Examination of Witnesses (Questions 140-159)
MR NICK
MACPHERSON, MR
JON THOMPSON
AND MS
GILL RIDER
28 APRIL 2008
Q140 Mr Dunne: What sort of threshold
do you have in mind?
Mr Macpherson: I suppose one measure
is whether there is an accounting officer. Ultimately the Permanent
Secretary of the Treasury appoints all Accounting Officers, so
that would be a very visible manifestation of the Treasury's role.
Q141 Mr Dunne: When, for example,
the Olympic Board was established—and we recently reported
on the Olympic budget being more than double its original estimate—what
role did the Treasury play, firstly in assessing the initial budget
and, secondly, in setting the resulting budget from March 2007?
Mr Macpherson: The Olympics is
an issue of huge interest to the Treasury, largely because it
involves a very big sum of money. We have a big interest in understanding
the costs and indeed it was as a result of our pressure that the
DCMS was required to incorporate quite a big contingency margin
in the Olympic project. That is a difficult one because, if you
give them a contingency then everybody wants to spend it. On the
other hand, if you do not give them a contingency, then they may
well come back to call on us at an inconvenient time.
Q142 Mr Dunne: There was no contingency
in the original bid was there?
Mr Macpherson: I think there was,
but it was not big enough. There are lessons both for the departments
but also for us the next time a big sporting event is a contingent
possibility. Also, the Treasury has latterly become quite involved
in governance. We obviously have a huge interest in the Olympic
governance being conducive to good financial management, so we
have actually been quite active in pressing both for having a
professional finance director of this project, but also getting
the accountabilities right. It is not just the Department for
Culture which is putting money into this; a lot of other departments
are. DCMS by its nature is a small department. It is a very good
example of a risk-based approach where we are taking a very active
interest in that.
Q143 Mr Dunne: Does that active interest
extend to receiving copies of the monthly board pack, for example?
Mr Macpherson: I cannot tell you
off hand but I can let you have a note on that. I know the Treasury
is very actively involved, whilst at the same time not trying
to second guess every twist and turn.
Q144 Mr Dunne: Do you have officials
in your department who have regular contact with the Board?
Mr Macpherson: Yes, I have officials
whose job is basically to live, eat and drink the Olympics; that
is their job.
Q145 Mr Dunne: Could you provide
us with a note of what their findings have been on the quality
of financial information which is provided up to Olympic Board
level?[8]
When we discussed this last autumn it seemed to be very light
indeed.
Mr Macpherson: Certainly.
Q146 Mr Dunne: That would be instructive
and might help. You referred earlier in your evidence to the departmental
capability review and I remember when you came in front of the
Treasury Select Committee and discussed that. One of the things
which came out of that hearing was that there was a question mark
over the experience of your own staff in the Treasury, not as
to their financial qualifications, which is the thrust of this
inquiry, but as to their longevity in the role and your ability
to retain experienced personnel within the Treasury. Could you
comment on how that has developed over the last year since this
was brought to your attention?
Mr Macpherson: This is an issue
of big interest to me and a fair degree of concern. The Treasury's
business model has always been based on it being a small department;
it has also been a relatively youthful department. In many ways
that is a good thing. It means you have people who are up to date
with recent thinking and will, especially if they have ambitions
to make large amounts of money, work in the Treasury for a few
years and then leave. That is good. I do not want to create a
structure where it is all frozen and nobody ever moves. However,
just changing the balance at the margin of encouraging a culture
where people do jobs for longer actually potentially yields quite
a big return. We are actively addressing that. We are trying to
change the incentives within the department in terms of the sort
of things you need to do to get promoted in the organisation and
we are channelling a bit of money within our tight pay envelope
to incentivise people to stay longer in post. We have had some
success. The average time in post has gone up over the last year.
Q147 Mr Dunne: Could you remind this
Committee what that was? Am I right in remembering that only 50%
of Treasury officials had more than three years' experience in
the Treasury?
Mr Macpherson: There are two issues
here. One is how long you have been in the Treasury. The other
issue is how much you have been in your current post. It is how
long you have been in your current post which is most important
to me.
Q148 Mr Dunne: Could you just answer
my question first and then explain?
Mr Macpherson: I do not have the
figures in front of me but I can let you have those.[9]
Your figure sounds broadly in the right ballpark.
