Spending approvals processes will be streamlined and the size of the Government Major Projects Portfolio will be “significantly reduced” as part of an overhaul of government’s spending control and accountability framework, the Treasury has announced.
The reform follows a review by the now-defunct Office for Value for Money and aims to “drive better value for money and enable the public sector to deliver the government’s priorities efficiently and effectively”, according to the Budget red book.
A report published by the OVfM alongside the Budget today says its review “revealed significant scope to remove duplication of controls and strengthen accountability, to deliver more effective and efficient spending control, while freeing up capacity to focus on delivery of citizens’ priorities”.
The new system will be based on five principles, set out in the OVfM report:
- Decisions should be delegated to those closest to delivery, at the lowest appropriate level, with ultimate accountability to parliament remaining with secretaries of state and accounting officers
- The centre of government should be responsible for oversight of the biggest strategic risks and cross-cutting priorities
- Functional expertise should be embedded in departments and their arm’s-length bodies as required, with central functions focused on setting common standards and frameworks; supporting capability; dealing with issues that are best done once on behalf of the whole of government; and providing specialist support up front
- Approval of decisions should typically be done once and done well, by those accountable for those decisions
- Trust, openness and collaboration should be the foundation of cross-government relationships
Under the reforms, the Treasury will agree bespoke memoranda of understanding with departments on new ways of working. It will increase delegated authority limits – the maximum amount departments can spend without Treasury approval – for the majority of departments for 2026-27.
The MoUs will set out “clear expectations about ways of working and how early engagement and openness to challenge will operate in practice”, chief secretary to the Treasury James Murray said in a letter to the Public Accounts Committee about the reforms.
The agreements will cover transparency around data and developing a shared assessment of capability, and “a willingness to proactively and constructively address any capability gaps that are identified”, Murray added.
Departments will be told to streamline their internal approval processes, drawing on the expertise of their non-executive directors where appropriate.
The Treasury will retain “a range of measures to incentivise improvement”, including the reintroduction of controls where necessary, if departments perform poorly or fail to meet their obligations, Murray said.
Delegated authority limits for smaller areas of spending, which “currently vary widely”, will be simplified. In many cases, this spending will be entirely delegated to departments.
Spending controls operated by the Cabinet Office, as well as digital and technology spending controls overseen by the Department for Science, Innovation and Technology, will be reformed. There will be a new, “multi-disciplinary single approval point” within the Treasury for spending above new delegated limits.
And the size of the GMPP will be cut from more than 200 projects to between 80 and 100 projects. This will allow for “a more focused approach to the provision of enhanced oversight and specialist support from the National Infrastructure and Service Transformation Authority”, Murray said in his letter to PAC about the reforms.
As well as the reduction in the portfolio’s size, there will be changes to improve delivery for GMPP projects, including streamlined approvals, feasibility studies and limited budget flexibilities that will be decided on a case-by-case basis. The reforms will also include improvements to the overall data strategy and ongoing work across the government project delivery profession and function.
The reforms to the spending control and accountability framework will be introduced in phases, with guidance and rules to be updated at the start of 2026-27.
“Building capability and improving ways of working will take time, and will therefore be a key focus for the whole of government over the Spending Review period,” the OVfM report says.
Reinforcing ‘diluted accountability’
The OVfM said the existing system of spending controls has arisen from a combination of major reforms and incremental changes by successive governments in recent years, it says, adding: “No system as complex as this one can remain fit for purpose forever, and periodic reviews are necessary to ensure the whole system is as efficient as possible.”
Overlapping control frameworks exercised by the centre of government and departments have “diluted accountability”, weakening parliament’s ability to hold ministers and accounting officers responsible for value for money in everyday decision-making, according to the report.
“It also limits the centre of government’s ability to ruthlessly focus on the biggest strategic and cross-cutting priorities of the day,” it adds.
The reforms will reinforce accountability by making the rules and frameworks more streamlined and effective, as well as enabling central government functions to focus more of their efforts on building capability across government, the OVfM said.
The reforms “will need to be supported by open and collaborative ways of working across government, which are underpinned by high levels of transparency and trust”, the OVfM said.
“This means departments engaging openly and early with the centre of government on emerging risks to priorities, and the centre of government responding through timely, constructive, and strategic interventions rather than micro-management. Where there are challenges, there will be a clear and predictable escalation mechanism, ensuring issues are addressed quickly and in a constructive way.”