Administration and expenditure of the Chancellor's departments, 2008-09 - Treasury Contents


An Extraordinary Year

HM Treasury and its associated bodies faced extraordinary challenges during 2008-09. We draw out common themes, including the extent to which they have had to take on new activity and/or greatly increase the volume of normal activity. We consider how successful they have been, and the cost in terms of pressure on people and other work. We conclude that it is very difficult to draw final conclusions regarding the level of success that should be attributed to the Treasury and its associated bodies for 2008-09—too much remains unfinished business, including HM Treasury's financial stability interventions and its relationship with UK Financial Investments Ltd (UKFI). We recommend that the Government considers whether the formal terms of the relationship between the Treasury and UKFI need some redefinition in the light of experience.

The Treasury Group's performance against objectives

We assess the Treasury Group's performance against its two Departmental Strategic Objectives. We highlight that only 22% of bodies required to report monthly in-year figures to the Treasury met the standards for timeliness and accuracy, and look forward to seeing a significant improvement next year. We recommend that the Treasury reflects on the terminology used to assess its supporting low inflation indicator as "met-ongoing" appears disingenuous when the target was missed in eleven months out of twelve. We also conclude, in line with our earlier reports, that the Government will fall well short of its Public Service Agreement target to halve the number of children living in poverty by 2010-11.

HM Revenue and Customs

Performance at HMRC remains mixed with considerable room for improvement, and considerable challenges remain to be overcome if HMRC is to achieve this improvement. We express concern at the absence of milestone reporting, and urge HMRC to provide more data in future. Noting a 7% increase in total recorded customer complaints, we urge HMRC to reflect on whether customer experiences of HMRC are yet improving as much as their summary of 'strong progress' implies. Highlighting the dire results for HMRC of a February 2009 cross-Government staff survey, we express deep concern about employee engagement at HMRC and its effect on performance. We recommend that HMRC's management re-double their efforts to re-engage with their workforce, and publish a clear and detailed plan to provide focus and direction to their actions. HMRC has been slow to consider the possibility that the terms of its contract with Mapeley could put the latter under immense financial strain. We remain to be convinced that sufficient risk management, including a clear and mutually beneficial way forward, is yet in place.

National Savings and Investments

NS&I was a 'safe haven' for savings at the height of the economic crisis, and successfully processed a record amount of new business. These exceptional circumstances posed a dilemma for NS&I which has to tread a fine line between providing a good deal for its customers and supporting Government macro-economic policy. As extremely testing economic times are by no means at an end, it is likely that NS&I's particular role and priorities will continue to come under scrutiny. NS&I expects to reduce its dependence upon the Post Office. We recommend that the Government considers whether there is a wider public interest in retaining stronger links between the Post Office and NS&I.

The Royal Mint

Profits and average rate of return dropped in 2008-09 compared with 2007-08. We note that the rate of return remains relatively healthy. However, the Royal Mint only returned to profitability in 2006-07, and positive future performance—now as a Government-owned company—cannot be taken for granted.

Other associated bodies

Having been told previously that Ministers would meet with port operators to discuss some of the issues arising from the Valuation Office Agency's revaluation of UK statutory ports, we were dismayed to learn that this has not occurred. We are not impressed by the Government's decision to wash its hands of problems which arise, in part, from its own insensitive handling of port rate revaluation. We recommend that the Government urgently reviews the impact of the revaluation on port occupiers, and publishes its findings.

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Prepared 9 March 2010