Examination of witnesses (Questions 40 - 59)
MONDAY 11 MAY 1998
MR JAMIE
MORTIMER, MR
FRANK MARTIN and MISS GILL
NOBLE
Chairman
40. Thank you, Mr Leslie. I think the rarity
of single tender contracts might look interesting when you come
to the NAO Report on MoD contracts this week.
(Mr Martin) Not covered by the EU directives.
Maria Eagle
41. It interests me, Mr Mortimer, I think
your section of the Treasury is the people who departments come
to and say "we want prior authority for X and Y", is
that right?
(Mr Mortimer) Not necessarily. Sometimes they
come to us, sometimes they come to the spending team. The Treasury
has a spending directorate with perhaps a dozen spending teams
that track the main departments.
42. What percentage of the time of your
staff is taken up answering, dealing with queries relating to
requests for prior authority?
(Mr Mortimer) Case work, which includes not only
requests for prior authority but also general advice on how the
rule book should applied in particular cases, takes up a very
large proportion of the time of my staff, certainly over half
the time.
43. Over half the time.
(Mr Mortimer) We deal with over 3,000 case work
queries a year.
44. Right. There is nothing more annoying,
is there, than having somebody who should be making a decision
and doing a job themselves come crawling to you and saying "will
you do this for me because I cannot be bothered" or "I
do not know who to ask" or "it is all a bit too much
for me, I have got to have an answer, will you do it for me"?
That is effectively what departments are doing, is it not?
(Mr Mortimer) It is not annoying if they have
made an effort themselves and they come to us for help because
that is our job and we are very conscious of the need to have
positive relations with departments and to promote high standards.
If we think they are coming to us because they are lazy and have
not actually tried to address the issues themselves then that
can be irritating.
45. What percentage of the work you do,
which is 50 per cent of your work, is taken up by these somewhat
lazy requests, would you say if you had to estimate?
(Mr Mortimer) I would say it is fairly small.
46. Fairly small?
(Mr Mortimer) Yes.
47. You have already said that these changes,
if they are agreed, would be marginal in terms of the overall
work?
(Mr Mortimer) Within the Treasury, yes.
48. Why on earth are we bothering to have
the changes then? If you had said to me "it is taking up
50 per cent of my staff's time dealing with queries that other
people in departments ought to be able to sort out themselves"
I could understand why you would want to make these changes, but
if it is a small percentage of the 50 per cent of your time that
is taken up and the differences are only going to be marginal
if the changes are made, why on earth give away the scrutiny that
you have by doing it?
(Mr Mortimer) We have got a Government Accounting
rule book, it gets thicker and thicker every year, we add new
rules and we add new guidance, and every now and again you have
just got to look through it critically to see what needs to be
retained and what needs to be thrown out.
49. Right.
(Mr Mortimer) Quite a lot of the changes we could
make without consulting you but some of the changes do reflect
prior agreement with this Committee so we felt obliged to consult
you.
50. I understand, thank you. I would like
to move on to the question of Treasury Minutes. I am concerned
that you think the departments and the accounting officers in
departments are better able to reply to these. I know effectively
they will draft these replies but you will have oversight of them
and you will say "what about this bit, what about that bit".
One of the things that strikes one when one comes on this Committee
is the way in which accounting officers are quite often completely
unwilling to accept our view of some outrage that they have perpetrated
that the NAO has drawn to our attention. If you are then leaving
those people to come up with the responses with no view of it
from yourselves how are we to get satisfactory responses? Do you
not think this would lead to much more resistance to our recommendations?
(Mr Mortimer) I do not believe it would.
51. Why not?
(Mr Mortimer) Let me explain. The Treasury has
this job of presenting Treasury Minutes and, therefore, it does
look through departmental responses, it does try to make sure
that recommendations are addressed and they are addressed sensibly
and deadlines are included for action. It is very rare that the
Treasury will say to a department "you have rejected this
recommendation but should you not really accept it?" I think
I am right in saying that something over 90 per cent of all PAC
recommendations are accepted. Most of those recommendations are
made to departments. They are primarily responsible for preparing
draft responses, they do the drafting, and they are the ones who
agree that those recommendations should be accepted.
52. Do you not think that yourselves standing
there as an outside department, not this Committee, not Parliament,
an outside department with the purse strings, might be in quite
a strong position to push them where they are reluctant in a way
where if you were not there you would just get the complacency
and the resistance and the kinds of answers that we often get
here when they come before us?
(Mr Mortimer) Let me say that because we have
proposed that Minutes should be presented by departments it does
not mean to say that the Treasury will lose interest in them.
The Treasury pays, and will continue to pay, a lot of attention
to PAC recommendations and to what departments do about them.
