Select Committee on Liaison Second Report

List of recommendations


1.  The current problem is not the House's powers but the willingness and (even more) the ability of the House and its Members to scrutinise financial matters in the degree of detail required to hold the Government to account. (Paragraph 8)

2.  We define the purpose of financial scrutiny as follows:

  • to make the Government's financial decisions transparent, including the relationship between its stated priorities and its funding decisions;
  • to engage bodies and individuals outside Parliament and give them the opportunity to comment;
  • to have the opportunity to influence the Government's financial decisions;
  • to hold the Government, individual Departments and other public bodies to account for their financial decisions and financial management; and thereby
  • to contribute to an improvement in the quality of Departments' financial decisions and management and improved value for money in public services. (Paragraph 9)

3.  Financial scrutiny is not a narrow exercise of poring over figures on a balance sheet but is about ensuring the effective management of finite resources to achieve purposes such as better hospitals or better-equipped troops. Better financial scrutiny would have advantages for the Government as well as for the public and for Parliament. (Paragraph 10)

4.  Knowledge of the Department's finances should underlie and inform much of a departmental select committee's activity, including examination of policy and administration, and knowledge of the Government's finances should similarly underlie and inform much of the House's own work. (Paragraph 11)

5.  The reason why we question the ability at present of Members to hold the Government to account for its financial decisions is that, as just indicated, several of the fundamental requirements for doing so are missing. These missing requirements are:

  • a financial system which is coherently organised and comprehensible;
  • provision to Parliament of information suited to the purpose set out in paragraph 9 above; and
  • the opportunity to debate on the floor of the House specific items of expenditure or the objectives of expenditure and if necessary to vote on them. (Paragraph 13)

History of financial scrutiny

6.  There was no golden age in which the House rigorously scrutinised every line of the Government's Estimates and accounts and routinely rejected or reduced requests for funding. (Paragraph 26)

7.  Neither scrutiny on the floor of the House independently of select committees nor scrutiny by select committees without any link to proceedings on the floor is likely to be as effective as combining detailed work by select committees with debate on matters of particular interest on the floor, for example through select committees choosing financial matters for debate. (Paragraph 26)

The Government's financial system

8.  The overall shape of the Government's finances and changes in it are matters which could and should be presented comprehensibly, like the overall finances of any other organisation. (Paragraph 32)

9.  We regard removing complexity from the Government's financial system as fundamental to improving financial scrutiny, as well as to improving financial management in Departments. The Alignment Project offers the possibility of achieving this. In revising the basis of Parliament's financial control and the system of reporting to Parliament, it is potentially a historic development in the long story of Parliament's scrutiny of government finances. (Paragraph 38)

10.  We emphasise the magnitude of the prize which is potentially available: a comprehensible and coherent system of planning, authorising and reporting government expenditure, making it possible for the House and select committees to scrutinise the Government's finances far more effectively. We commend the Alignment Project to the House. (Paragraph 40)

Financial reporting

11.  We recommend that each Department publish an annual statement in plain English about its internal financial planning processes and control mechanisms. (Paragraph 52)

12.  We recommend that the management letters provided to Departments by the National Audit Office identifying areas of significant weakness in financial control be published by Departments. (Paragraph 52)

13.  We believe that Departments should move towards a system where data in their electronic management accounting and information systems are accessible to Members and Members are able to interrogate that data. (Paragraph 53)

14.  We recommend that provisions similar to those relating to the NAO be made in PFI contracts to enable the Government to pass information to select committees. It is inherent in the House's right to control expenditure that the House and select committees should have access to sufficient information about PFI contracts to make possible an assessment of whether they offer value for money, of the extent to which public bodies are locked into long-term commitments and of the extent to which risk is transferred to the private sector or retained within the public sector. (Paragraph 56)

15.  We invite the Treasury to enter into dialogue with us about how our proposals concerning financial reporting should be implemented, and suggest that testing them first on a single Department or several Departments may be the best way forward. (Paragraph 61)

Making financial scrutiny worthwhile

16.  In future Spending Reviews the Treasury and other Departments should publish information about the framework within which the negotiations are taking place, and this should include the draft Public Service Agreements and Departmental Strategic Objectives setting out what the spending is intended to achieve. We note the Treasury Committee's recommendation, made before the results of the CSR were published and not accepted by the Government, that each Department should inform the relevant select committee about "the Government's emerging views on those past objectives which have been achieved and those supporting programmes from which spending is potentially available for reallocation", and we endorse it. (Paragraph 66?)

17.  It is absurd that the outcome of the Comprehensive Spending Review was discussed for only an hour and a half in the Chamber, and makes a mockery of the House's right to scrutinise government expenditure. We recommend that the results of Spending Reviews be the subject of a day's debate on the floor of the House some weeks following the initial announcement, and that the timing be such that select committees can report on the outcome in order to inform that debate. (Paragraph 66?)

18.  Following the completion of Spending Reviews, select committees should consider examining how the Department is allocating its spending total across its various programmes. This will depend on Departments making the necessary information available earlier, well before the start in April of the Spending review period, instead of committees having to wait for the next Departmental Annual Report in May. (Paragraph 66?)

19.  We welcome the fact that the NAO is increasingly assisting select committees other than the PAC, and we are keen to see this work develop further. (Paragraph 71)

20.  We suggest that the opportunities for debating Departments' future plans, including spending plans and Estimates, be considered by the Modernisation Committee together, with the aim of devising a coherent set of opportunities for debate. (Paragraph 79)

21.  We consider it essential that the House take back the right to debate and vote on individual government programmes or items of expenditure. (Paragraph 80)

22.  We recommend that it should be permissible to put forward "opinion of the House" motions proposing increases in future expenditure or transfers in the future between budgets, in addition to motions proposing reductions in expenditure. (Paragraph 82)

23.  We recommend that the Government provide an explanatory memorandum for each Estimates Day debate explaining how the figures in the Estimate relate to the subject under discussion. (Paragraph 83)

24.  For far too long the House has shirked the task of providing itself with the means to carry out financial scrutiny effectively, and it is time that the House was more assertive in this area. (Paragraph 89)

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