Conclusions and recommendations
1. The
total of excesses in 2005-06 was significant, with a resource
excess of £795.9 million and a cash excess of £5.1 million.
The causes were:
i. the NHS Pension Scheme, where the Scheme Managers
did not accurately budget for their appropriations in aid and
also incurred significantly higher costs than expected on a range
of notional items of expenditure;
ii. the Assets Recovery Agency[1],
a Non-Ministerial Department, which did not fully consider the
impact of changes to its authorising legislation or the way in
which it received funding for its activities from the Home Office;
and
iii. the House of Commons Members Account, where
the Department of Finance and Administration at the House of Commons
did not allow sufficient Estimate cover for the value of the service
cost[2] related to the
Parliamentary Contributory Pension Fund and for increases in the
level of Members' expense claims due to changes in the allowance
structure.
2. In
each of the three cases above, the bodies could have sought provision
for at least some of the excess. Each body has reviewed its operations
to identify areas of weakness and has taken steps to improve its
resource budgeting. In considering the wider lessons to be learned,
vote-funded bodies should:
i. assess fully the implications of changes in
their authorising legislation or operating environment and consult
the Treasury or other relevant departments to ensure that the
implications of such changes are fully understood;
ii. assess the impact of changes in the valuation
of their managed assets and liabilities, at the earliest opportunity,
in order to determine any associated costs, to minimise the risk
of an excess; and
iii. review carefully the level of appropriations
in aid, resources and cash they require in time to seek a Supplementary
Estimate, if necessary.
3. The
Treasury should bring these points to the attention of departments
and other vote-funded bodies.
4. We recommend that
Parliament provides the necessary amount by means of an Excess
Vote, as set out in Figure 1.
1 On 11 January 2007 the Home Secretary announced that
the asset recovery functions of the Assets Recovery Agency would,
subject to parliamentary approval, transfer to the Serious Organised
Crime Agency and the training functions would transfer to the
new National Policing Improvement Agency, with effect from April
2008 at the earliest. Back
2
The service cost is the increase in the value of the pension liability
due to in-year employment. Back
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