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


Measuring Performance
1.We remain unconvinced that HM Treasury's present DSO outcome 1(a) temporary indicator serves any real value. We will monitor with interest the extent to which the Fiscal Responsibility Bill, should it become law, comes to provide a rule against which such measurement can be made. (Paragraph 16)
2.It would have been helpful to have seen NS&I's proxy measure, and the rationale behind it, clearly set out in its 2008-09 Annual Report. We recommend that, if circumstances do not allow the re-instatement of the Value Add measure during the course of 2009-10, the proxy measure is given greater prominence in next year's NS&I Annual Report. (Paragraph 17)
Unfinished Business
3.It appears to us that the relationship between the Treasury and UKFI remains a work in progress, and we recommend that the Government considers whether the formal terms of the relationship need some re-definition in the light of experience. It is important that the lines of demarcation are clear, and reflect the reality on the ground, not least to ensure that other shareholders are properly protected. (Paragraph 21)
4.It is very difficult to draw final conclusions regarding the level of success that should be attributed to HM Treasury and its associated bodies for 2008-09—too much remains unfinished business. (Paragraph 24)
5.We appreciate the magnitude of the challenges faced by HM Treasury and its associated bodies during the course of this extraordinary year, and commend the extent to which the workforce has been willing to go the extra mile in response to these challenges. It is important though that Departments do not take this commitment for granted and continue to monitor for signs of burn-out and over-stretch. This is particularly important because, as we have highlighted above and in other recent reports, the challenges posed during this extraordinary period remain very much ongoing business. (Paragraph 31)
6.We look forward to seeing a significant improvement in the timeliness and accuracy of Departmental monthly in-year monitoring figures next year, as the actions highlighted by the Permanent Secretary and Minister take effect. (Paragraph 36)
7.Whilst we understand the logic of the Treasury's position, it still appears disingenuous to claim, with no further explanation, that a target has been met when that target has in fact been missed in eleven months out of twelve, and we recommend that the Treasury reflects on the terminology used to assess this indicator. (Paragraph 38)
8. We recommend that the next Treasury Committee test whether this commitment to provide a DSO2 indicator for pensioners has been fulfilled next year. (Paragraph 39)
PSA9—Child Poverty
9.We reiterate our 2009 Pre-Budget Report recommendation that the Government clearly sets out the steps it proposes to take to move nearer its 2010-11 target in the time available and to achieve the eradication of child poverty by 2020. (Paragraph 41)
Implementation of International Financial Reporting Standards
10.We reiterate our view that future Pre-Budget and Budget Reports should include a reconciliation between Public Sector Net Debt calculated on a national accounts basis, and the same figure calculated using the IFRS principles which apply to departmental accounts. (Paragraph 42)
11.The absence of regular public reporting on milestones by HMRC is a major obstacle to both effective scrutiny and performance. We believe that HMRC must publish data regularly to chart its level of progress against DSO1 indicators; and set these out in its Annual Reports. We believe this is essential for the tax gaps to be closed and for the assessment accuracy and take-up of the working tax credit to be improved, especially for those without children, and those whose incomes and jobs are volatile and constantly changing. (Paragraph 49)
12.We urge HMRC to reflect on whether customer experiences of HMRC are yet improving as much as the DSO2 "strong progress" summary implies. In particular, call response rates—though improving—remain at unacceptably low levels. The April 2011 target of answering 90% of calls remains challenging and will continue to require the attention of senior management. (Paragraph 54)
13.On balance, performance at HMRC remains mixed with considerable room for improvement, and considerable challenges remain to be overcome if HMRC is to achieve this improvement. (Paragraph 58)
14.We are deeply concerned about employee engagement at HMRC and its effect on performance. We accept that the relatively new senior management team is aware of the issue, and takes its implications seriously. Nonetheless, we are deeply troubled by the apparent absence of any detailed plan to ameliorate the situation. 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. We will continue to monitor this issue closely. (Paragraph 66)
15.Future performance at HMRC is highly dependent upon improvements to its IT systems. We will continue to monitor progress of its IT up-grading progress, including the new Aspire contract. (Paragraph 69)
16.It seems clear from the recent NAO report into the HMRC contract with Mapeley, that HMRC has been slow to consider the possibility that the terms of the contract could put the latter under immense financial strain. It appears that HMRC believed it had transferred all substantive risks to Mapeley, and did not envisage the possibility of the risks returning to them if Mapeley should default. We accept HMRC is now taking steps to improve its management of the contract. We remain to be convinced, however, that sufficient risk management, including a clear and mutually beneficial way forward, is yet in place, and will return to this topic in future evidence sessions. (Paragraph 75)
17.Whilst we recognise that it may make business sense for NS&I to move away from the Post Office, it is a Government-owned body. We recommend, therefore, that the Government considers whether there is a wider public interest in retaining stronger links between the Post Office and NS&I both to ensure that all sections of the public have easy access to NS&I products and to help secure the future of Post Offices. (Paragraph 84)
Royal Mint
18.We accept that Royal Mint rates of return will be affected by changes in consumer demand for products of varying margins of profitability, and note that the rate of return remains relatively healthy at 7.1%. However, given that Royal Mint only returned to profit in 2006-07, positive future performance can not be taken for granted and we will monitor, with interest, the level of profit the Royal Mint declares for 2009-10 and whether it succeeds in meeting its 10% average rate of return target. (Paragraph 91)
19.The Committee is pleased that the Royal Mint has changed its accounting policy to ensure consistency with UK GAAP and we note the disclosure in the accounts. However, given the size of the adjustment, we do not believe that the disclosure is detailed enough for the reader of the accounts to understand the reasons for the change in the reserves. We recommend that any future changes in accounting policy of this nature are more clearly explained, with the reasons behind such changes provided in the accounts, especially where previous policies are found to be non-compliant with UK GAAP. (Paragraph 97)
Valuation Office Agency
20.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 port revaluation on port occupiers, and publishes its findings. (Paragraph 103)
Government Actuary's Department
21.  We will continue to monitor the financial risk to GAD arising from the need to remain at Finlaison House, and request that, in its response to this report, the Government explains its contingency plans for GAD in the event that sub-tenants leave. (Paragraph 104)

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