The Government Property Agency is tightening up training and oversight after weaknesses in its spending-control processes saw its annual accounts – and those of the Cabinet Office – qualified last year, MPs have been told.
Members of parliament’s Public Administration and Constitutional Affairs Select Committee questioned Cabinet Office permanent secretary Cat Little and GPA chief executive Mark Bourgeois about the failings earlier this week.
Little told the panel she believed that the issues resulted from a failure of the GPA’s checks-and-balances culture to keep pace with the organisation’s rapid expansion since it was established in 2018.
CSW reported in April last year that the GPA had breached spending controls by agreeing a £6m site-security contract before obtaining approval from the Cabinet Office commercial-control team.
The National Audit Office subsequently qualified the GPA’s 2023-24 annual accounts and those of parent department the Cabinet Office for the spending-control failure and over separate "weaknesses" in the agency’s accounting for ongoing capital projects worth £214m.
Neither Little nor Bourgeois were in their current roles at the time of the issues red-flagged by the NAO.
However, Little said it was a “huge disappointment” to be principal accounting officer for accounts that were delayed and qualified last year.
“I am disappointed that we are in this position. But I’m much more interested in how we fix it,” she told the MPs on 29 April.
She told MPs that the GPA had “grown significantly” since its creation in 2018.
“This is a vast organisation,” she said. “It’s providing facilities management, property development, big strategic property advice for a vast government estate, and now provides for over 50% of what we do in property across government.
“My personal view is that that is a very high-risk business and that the controls-and-assurance regime that is in that part of my department has not grown in the pace at which the risks have grown.”
Little said that both areas flagged by the NAO had been the result of a control environment that was "lacking".
“We should just be really straight about that with the committee and I’m very confident that I’ve got a leadership team and a board and a group of stakeholders who are now making sure that the control environment is fit for purpose,” she said.
Little added: “I do think there are some big lessons learned about when you set up large-scale, high-risk agencies of this nature that are delivering big services on such a scale that you have got to be very confident in the control environment as you set things up. It’s our job to make sure that we close that gap quickly and effectively.”
Nevertheless, she told MPs the accounting failings needed to be put in perspective.
“It’s not as though we have not been delivering brilliant facilities management and good services to the whole of government over the last five to six years,” she said. “That has absolutely the case. But it needs to be better.”
No 'rogue decision' by individual civil servant
Little said it was not the case that the £6m contract approval had been pushed forward because of a “rogue decision” by an individual.
“If an official is found to sign a contract without authorisation, that is a very, very, very serious offence,” she said. “That is not what we are describing here.”
She said the decision to proceed with the contract was taken following an error that meant there was no time to get Cabinet Office approval in the normal way.
“My understanding is that at the time an active decision was made by the department to allow the contract to proceed because of the level of savings associated with it and the timetable under which that procurement was being undertaken," she said. “That was a decision that my predecessor was aware of at the time.”
Little’s predecessor as Cabinet Office perm sec and civil service chief operating officer was Sir Alex Chisholm.
Little added that it was important for MPs to understand that the decision to proceed with the contract in breach of spending controls was made at department level.
“That really matters constitutionally, because it is not possible for a civil servant to enter into contracts without there being a level of oversight, either by the department or by the Treasury or by ministers,” she said. “And the scheme of delegation that we operate for our controls within government has checks and balances throughout to make sure that is not the case.”
Little told MPs she believed that the decision on the security contract would ultimately have had the approval of the then-chief secretary to the Treasury. However, she said she would need to double-check to be absolutely sure.
Assurance levels strengthened
Little told MPs that assurance levels had been strengthened as a result of the spending-control breach and the assets-under-construction shortcomings.
“Firstly, in terms of our sponsorship as a department, we’ve got a dedicated sponsorship team,” she said.
“We’ve also got the UK government Investment team involved, who are our corporate governance and assurance experts working with us. Our corporate finance team has a very close and detailed working relationship, we’ve also got our internal auditors currently assessing those sponsorship arrangements to make sure they’re as robust and tight as they should be.
“Secondly, since taking on this role, I’ve spent quite a lot of time with the [GPA] board – I obviously line-manage Mark – and we’ve set out the very clear expectations around performance improvement and assurance. And we regularly assess that performance at board level.
“We are setting the tone, we are putting in place the controls and the reassurance around the organisation. But we’re also working together in partnership to make sure that it has the best chance of succeeding. And I’m much more confident a year on than I was when I first took on this role.”
GPA chief Bourgeois told MPs that the failings identified by the NAO were “regrettable” and in the case of the £6m contract stemmed from members of the GPA’s commercial team “not recognising the timing of the approval required from the Cabinet Office commercial team”.
“We have a new chief operating officer at GPA who is very focused on the skills and capability of that commercial team, how we manage contracts, how we train our people to manage contracts," he said. “Most importantly, how the team then collaborate and work with Cabinet Office commercial controls to plan effectively this type of activity.
“Clearly it’s a complex environment and this was the bringing together of a number of contracts that were inherited across government into a consolidated set of contracts.”
Bourgeois said he was “confident” that the improvements being delivered at the GPA would mean there would be no repeat of the “irregularity” seen with the security contract.
In relation to the assets-under-construction problems identified by the NAO, Cabinet Office chief financial officer Caroline Patterson told MPs that “nothing wrong” had happened with the money involved. She said the issue was about classification on the GPA balance sheet.
In its qualification of the Cabinet Office’s annual report and accounts, the NAO said there was “insufficient evidence” that £28m of the assets under construction set out by the GPA had been correctly classified and launched a full review.
Bourgeois told MPs this week that “extensive work” was going on throughout the Cabinet Office and the GPA’s finance teams to improve capability and resources.
He said he was “confident that reclassifications are well in hand”.