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Select Committee on Public Accounts Minutes of Evidence


Supplementary Memorandum by HM Treasury, Cabinet Office and Department for Children, Schools and Families

Question 30 (Mr Touhig):  Progress on the extent to which departments provide boards with a monthly analysis of expenditure by operational target

  As the committee has pointed out, only 28% of departments responding to the survey carried out by the National Audit Office stated that they were already providing board members with an analysis of expenditure against operational targets on a monthly basis. It is not possible to replicate the survey methodology used by the NAO and provide an updated figure on a consistent basis in time for this note. However, in the 2007 Comprehensive Spending Review, both budget allocations and Departmental Strategic Objectives (DSOs)—departments' high level performance objectives that these allocations finance—were negotiated and agreed together, and the clear direction of travel set out in CSR07 is that departments will be expected to develop and then use robust methodologies for attributing costs on a full accruals basis to their DSOs and to their key component outputs. Initial work includes NAO sponsored pilots in DfID and DIUS. The lessons learnt from this exercise will help departments develop the right methodologies for the costing of their own DSOs. The Government is working with the NAO and pilot departments to ensure that the work of other departments in this area can be informed by their experience and a resulting analysis of the lessons to be learnt.

  The Government believes that the measures introduced in CSR07 will ensure that, in future, increasing numbers of departmental boards will receive fully joined up financial and performance information on a much more regular basis than now, since departments will be expected to report to their boards on the basis of such breakdowns of expenditure. This is crucial for ensuring that decisions over allocations and the monitoring of costs and performance are made on a sound basis. The Government welcomes the Committee's interest in this important area and looks forward to further discussions during the CSR period.

Question 34 (Mr Touhig):  Recent trends in revenue from asset sales

  The Government published public sector receipts from sales of assets in Table 5.7 of Public Expenditure Statistical Analyses 2008:

    http://www.hm-treasury.gov.uk/economic_data_and_tools/finance_spending_statistics/pes_publications/pespub_pesa08.cfm#pesa

Question 93 (Nigel Griffiths):  Cross-Whitehall agreement that any proposals should include costings agreed by HMT

  A copy of guidance on policy proposals with expenditure implications is attached to this Memorandum.[13] This guidance is not new and is taken from a number of currently published sources such as Managing Public Money and the Consolidated Budgeting Guidance. This does not reflect an update of the Ministerial Code.

Question 1l8 (Mr Davidson):  Departments' completions of tier 1 "Finance Skills for All" training

  The figures in the following tables show, for main and smaller departments, the number of online completions of tier 1 "Finance Skills for All" training up to 1 May 2008, provided through the National School for Government Management Reporting facility. Each department has access to detailed information for all those registering and completing the modules. At the time HM Treasury developed the e-learning modules, the Ministry of Defence was the only department with its own tier 1 e-based resource management learning system of an equivalent level to that developed by the Treasury. The numbers for the MoD equivalent (Certificate in Resource Management) are shown for completeness. HM Treasury does not have information on equivalent tier 1 training that may have been developed subsequently.

FINANCE SKILLS FOR ALL COMPLETED FOUNDATION UP TO 1 MAY 2008 Main Departments


Department Name
CompletionsSCSGrade 6/7 Others


Cabinet Office
2 011
Department for Communities and Local Government 2418 15
Department for Culture, Media and Sport 6033
Department for Children, Schools and Families 100 1
Department for Education and Skills*52 41731
Department for Environment, Food and Rural Affairs 31210 19
Department for International Development 1022 6
Department for Transport 327 14012958
Department for Work and Pensions 55 41041
Department of Health30 2820
Department for Business, Enterprise and Regulatory Reform 101 0
Department for Innovation, University and Skills 000 0
Department of Trade and Industry*42 6279
Foreign and Commonwealth Office115 264643
HM Revenue & Customs20 3413
HM Treasury273 915
Home Office222 812
Ministry of Defence6 006
Ministry of Defence (Certificate in Resource Management) 7,029132704 6,193
Ministry of Justice19 1612
Northern Ireland Office14 158


*   These figures are pre July 2007 Machinery of Government changes.


FINANCE SKILLS FOR ALL COMPLETED FOUNDATION UP TO 1 MAY 2008 Smaller Departments
Department NameCompletions SCSGrade 6/7 Others
Assets Recovery Agency1 001
Central Office of lnformation 0 000
Charity Commission0 000
ECGD 00 00
Food Standards Agency 9 018
Government Actuaries Department 0 000
Government Communications Headquarters—GCHQ 571227 18
Health & Safety Executive 1 001
Land Registry 10 01
Legal Secretariat to the Law Officers 1001
National Archives 0 000
National Savings and Investments 0 000
National School of Government 3 111
Office for National Statistics 11 245
Office of Fair Trading0 000
Office of Her Majesty's Chief Inspector Schools (OFSTED) 510 4
Office of the Parliamentary Commissioner for Administration and Health Service Commissioner for England 110 0
Office of the Rail Regulator 1 010
OFGEM 00 00
Ordnance Survey 00 00
Postal Service Commission 1 010
Revenue and Customs Prosecution Office 0000
Royal Mint 10 01
Serious Fraud Office 1 010
The Crown Prosecution Service 6 042
Treasury Solicitor's Dept 36 21717
UK Trade & Investment 4 004
Water Service Regulation Authority 0 000


Questions 127-8 (Mr Davidson):  What is the educational background of the top 20 civil servants in HM Treasury, what is the Treasury doing to increase diversity and is this being successful?

