Annex B
ALTERNATIVE WORKING PATTERNS
Alternative working patterns in the Treasury
can take a number of different forms.
PART-TIME
WORKING
This involves working fewer than 36 hours (net)
and can be done either by working fewer than five days (eg Monday
to Wednesday 9.00 am until 5.00 pm) or by working days of varying
length (eg Monday to Friday 10.00 am until 3.30 pm). It enables
managers to tailor the workforce to meet the precise needs of
the work to be done. For the individual, it can be a useful way
of getting back to work after illness or a career break, or even
be a prelude to retirement, as well as enabling domestic commitments
to be combined with a career.
COMPRESSED HOURS
This involves working full-time hours in fewer
than a five day week or even a 10 day fortnight. Such a scheme
is already operated by full-timers who work their full conditioned
hours in a nine day fortnight and take alternate Fridays off as
flexidays.
JOB-SHARING
This is where two or more part-timers share
the responsibilities of a full-time post. Variations include:
split day: one person works in the morning,
the other in the afternoon;
split week: one person works the first part
of the week, the other the second part;
alternative weeks: one person works one week,
the other the next week.
Job-share can introduce part-time hours into
jobs which have always been seen as full-time and extends the
number of jobs which can be done on a part-time basis, with two
people often bringing a wider range of skills and experience to
a job than one. It allows for continuity of cover—if one
person is off work, some of the work will still be completed and
the other person may even agree to work full-time for cover—and
for continuity of skills—if one person leaves, someone knowledgeable
is still available to continue some of the work.
HOME WORKING
Under this option, the individual's home is
their regular place of work for all or part of the working week.
Around 100 people in the Department are now working from home
on a formal basis.
TERM-TIME
OR PART-YEAR
WORKING
Under this option, people work fewer than 52
weeks a year. Examples include unpaid leave during school holidays
to care for children or unpaid leave for study purposes. This
type of arrangement works particularly well in teams with project
work or seasonal peaks and troughs of work, or indeed where the
workload is constant and cover can be arranged.
CONTROLS OVER
EXPENDITURE
Introduction
1. The Sub-Committee expressed interest
in the controls which Treasury exercises over Departments' spending.
We are submitting this note to follow up the responses given by
Sir Andrew Turnbull to the committee on 11 May 2000. It explains
how the Treasury exercises control over public spending; lists
detailed controls removed from departments in recent years, and
notes some areas where the Treasury would like to go further;
explains how it has moved to a more strategic approach in exercising
this control, and what the benefits of this approach are.
HOW THE
TREASURY EXERCISES
CONTROL
2. The Treasury operates two types of control:
firstly, for Parliament as part of the Estimates procedure, and
secondly, as part of the Executive and on the basis of internal
Government agreement. The mechanisms used in the Treasury to promote
its public expenditure objectives include its work in devising
and managing public expenditure control regimes, planning spending
over the medium-term through the spending review process, the
power—reserved to the Treasury alone—to present departmental
Estimates to Parliament (seeking Parliamentary approval for most
spending by departments), in-year monitoring of agreed departmental
control totals, and in-year assessment of additional departmental
spending bids.
3. The Treasury appoints Accounting Officers
in each department and places on them a personal responsibility
to ensure high standards of propriety, regularity and accountability,
and to secure high quality, cost-effective public services which
deliver expenditure priorities and policies.
4. While departments are given delegated
authority by the Treasury to spend most of the money voted to
them by Parliament, they are required to follow guidance published
by the Treasury on good financial management (as set out, for
example, in the financial control handbook called Government
Accounting), and need to refer to the Treasury for specific
approval in many cases including spending proposals which exceed
the delegated levels agreed between the Treasury and individual
departments. The Treasury also prescribes how departmental accounts—showing
how public expenditure has been spent—are presented.
A MORE STRATEGIC
APPROACH
5. The Treasury periodically examines the
controls it exercises over departmental spending decisions to
assess which might sensibly be simplified or discontinued in the
interests of improved accountability and more effective working
in departments and the Treasury, while enabling the Treasury to
focus more effectively on matters of strategic concern. This aim
has been endorsed by the Public Accounts Committee.
