Conclusions and Recommendations
1. The Ministry of Justice (the Ministry)
has much to do to embed strong financial management as standard
across its business but we welcome the steps the Ministry has
started to take in order to improve.
The Ministry should produce a report on progress to this Committee
by September 2011 and the NAO will then validate the Ministry's
assessment. We will then take further evidence on its financial
management at a hearing in November 2011.
2. By its own admission, the Ministry has
exercised insufficient control over its arm's length bodies, including
the Legal Services Commission. We do not
share the Ministry's view that there is little scope to influence
the behaviour of arm's length bodies. The Ministry needs to be
clearer in its funding arrangements with these bodies about what
its expectation of them is, setting out, for example, clear rules
of engagement and management information requirements. It should
also tailor the depth and frequency of its oversight arrangements
to reflect the real risks different bodies pose.
3. It is simply not acceptable that, after
two years of work, the Ministry still does not have a detailed
understanding of the costs of its staff activities in its largest
executive agency. Given the scale of the
challenge it faces following the Spending Review, it is very worrying
that, on current plans, the Ministry will not have this information
until the end of 2011. We look to the Ministry to bring forward
the work it is doing to understand the cost base in the National
Offender Management Service and HM Courts Service. We expect the
Ministry to be explicit about how it will use this information
to drive value for money, and we want to hear how the department
will develop proposals for similar analyses across the rest of
its business.
4. Without combined financial and operational
performance data and a full understanding of its costs, there
remains a risk that, in implementing its Spending Review settlement,
the Ministry will not achieve best value for money and will not
understand properly the impact of cost reductions on frontline
services. Cost reductions should be based
on a full understanding of relative costs of alternative cuts
and a proper understanding of the value that will be lost, in
particular so that a cut in one area does not lead to additional
expenditure elsewhere. We look to the Ministry to produce a robust
business planning process and to integrate its operational modelling
with the full cost information systems it is developing.
5. The Ministry was the only major government
department not to meet the timetable for delivery of its 2009-10
accounts. We are not convinced that the
problems facing the Ministry in producing its accounts were any
more severe than those facing other departments. The Ministry
must produce its accounts on time in future.
6. The Ministry has not recovered the full
cost of Family and Civil (Magistrates' Court) work through the
fees charged to service users. This contrasts
with Probate, where the Ministry has consistently recovered 120%
of the service costs. We look to the Ministry to set fees so as
to ultimately reach 100% cost recovery in a fair and equitable
manner.
7. There was little evidence of the sustained
improvement in fine collection rates that we were promised in
2006. As at 31 March 2010, outstanding fines and confiscation
orders in arrears and over six months totalled just under £1.5
billion, of which just 30% was considered recoverable.
Unpaid court fines and penalties have increased year-on-year and
the Ministry's primary measure of how effectively court fines
are being collected is inadequate. The Ministry still relies on
payment rate, despite our conclusion after our 2006 Hearing that
the payment rate fails to capture the amounts of outstanding arrears.
We look to the Ministry to introduce the promised improvements
to performance measurement by September 2011.
8. No one department currently has overall
responsibility for overseeing collection of confiscation orders.
The Ministry informed us that it was only
responsible for overseeing the collection of some 16% of the confiscation
orders issued annually across the criminal justice system - although
100% of the value of these orders sits in the Ministry's financial
statements. Concerted efforts to improve collection rates
are needed urgently and we look to the Ministry to take the lead,
through closer working between its Accounting Officer and the
Heads of its criminal justice partners.
9. Qualification of its accounts has led the
Legal Services Commission to strengthen its quality assurance
processes but the level of error and potential fraud in payments
to providers are still too high. It is unacceptable that the Commission
cannot specify a date by which it expects to produce unqualified
accounts. The Commission should categorise
and analyse the causes of error, and then target its resources
and initiatives to reduce the level, so that its accounts are
no longer qualified. The Ministry's September 2011 progress report
to this Committee should include an update on the performance
of the Commission.
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