  The Treasury does not routinely hold this information for individual members of staff. Disclosure of this information is a matter for the individual concerned.

  The following information is available in relation to the Executive Members of the Treasury Board.


Nicholas Macpherson
BA, Philosophy, Politics and Economics, Oxford; MSc Economics, University College, London


John Kingman
BA Modem History, Oxford, World Fellow, Yale 2004


Dave Ramsden
BA Economics and Politics, Oxford; MSc Economics, LSE


Mark Neale
BA, Modem History, Oxford


Tom Scholar
MA History, Cambridge; MSc Economics, LSE


Stephen Pickford
BA Economics, Cambridge; MA Economics, University of British Columbia


Louise Tulett
ClPFA, 1989, Southampton IHE


Nigel Smith
BA Business, Bristol Polytechnic; General Management Course 120, Henley Management College



  Over the past 3 years, 2005 to 2008, the Treasury has actively participated in the Cabinet Office's 10 Point Plan on Diversity which committed all Whitehall departments to tackling the under-representation of women, people from ethnic minority background and people with disabilities in the Senior Civil Service and feeder grades.

  We have made some good progress on improving the diversity of the feeder grades (Range D and E) in particular. This will ensure there is a pipeline of talent that will feed into the SCS over the next few years and thereby improve the diversity of the SCS. However, the number of employees in the SCS is small (109 people as at April 2008), so the movement of one or two individuals can have a disproportionate impact upon progress towards meeting the targets:

    —  As at 31 March 2008 women made up 36.0% of range Es and 41.6% of Range Ds and the Treasury is on track to meet targets of 40% at each grade. Women made up 34.9% of the SCS (target 37%) with women in 20% of top management posts.

    —  The proportion of staff from ethnic minority backgrounds is 6.4% (target 14%) at Range E and 2.8% in the SCS (target 4%). However we have already passed our target (of 14%) for the representation of people from ethnic minority backgrounds at Range D (now 15.8% March 2008).

    —  There has been some very encouraging progress on the representation of disabled people in the feeder grades (this may be due partly to the improved recording procedures that have been put in place in the last year). The target is 5% and at March 2008 the representation of disabled people at range E is 4.4% and at range D 4.6%. Disabled people made up 1.8% of staff in the SCS (target 3.2%).

  The Treasury is seeking to address under representation in a number of ways including:

    —  Developing stronger links to Universities with Diverse Student Populations Outreach.

    —  Launching a Diversity Tool Kit.

    —  Mentoring women in the SCS.

    —  Promoting diversity awareness through a series ofevents and networks.

    —  Closer working with Other Govenunent Departments' Diversity Groups.

    —  Mainstreaming diversity.

Question 129 (Mr Davidson) and Question 138. (Chairman):  How many senior civil servants have left the civil service as a result of poor performance, including any instances where people have gone as a result of PAC pressure?

  The process of managing out poor performers is necessarily a sensitive one. In many cases, poor performers will choose to resign and pursue careers elsewhere rather than be dismissed. For that reason data is limited. However, the Office for National Statistics collects aggregate data on civil service leavers and dismissals. Between 2003 and 2005, 2,560 civil servants were dismissed on grounds of "inefficiency", representing 2.6% of the total population of leavers during that period.

  In the case of the senior civil service (SCS), if we look at the correlation between performance and leavers, proportionately more poor performers at SCS level left the civil service than those in other performance tranches. In 2007, 6% of SCS were considered to have significant development needs, 17% of those who resigned are known to have been from this performance tranche. Steps have also been taken to improve performance at the departmental level. For example, the Home Office has undergone significant changes to its leadership in recent times. In his evidence to the Public Administration Select Committee in November 2007, the Cabinet Secretary noted that 28 of the 50 directors within the Home Office were new and that there had been 17 exits.

  We do not have information on the impact of the PAC on resignations or career progression of senior staff.

Questions 143-5 (Mr Dunne):  Does the Treasury receive the monthly board pack submitted to the Olympics board, and what is the Treasury's assessment of the quality of the financial information?

  The Chancellor of the Exchequer is Chair of the Ministerial Funders Group, which is responsible for controlling access to the contingency funding available. As such, on behalf of the Chancellor of the Exchequer, Treasury officials are party to all discussions on managing the public sector funding package for the Olympics.