6. In principle, Treasury approval is required
for all spending decisions by departments. In practice, it would
not be sensible—indeed, it would not even be possible—for
the Treasury to be involved in all such decisions. So it has always
delegated to departments the authority to spend money within defined
limits and subject to various conditions and controls.
7. An excessive array of controls does not
promote good decision-making and effective control over public
expenditure if it is at too detailed a level. Nor does this type
of Treasury involvement always sit comfortably with the framework
for accountability laid on Accounting Officers by the Treasury.
8. In some instances, a clear case can be
made for retaining control in the Treasury. For example, the Treasury
should and does retain the right to introduce—or reintroduce—detailed
controls on particular departments or in respect of certain types
of transaction if and when it had serious concerns about control
procedures.
9. There are also a number of statutory
requirements for Treasury consent or approval over which we have
no descretion and no scope to delegate without amending or repealing
legislation.
10. In recent years the Treasury has introduced
major reforms to the framework of controls we exercise over departmental
spending as well as identifying and so far as possible removing
a significant number of more detailed controls and mechanisms
which add little or no value to the achievement of Treasury's
objectives. These are listed in the next section.
CONTROLS REMOVED
IN RECENT
YEARS
11. The 1998 Comprehensive Spending Review
(CSR) abolished the annual Public Expenditure Survey and replaced
it with a rolling three-year settlement. Departmental Expenditure
Limits (DELs) were set for three years so that departments could
plan over a longer time horizon than when plans were reviewed
and revised annually. The Government was thus able to take a more
strategic look at the effectiveness of spending, rather than falling
into the familiar annual exercise of bidding for extra resources.
12. The 2000 Spending Review continues and
strengthens these arrangements by asking departments to prepare
new Public Service Agreements (PSAs)—agreed output targets
detailing the exact outcomes departments will deliver with the
money provided. Rather than focussing on money inputs, the new
spending regime places a strong emphasis on setting outcome targets;
for example, better health and higher educational standards or
service standards. The Treasury monitors progress against PSA
targets. In the 2000 Spending Review, the number of PSA targets
is being reduced, with departments being asked to focus on a small
number of key strategic objectives. By focussing on key objectives
and outcomes, the new system has allowed the Government to look
across the work of departments to find cross-departmental solutions
to achieving its objectives and to encourage joint working.
13. The separate system of subsidiary cash
limits has been abolished, and replaced by:
— a single control at the level of
the DEL;
— separate capital and current expenditure
budgets with limited flexibility on transferring from capital
to current.
This, together with the continuation of separate
running costs controls provides departments with more flexibility
to reallocate money according to their priorities whilst maintaining
downward pressure on the costs of administration and disincentives
against short-termism by the sacrifice of capital to meet spending
pressures. Furthermore, departments are encouraged to set up Departmental
Unallocated Provisions (DUP) which act as a departmental-level
reserve upon which the department can draw to meet unexpected
pressures, rather than having to make a formal DEL Reserve claim
to the Treasury.
14. Extension of End-Year Flexibility (EYF):
any planned funding within a DEL which is not spend in one year
can be carried over to the following year, helping departments
to manage their budgets and avoid wasteful end of year spending
surges. The EYF scheme has been progressively broadened from capital
spending to include all DEL spending, including running costs,
across all departments.
15. As part of the CSR, departments have
had three year running cost settlements which have allowed them
greater certainty in planning expenditure.
16. There has also been some relaxation
in the receipts which departments have been allowed to "appropriate
in aid" of their running costs limit. These relaxations were
given to allow greater freedoms within the headline gross running
costs limit, and to encourage efficient use of assets or expenditure.
They include:
— the automatic right to retain and
benefit from receipts, subject to certain limits, for selling
services into wider markets. This encourages departments to maximise
use of their assets.
— the ability to score receipts from
other running costs areas, particularly other government departments,
for services provided. This concession ended the double counting
of expenditure by both the provider and the purchaser of a service.
It means that the provider of a service can compete on a level
playing field with external providers, and that the purchaser
can chose whether to deliver a service in house, buy in from another
department or procure it from the private sector based on value
for money.
— the ability to score New Deal subsidies
and training payments against the corresponding running costs
expenditure, to encourage use of New Deal participants.
17. Estimates were simplified in 1996-97.
The change improved the alignment between Estimates and the Government's
expenditure plans set out in the series of departmental reports.