The Treasury will still take action with departments to follow
up particular recommendations. For example, we have had a whole
series of very good reports on private finance and one of the
recommendations, in the recent Bates review on private finance
was that departments should pay attention to PAC reports. I write
a DAO letter to all Permanent Secretaries every year drawing attention
to recommendations of general application. I can give you quite
a lot of examples of cases where Treasury spending teams are very
much concerned with following up particular PAC recommendations.
And they would want to do that whether or not the Treasury presented
Treasury Minutes.
Maria Eagle: If the
impact is going to be so marginal, I ask myself again why on earth
are we bothering to make the change? I do not want an answer,
it is a rhetorical question.
Mr Davies
53. Am I right to say that this movement
towards a strategic consideration is really largely to free up
time in your department so you can think about the wider picture,
the Comprehensive Spending Review and this sort of thing, and
not get bogged down in micro-issues?
(Mr Mortimer) Perhaps I could ask my colleague
who works in the Spending Directorate and who is very much concerned
with these issues.
(Miss Noble) The answer to your question is yes,
very much so. The spending teams operate at different levels.
Our biggest job is settling the budgets for the departments.
54. Are you confident that individual departments
in fact have the financial and accounting resources to adequately
look after their own interests without your support?
(Miss Noble) As I say, we have jobs that we have
to do with the departments: setting the budgets, looking at new
policy initiatives etc. When we do that with the departments that
involves us having a dialogue with them which gives us some feel
for the way they conduct their business. That is actually how
we get most of the intelligence that we have about the way departments
are run. It is actually a more important source; from that, and
things like the Comprehensive Review and various other initiatives
that we have with the departments, that is how we get the intelligence.
55. It is my impression, albeit a limited
one, that anecdotally when you look at the DSS and large spending
departments——— I think the DSS has only got
three full-time accountants.
(Miss Noble) Yes[3].
56. Within the departments there seems to
be clearly not enough professional support within the departments
to service them. I am reading out of this that because of that
the Treasury has to pick up the support services and are getting
a bit annoyed about it and, therefore, wants to abdicate responsibility.
Are you confident that the departments have got enough internal
support to manage their affairs?
(Miss Noble) I think there are several strands
in what you say. It is the accounting officer's responsibility
to make sure that he has got proper resources to do this. When
we felt from our contacts with the departments that they were
under-staffed, we would find some way of saying so to the finance
officer, if we thought it was a problem. I am not suggesting that
the Treasury is having to do this, picking up some of these small
issues because the department has not got enough resources. It
is more that there are small issues here which we think it is
better to be left with the department, rather than for them to
have to have a dialogue with the Treasury which would actually
waste both of our time.
57. Your colleague said earlier that one
of the driving forces for this change was to stop departments
referring to you for help. I understand that because you want
to get on with something much more grandiose and important but
I wonder whether this is letting down the departments. If it is
the case of resource management driving you from the Treasury
I would ask why you do not charge departments for the services
that you provide so you can actually provide more financial officers
than you have used up in providing that service like any normal
private business? Do you do that? Presumably you do do that. Do
you charge them?
(Miss Noble) We certainly do not charge the departments.
58. You do not charge them?
(Miss Noble) No, we do not charge them for answering
their questions. I think I should explain that some of the impetus
for us withdrawing from some of these detailed controls actually
came from the departments. They said that they thought it was
none of our business, these small things, and we ought to concentrate
on discussing the big strategic issues, with the larger sums of
money. Out of those dialogues we can pick up from them how well
they are running their departments. We also get advice from the
NAO and speak to the NAO about it.
59. Not on the scale that you operate but
I operated in a local council in London with a gross turnover
of about half a billion pounds. It was normal for the finance
department to charge service departments for financial help and
departments would take their own view on whether to hire their
own accountants or not in a wider context which made real cuts
of ten per cent a year. It seems that the level of professionalism
we are looking at here is very questionable. I do not really understand.
It seems to me that what is happening is you are pulling out because
you have got other things to do, you do not charge for your services,
and meanwhile the departments are roaming around with an inadequate
number of people and at the end of the day the NAO picks up the
bill and presumably you will not be paying the NAO for the work
that you are doing?
(Miss Noble) We are actually trying to pull out
of these small tasks that we have to do to spend more time with
the bits of the departments' business which they actually think
are more important. They think it is more important that we have
dialogues with them on big policy issues and that we understand
that aspect of their business, rather than we pick up these small
issues. I can think of some cases where we have had a spending
team that has been in the middle of agreeing some quite substantial
policy initiatives, trying to make sure they are properly costed,
that ministers actually have the advice that they need, and somebody
has had to stop to agree a special payment of half a million pounds.
It just seems to everybody that is not the most sensible way of
conducting our relationship with the departments.
3 Note by Witness: There are currently 88 accountants
working in DSS not 3. Back
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