  HM Treasury receives monthly financial and project information from the Olympic Delivery Authority (ODA) and regularly discusses the position with the Government Olympic Executive (GOE) in DCMS, which acts as client on behalf of the Government. HM Treasury is also heavily involved in the process of quarterly review of the programme's financial position, risk assessment and delivery performance, which the GOE leads on behalf of government. This process forms the basis of the information that is made available to inform Parliament and the public on progress of the Olympics, through, for example, the GOE Annual Report and the half-yearly updates and quarterly briefings provided to opposition Spokesmen and Committee Chairs by the GOE.

  The financial information provided by the ODA supported the agreement of the DCMS Main Estimate submitted to Parliament for the last financial year. Since that time, detailed cash flow estimates have been developed and agreements are in place between all of the funders of the Olympics, supported by HM Treasury, to ensure the funding available matches the projected profile of spend. GOE and HM Treasury continue to work with ODA to improve information further. To support this, Treasury officials hosted a half-day training for ODA and GOE officials covering public spending and financial management disciplines as applied in government. GOE are holding a workshop on ODA reporting to drive further improvement, in which HM Treasury will actively participate.

Questions 146-8 (Mr Dunne):  What is the average time spent in post in HM Treasury, and the average time spent in HM Treasury?

  As of 31 March 2008, staff have, on average, been in their current posts for 1.6 years. This includes staff on time-limited loans and secondments to the Treasury. Current employees have been in the Treasury on average for 6.4 years.

Questions 149-150. (Mr Dunne):  Which Treasury officials have prior banking experience?

  Nicholas Macpherson, Pennanent Secretary, worked on the Barings Bank crisis and resolution, as Principal Private Secretary to the Rt Hon Kenneth Clarke QC MP, in 1995.

MANAGING DIRECTORS

    —  John Kingman, Second Permanent Secretary, and Managing Director of Public Services and Growth, was an Executive Director of the European Investment Bank from 2003-06. He also wrote extensively on banking sector issues for the Financial Times Lex column.

    —  Stephen Pickford, Managing Director of International Finance, was an Executive Director of the World Bank from 1998-2001 and has been a Director of the European Investment Back since 2007.

    —  Tom Scholar is a Non Executive Director of Northern Rock and was an Executive Director of the World Bank from 2001 to 2007.

FINANCIAL SERVICES/NORTHERN ROCK TEAM

  Experience in the Financial Services/Northem Rock Team includes:

    —  a Senior Civil Servant who worked for three years in the City for Natwest and Prudential Groups (including a period working for Egg) and as a consultant for HBOS Group 2; and

    —  a Senior Civil Servant who worked for two years as an economist in fund management, plus 12 years as an economist covering fixed income and currency markets in investment banking.

  Staff experience in the broader International Finance and Macroeconomics and Fiscal Policy Directorates includes:.

    —  a former Managing Director of the Deutsche Bank Group;

    —  a current Alternate Director of the European Bank for Reconstruction and Development; and

    —  a Qualified Chartered Accountant with over 15 years of post-qualification banking experience prior to joining the Treasury, including five years as Finance Director of Close Brothers Ltd.2

Questions l51-2 (Mr Dunne):  Have any current Treasury Ministers attended a financial risk seminar?

  Two of the Ministers who attended a financial and risk seminar in April 2006 are now Treasury Ministers.

Question 156 (Mr Williams):  What is the Treasury's approach to accreditation of financial management training courses?

  HM Treasury has a light touch approach on accreditation. This is because the tier 1-3 training material is available free of charge to all departments and tier 2-3 is also freely available to external providers of finance training to departments. In addition, HM Treasury has specified the 22 knowledge traits which underpin the Professional Skills for Government core finance skills. Again, these knowledge traits are freely available and should be used in the design of finance based training. Departments are encouraged to use the training material and adapt it to meet the specific needs of their departments by, for example, substituting case studies with real life departmental examples. The National School of Government updates the tier 1-2 material on an annual basis and provides on-going quality assurance of content. For practical reasons, only the tier 1-3 material is endorsed by the Head of the Government Finance Profession, as it was specifically commissioned by the Cabinet Office.

Question 171 (Mr Bacon):  Why is financial management not a mandatory element of the performance framework for the whole of the SCS, and will the guidance be updated to make financial management a mandatory element?

  All permanent secretaries have agreed to apply a single, common performance management framework across the senior civil service (SCS). The framework sets out what is expected from departments, it is mandatory in its effect. The framework and assessment process is detailed in the Cabinet Office document "Performance Management Guidance 2008". The Guidance allows departments limited discretion to reflect the particular challenges they face—for example, if a department is placing a particular focus on improving the quality of its financial management or leadership, it may want to emphasise this in the overall assessment process. The guidance also allows limited flexibility at the individual level. For example, in the case of financial management, it may be inappropriate to place a significant focus on performance or capability in this area if an individual does not have financial responsibilities.



A bank and authorised under the Financial Services and Markets Act 2004. It is regulated by the Financial Services Authority and is the parent company of a group providing a range of banking services including specialist financing, asset financing, treasury and deposit taking. Close Brothers Ltd is wholly owned by Close Brothers Group plc which itself is listed on the London Stock Exchange.




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Prepared 9 September 2008