as a critical friend to help AOs develop their accountability systems. AOs should be required to provide positive assurance over major projects and policy initiatives at key implementation stages, and raise any concerns about the use of public money through AO assessments. Permanent secretaries need to take firmer ownership of the AO role and the systems of accountability under their control, including plugging any accountability gaps and resolving confused responsibilities. And all departments should prepare accountability system statements setting out all of the accountability relationships and process within that department.
And what does all of this mean for you? We appreciate that accountability to parliament for public money might seem far removed from most people’s everyday work in the public sector. We think, though, that issues of accountability also apply wherever taxpayers’ money is spent. Hence, we have come up with four “accountability essentials” that can be used to assess whether public services and government projects or programmes are properly accountable (see picture below).
As we said at the outset, it is unusual for the NAO to examine governing relationships in this way. But we want to open up these important issues for debate, and we recognise it is difficult for civil servants to raise them. Accountability needs to be more than an afterthought – it should be central to decisions about how taxpayers’ money is spent. This goes to the very heart of our system of accountable government.