Q149 Mr Dunne: Perhaps you could also
let us know how many of your officials had prior experience of
a banking crisis before the crisis which hit this summer.[10]
Mr Macpherson: Yes, I think I
let the Treasury Select Committee have that.
Q150 Mr Dunne: I am sure this Committee
would also be interested.
Mr Macpherson: I am very happy
to share it with you.
Q151 Mr Dunne: I am interested on
page 15 of the NAO Report, paragraph 2.6, that it refers to 32
ministers having attended financial and risk seminars since 2005.
Are you aware whether any of the current Treasury ministers have
attended a financial and risk seminar?
Mr Macpherson: I could not tell
you off hand?
Q152 Mr Dunne: Could you include
that in your note to the Committee?[11]
Mr Macpherson: Certainly.
Q153 Mr Dunne: My last questions
relate to page 13, Table 3, which touches on initiatives for the
future. In the work you have been doing in the Treasury to align
budgets, estimates and accounts, in the recent Budget it was announced
that the intention of having a new system of accounting is going
to be deferred for another year on the strength of two departments
in particular being unable to achieve the target which had been
set them and those departments, from memory, were the Department
of Health and the Ministry of Defence. Do you see any correlation
between the financial training or financial capabilities within
those departments and missing that target?
Mr Macpherson: I do not think
so. Actually I attribute that to the complexity of their organisations;
in particular with the Department of Health, just how many trusts
and bodies they are having to deal with.
Chairman: My Clerk tells me that congratulations
are in order Mr Dunne because your father has just been made a
Knight of the Garter. Is that correct?
Mr Dunne: That is correct.
Chairman: The Committee congratulates
him.
Q154 Mr Williams: I do not think
I was the only member of the Committee who was surprised to read
that the MoD's internal training is actually the only course within
Government that meets the professional skills for Government's
programme standards. You will understand that we do not always
associate them with financial accuracy. Why are the others finding
it so difficult to get there and do you grade them in any way?
Could you give us a list of them in order of level of attainment?
Probably not. I do not expect it but I am just asking.
Mr Macpherson: This is not a pass
or fail thing. I cannot give you a league table. The point I make
on this is that the MoD have their own in-house course. The rest
of Government on the whole are happy to use the ones provided
by the Cabinet Office/Treasury. The implication that lots of other
departments have courses but they are too useless for anybody
to accredit may be wrong, but I will give you chapter and verse
on that.
Q155 Mr Williams: Is that a criticism
of the other courses?
Mr Macpherson: No. The MoD tend
to do things differently, often because they are also serving
the Armed Forces who are covered by them.
Ms Rider: Yes, the military as
well.
Q156 Mr Williams: Is there any Treasury
guidance for individual departments on levels of attainment or
in priority of attaining this level of satisfaction?
Mr Macpherson: I do not know whether
there is any guidance. Certainly the Treasury has views on what
makes a good course and what it should cover and we would let
departments know in accrediting their courses. If it would be
helpful, I could give you a note on what, in our view, determines
a good course.[12]
Q157 Mr Williams: Are the courses assessed
annually? Do you have some system of monitoring whether they are
individually improving?
Mr Macpherson: Yes.
Q158 Mr Williams: That comes to the
suggestions that there may be some tier of good, bad and poor.
Mr Macpherson: What I should say
is that the Treasury's participation in providing courses and
assessing courses is relatively new. This reflects Mary Keegan's
influence. We have not quite got into a cycle yet of re-accrediting
courses, but I can let you know precisely when we are going to
be doing it again.
Q159 Mr Williams: If it is that bad
in the centre, what is it like out in the quango sticks? Each
department has a whole range of agencies and subsidiary bodies.
What about training in financial control and financial ability
at that level? Although they are small, collectively they control
an enormous amount of money. Is there any monitoring of that?
Mr Macpherson: I think there is
but Jon has some quangos associated with his department.
Mr Thompson: Yes and in those
cases all those individuals can access the National School of
Government offer which is accredited. So you can apply and go
on those courses if you work in an NDPB and so on. We also have
an active network of those who are qualified and those who are
training towards a qualification to which we provide different
kinds of support so that they are clear about the access they
can get and where they can get it. The answer to the question
about the MoD is that it is very much driven by the business need
of the Ministry of Defence. Their sheer size and the numbers of
qualified accountants and those training mean that it is appropriate
for them to run their own course. In my case, because the numbers
are much smaller, it is easier for me to use the National School
of Government. That essentially would be one of the differences.
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