Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence



  Within the Highways Agency PCS are concerned about the effect that poor financial management within the Agency has had on staff and their ability to deliver the Agency's Business Plan objectives including the 10 Year Plan. The Group is also seriously concerned about the poor management of a project to deliver Resource Accounting to the Agency.

  Following the publication of the Government's Transport White Paper in 1998 and the Associated New Deal for Trunk Roads in England, a new role was identified for the Highways Agency. This new role—as a road network operator—was announced in November 1998 and staff were informed that substantial additional funds had been secured from DETR to recruit new staff over the next financial year.

  Very few additional staff were recruited over the following year—due in part to a high turnover. However, large numbers of posts had been advertised and it was expected that these posts would be filled in the first few months of this financial year.

  Little progress was made and it was noticeable that very few posts were advertised in April and May 2000. Finally in June 2000, under pressure from the Trade Unions, the then acting Chief Executive issued a note to staff to explain that the Agency did not have sufficient running costs to meet expected spend to the end of the financial year. The main reasons given for the agency finding itself in this position were that forecasts for staff recruitment had proved wrong and £3.5 million was handed back to DETR in November 1999. Divisional Directors within the Agency were also apparently "working towards aspirations that the HA

Board had not signed up to. All recruitment was put on hold as a result.

  A bid was made to DETR for more funds to alleviate the situation, but the PCS Group understand that this was refused. Instead an extra £1.6 million running costs was identified by re-categorising some expenditure as programme spend. A thorough review of running costs was also announced at this time but the PCS Group has no information on the outcome of this.

  In late July 2000 it was agreed that some limited recruitment could take place provided this was within existing budgets and did not incur long-term costs. There is however no central co-ordination of this recruitment and in fact very few vacancies have been filled.

  The net effect of this has been to cause widespread alarm and confusion. It has also placed significant numbers of Highways Agency Staff under considerable stress as they strive to meet objectives with less staff and other resources (training for example) than they need. PCS is in no doubt that this is adversely affecting the ability of HA to perform effectively.

  The issue of the introduction of Resource Accounting and Budgeting (RAB) to the Agency also reveals a lack of good financial management at senior levels within the Agency.

  In 1994 a single external consultant was appointed to advise on how the Agency could meet the requirement to introduce Resource Accounting by April 2001. It is assumed that this appointment was made on the basis of Single Tender Action since there appears to be no record of any competitive process. The Same Contractor, under a different name, then bid for a contract to introduce Resource Accounting and Budgeting to the Highways Agency sometime in 1998. Around the same time, a PCS member working in Internal Audit raised concerns about the propriety of the project with senior Highways Agency management. Despite these concerns the Consultant was successful with bid. The PCS Member was removed from his post and ultimately transferred out of the Agency. The Project proceeded until the contract was terminated on 31 October 2000.

  What concerns PCS most about this is that the consultant involved spent over five years at a cost estimated to be £13 million with the objective of introducing robust Resource Accounting Systems to the Agency. A New Project "Strategic Financial Management" has now been put in place involving new Consultants because the original project failed to deliver its objectives. It is estimated that this new project will cost a further £9 million. This means that the introduction of Resource Accounting to the Agency will have cost a total of around £22 million and taken around seven years yet it is still not clear that it will be successful. PCS believe that this does not compare well with other Government Department's and Agencies and is worthy of a detailed investigation.

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