This made it easier to relate the Estimate figures to information
on outputs, objectives and performance contained in the reports.
It provided better financial information and, the Treasury believes,
a more coherent presentation to Parliament. A large amount of
detail in Estimates was transferred to departmental reports and
the Treasury control over virement (the transfer of savings on
one subhead to meet excess expenditure on another) also made more
strategic.
18. Other miscellaneous relaxations include:
— discontinuation of the requirement
under which departments needed to consult the Treasury if a single
tender raised questions of principle;
— discontinuation of the requirement
for all NDPB financial memorandums to be approved by the Treasury.
The Treasury is finalising a model memorandum to which only exceptions
would need Treasury approval;
— discontinuation of Treasury approval
of appointments of departments' Principle Finance Officers; and
— 29 separate relaxations on banking
controls in 1996 effected through changes to Government Accounting.
Not all of the relaxed controls involved consulting the Treasury,
though the general outcome was to put more responsibility on departments
to decide their actions on the basis of guidance, rather than
of specific Treasury instructions or permissions.
BENEFITS OF
A STRATEGIC
APPROACH
19. The Treasury believes that the following
benefits result from moves to a more strategic approach:
— improved accountability from eliminating
unnecessary Treasury second-guessing. There will be greater clarity
about who took the key spending decisions and why. It will therefore
be easier to hold to account those that took the key decisions,
thus ensuring a fuller and clearer explanation of what occurred;
— better decision making (and hence
better use of resources by departments) by aligning more closely
responsibility for decision-making with accountability to Parliament.
Departments will take decisions with greater care if they know
that responsibility for such decisions rests unequivocally with
them. For example, there will be less scope for a department to
base their decision on an opinion from the Treasury in situations
where the department concerned was the only party that knew all
the facts and was in the best position to take the decision;
— better use of resources within the
Treasury since we find little scope for adding value in administering
many of the detailed controls. Their removal or simplification
will allow us to concentrate more effectively on achieving our
own objectives, including the objectives for public expenditure.
The Treasury's strategic interest lies in the adequacy of the
control framework, rather than in detailed assessment of spending
proposals;
— better relations between the Treasury
and departments because, while departments accept the need for
the Treasury to be involved in strategic decisions affecting public
expenditure control and overall value for money, they tend to
regard Treasury involvement in less imporant decisions as unnecessary
meddling, and inconsistent with trends in other areas (such as
pay and grading) where delegation to departments has already taken
place. Moreover, it is difficult to argue that departments should
delegate responsibility within their own organisation (eg, to
agencies) and empower more junior staff while insisting that the
Treasury should retain detailed controls over minor spending decisions.
FURTHER ACTION
20. In order to increase the focus on strategic
controls, last year the Treasury proposed increasing delegations
and Parliamentary reporting thresholds but the proposals were
not accepted by the PAC. However, the PAC said that some of these
issues should be looked at again once Resource Accounting and
Budgeting (RAB) was in place.
21. The Treasury would be interested to
pursue this. These proposals included:
— Gifts: Treasury approval is
required for gifts of an unusual nature or whose value exceeds
£100,000 (unless a lower delegation level has been set.)
Such gifts must be reported to Parliament. The proposal was to
discontinue requirement for Treasury approval, and increase the
threshold for reporting to Parliament to £1 million.
— Losses and special payments:
Treasury approval is required before departments can write off
various categories of losses and make "special payments"
(payments not anticipated by Parliament such as ex gratia
or extra contractual payments). The proposal was to discontinue
requirement for Treasury approval and increase the threshold for
reporting to Parliament to £2 million.
— Contingent Liabilities (CLs):
Treasury approval is required before departments can take on CLs
of over £100,000. Such CLs have to be reported to Parliament.
The proposal was to increase the threshold both for Treasury approval
and reporting to Parliament to £2 million. (Different arrangements
will continue to apply to ECGD)
— Fees and charges: Departments
are currently required to report to subsidies or deficits of £1
million or more to Treasury annually for report to PAC. The proposal
was to increase the reporting threshold to £2 million.
— Treasury minutes (not strictly a
"control"): Departmental responses to PAC reports are
published by the Treasury as "Treasury Minutes". The
proposal was for Departments to publish their own responses (after
consulting the Treasury on points where there is a clear Treasury
interest).
14 June 2000
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