There is a danger that Whitehall’s major suppliers are becoming “secretive sub departments of government” as the civil service fails to improve its contracting skills and boost transparency, a Labour MP has warned.
Meg Hillier, the chair of the Commons’ Public Accounts Committee, said in her annual report published today that management of contracting and commissioning risks was still not good enough in government.
The report said commercial capability tended to be concentrated in the Cabinet Office, and warned that the relationship between the centre of Whitehall and departments – made especially important by Brexit – was mistrustful.
Hillier also argued that “a culture of denial continues” in Whitehall, citing Universal Credit and government’s ability to deliver Brexit as examples of optimism overriding common sense.
The PAC chair published a list of “departments of concern”, which largely mirrored the list in the PAC's 2017 annual report: both included the Department of Health and Social Care, Department for Education, Ministry of Justice, HM Revenue and Customs, and the Ministry of Defence.
The Department for Work and Pensions – included in the PAC 2017 report due to concerns over the implementation of Universal Credit – did not make Hillier's list. The Home Office was included instead, and criticised for two “inexcusably late” projects, the Disclosure and Barring Service and new Emergency Services Network, which have seen spiralling costs and poor contract management.
Her report said DfE was “on a par with the Department of Health and Social Care in terms of strains on funding and doubts over its long-term sustainability”.
It also said that “HMRC’s challenges have increased and become more urgent due to Brexit”, particularly as the agency is attempting to deliver new customs arrangements at the same time as ongoing changes to IT programmes and relocation of staff to 13 major hubs.
Outlining the key challenges facing Whitehall, Hillier warned that government was “not ready to deal with” Brexit, and that levels of funding in some departments were out of kilter with demand. The government has acknowledged funding problems at the NHS – it has just received a boost of £20bn a year – but the Ministry of Defence “is the next major risk”, she said.
She criticised government’s tendency to plug gaps in expenditure by selling off land and assets, and warned of the dangers of contracting out services, including in terms of the lack of accountability that can result from outsourcing.
Departments too often see data collection as an afterthought, she said, citing the government’s failure to accurately record basic assets in the case of major supplier Carillion, which collapsed in January. The Cabinet Office is now collecting lists of programmes run by outsourced companies.
Earlier this week Cabinet Office minister David Lidington outlined the need to rebuild trust in private companies delivering public services in the wake of Carillion.
Hillier reiterated her oft-stated warning of the impact of silo working in Whitehall and of the mistrustful relationship between the Cabinet Office and the Treasury and other departments.
Lack of detail in single departmental plans, using Brexit as an excuse to withhold information, the challenge of bedding in all the new civil servants recruited for Brexit and continuing high turnover of staff were all also picked up in the report as particular areas of concern.
“A number of themes in this report are depressingly familiar," said Hillier. "We repeatedly see the same issues and mistakes repeated – particularly around contracts, procurement, how information is used and a disconnect from the real impact of Whitehall decisions and behaviour on the lives of the citizen.”
She complained of a lack of long-term thinking, and warned of the danger of major suppliers – those with contracts with government worth more than £100m – effectively “becoming secretive sub departments of government”. The PAC is pushing for more transparency, she said.
The PAC chair also called for public accounts infrastructure to be extended to regional government, and called on Whitehall to take the PAC up on its offer of pre-implementation scrutiny of major projects.
In an interview with Civil Service World earlier this year, Hillier said that the newly elected mayors of combined authorities should be choosing to have structures set up so they can be held accountable for spending money devolved to them from Whitehall.
She also said the pre-scrutiny by the PAC would limit the risk of going forward with a project destined for failure.
“I would love it if we could routinely look at projects at the early inception and say: ‘Well, clearly that’s going to be a bit odd, and that’s not going to work’. With the best will in the world, you’ve got a small civil service team beavering away on what can be a very fast-paced policy announcement or having to backfill a policy that’s been announced at short notice,” she said.
During this parliament the PAC has held 66 inquiries and published 49 reports with 187 recommendations – the government agreed to implement 171 of them.
The Cabinet Office has been approached for comment.