Select Committee on Public Accounts Twenty-Fifth Report



Departments and their agencies spend some £421 billion a year and are responsible for assets and liabilities respectively of £334 billion and £112 billion. Since 1998 a number of HM Treasury-led changes have been implemented to help departments make better use of their resources and, in turn, to improve the quality of services they deliver. The changes include Resource Accounting and Budgeting (preparing budgets and accounts on a commercial style accruals basis), three-year budgets, public service agreements and flexibility to carry forward unspent resources at the end of the year.

Resource accounting and budgeting provides for the first time a sophisticated means for departments to identify on a consistent basis the full costs of their activities, rather than knowing simply what is paid out in cash. If used effectively the new arrangements provide departments with the information to determine the relative efficiency of different activities and to identify areas of waste or low productivity. A 1% improvement in the utilisation of the total £1,447 billion allocated to departments over the next three years would save nearly £15 billion, significantly contributing to the delivery of the efficiency savings now required from departments. The recommendations below detail the actions that departments now need to take, if they are to achieve greater efficiency and improved services.

On the basis of a Report by the Comptroller and Auditor General we took evidence from HM Treasury, the Highways Agency, the Housing Corporation, the Teacher Training Agency and the Serious Fraud Office on how the new initiatives were working in practice, the areas where departments need to do more to realise the benefits, and the role of the Treasury in achieving this.[1]

1   C&AG's Report, Managing resources to deliver better public services (HC 61-1, Session 2003-04) Back

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