House of Commons - Public Accounts

Select Committee on Public Accounts Fortieth Report

2 Resources to deliver the Department's work

8. Lord Haskins's Review,[10] published in October 2003, recommended that the Department should define more clearly the difference between policy and delivery functions, and devolve more of its responsibilities to local and regional organisations. At October 2007, the Department had 31 delivery bodies and 27 advisory and tribunal non departmental public bodies (Figure 2). Over two-fifths of the Department's resources were used by delivery bodies. The Department's nine executive agencies, whose responsibilities include making rural payments to farmers and carrying out rural inspections, are constitutionally part of the Department, but are run semi-independently. The Department's non-departmental public bodies were established independently to allow them to question existing policy and to provide objective advice in developing new policies.[11] Figure 2: The 'Family' of organisations sponsored by the Department for Environment, Food and Rural Affairs

DELIVERY BODY	FUNDING RECEIVED IN 2006-07
Nine executive agencies	£657 million
Nine executive non-departmental public bodies	£985 million
Six levy funded boards	—
Two public corporations	£56 million for British Waterways. The Covent Garden Market Authority generated a surplus without any subsidy from the Department
Five private sector companies	Over £150 million
In addition, the Department sponsored 27 advisory and tribunal non-executive non-departmental public bodies, most of which employed one or two people.

Source: C&AG's Report, paragraph 2.2 and appendix 1

9. The effective management of budgets and expenditure depends to a large degree upon the Department's oversight of its 'family'. Each organisation sponsored by the Department has a clearly defined purpose, but varies in the extent to which they adopt good financial practices. For example, nine out of 19 finance directors reported that their organisation had not developed alternative budgets based on different assumptions to provide senior managers with information on the financial implications of budgetary decisions when setting their 2008-09 budgets. Only five reported that their 2007-08 budgets had been fully profiled over each month of the year to enable monitoring of progress, and different approaches were taken to challenging variances between budgets and actual income and expenditure.[12]

10. The level of departmental scrutiny of its delivery bodies depended upon their maturity and organisational risks. The Department had introduced a policy of 'earned autonomy' whereby long established, well run organisations were given greater opportunities to operate independently, albeit within a standard framework of financial information and reporting. More recently established bodies, such as the Marine and Fisheries Agency, had been managed directly by the Department until their systems and staff were sufficiently experienced. The Department was also developing a standard framework to scrutinise the performance of each organisation and to compare cost effectiveness across its delivery bodies.[13]

11. In April 2007, the Department established a Shared Services Organisation to provide administrative support to its 'family' organisations. The shared services approach was expected to deliver economies of scale. The largest benefits would come from migrating to the shared services centre those organisations with large transactional volumes which would otherwise need to upgrade their financial systems. In its first year of operation, the shared services organisation had focused on the stabilisation and improvement of services to its initial customers, including the Department, the Animal Health Agency and Natural England. The Department was examining which delivery body should migrate next to the shared services. All executive agencies are expected to utilise the Department's Shared Services Organisation unless a better value alternative can be found. The Department was still to explore the feasibility of opening the service to other organisations, such as the National Forest Company or the Horticultural Development Council.[14]

12. Further efficiency savings would depend upon rationalisation of the number of organisations sponsored by the Department. Some reductions had followed the Haskins Review and, in September 2007, the Department announced that five levy boards would merge into a single body from April 2008. A further review by the Department was underway to explore the scope to rationalise the number of bodies involved in tackling climate change, including the Carbon Trust, Energy Savings Trust and WRAP.[15]

10 DEFRA, Rural delivery review. A report on the delivery of government policies in rural England, 2003 Back



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