List of recommendations
Introduction
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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