Accountability for public money - Public Accounts Committee Contents


Summary

This Report addresses an issue at the core of the relationship between Parliament and government - accountability for public spending. We recognise that this is just one dimension of the accountability framework that underpins our constitution: Ministers have a separate accountability to Parliament and the public for their policy choices and outcomes achieved; and local authorities are answerable directly to their own electorate. We also recognise the inherent tensions between these different dimensions of accountability and that as government has evolved demarcation between them has become less clear. Our concern is to ensure that regardless of what public money is spent on, or which bodies are spending it, it is spent properly with due regard to value for money, hence our focus on financial accountability.

Our hearing addressed policy issues surrounding parliamentary accountability because the Committee of Public Accounts and the Comptroller and Auditor General have particular statutory charges in this regard. While the PAC is most engaged with the effectiveness of accountability for public spending, the issues are of significant interest to other select committees and to Parliament as a whole.

We were interested in the implications for accountability of two recent developments: the governance reforms which include Ministers chairing departmental boards and greater non-executive involvement in those boards; and the reform and localism proposals which envisage a significant devolution of responsibility for service delivery to a wide range of new bodies, in some cases independent of both central and local government. We took evidence from the Minister for the Cabinet Office, the Cabinet Secretary, the Permanent Secretary to the Treasury and the Government's lead non-executive. Our concern was to understand rather than challenge the underlying policy intentions. The testimony we heard on the governance reforms raised a number of practical points on which we have written to the Treasury in response to their consultation on the draft Corporate Governance Code (copy attached as the annex to this Report). The testimony we heard on the reform and localism proposals raised more fundamental points about the current model of accountability, which we explore in this Report.

We wanted to understand whether the Government intended that its departmental boards or reform proposals should alter the accountability structure of which this Committee is part. Our concern was that Parliament gives government the authority to raise revenue, and that it approves public spending and in turn holds government to account for the use of public funds and for what is achieved. In practice government has long chosen to discharge this accountability through the senior civil servant in each department, the Accounting Officer. Government vests in each Accounting Officer a direct and personal accountability to Parliament for his or her department's stewardship of public funds. While significant sums are spent locally, local taxes account for just 5% of revenue raised and so the overwhelming majority of public spending in the UK is routed through departments and is the responsibility of the departmental Accounting Officer. Parliament vests responsibility in this Committee to hold Accounting Officers accountable on its behalf.

The Accounting Officer model has a number of strengths: it promotes high standards of propriety in public spending and an understanding within departments of the importance of securing value for money. The Accounting Officer model has also stood the test of time, adapting to new and diverse methods of delivering services to the public.

The environment within which Accounting Officers operate has evolved since they were first appointed in the 1870s. The clear demarcation between ministerial responsibility for policy and Accounting Officer responsibility for implementation has blurred as Ministers in successive administrations have taken a closer interest in how their policies are delivered, and the present public service reforms will inevitably impact on senior relationships within departments. These developments, taken to their logical conclusion, might have been thought to argue for a shift from the current individual accountability model to a collective model in which departmental boards would be held accountable. We were told very clearly, however, that the Government intends to continue with the current model, and our Report therefore starts from this premise.

The Government has recognised the need to reconcile the policy objective of its reform and localism agenda with the demands of accountability to Parliament through the Accounting Officer model, and has asked Sir Bob Kerslake to review how this might be achieved. We welcome this review and the commitment to consult this Committee, and have taken the opportunity in this Report to set out our view of the fundamental elements that need to be in place to ensure the accountability process is effective. These are set out in Figure 1, and provide the context for our consideration of the current reform proposals.


Figure 1 Fundamentals of accountability

The Accounting Officer is personally and ultimately responsible to Parliament for the spending of taxpayers' money and must be unfettered in the discharge of these responsibilities. The Accounting Officer must therefore be given, and be willing to exercise, the authority to ensure that all funds allocated to the department are spent properly and with due regard for value for money.


Where a department provides funding to other bodies, the Accounting Officer is responsible for ensuring that there is an appropriate framework in place to provide him/her with the necessary assurances and controls. These assurances should cover: whether the funding has been spent with propriety and on the purposes intended by Parliament; whether value for money has been achieved; whether the bodies concerned are financially resilient; and how to respond to any failure to ensure taxpayers' money is protected and the public interest is served.


Responsibilities and authority for policy and operational decisions are clear throughout the delivery chain. Where arm's length bodies are responsible for delivery, the departmental Accounting Officers designate the relevant Chief Executive as Accounting Officer, and for major projects and programmes should nominate a Senior Responsible Owner. It is important to ensure that those to whom responsibility for service delivery is devolved understand what they are expected to deliver, at what cost, with what local discretion, how they will be held accountable and what action will be taken should performance fall short. Designated Accounting Officers and Senior Responsible Owners should support but not replace departmental Accounting Officers in discharging their accountability to Parliament.


There is a clear process for measuring outcomes, evaluating performance and demonstrating value for money, which allows organisations to be held to public account and which enables proper comparisons to be made across organisations delivering the same or similar services. This should cover the information needed for both local accountability and the assurance required by Accounting Officers to fulfil their central accountabilities. We welcome the Government's commitment to transparency, but the information must be relevant and robust if its publication is to enhance accountability. Information should include comparative information to highlight and understand variations in performance. Where value for money is not clearly demonstrated by arm's length bodies, this Committee reserves the right to hold departmental Accounting Officers to account for systemic performance issues and for the effective operation of governance in individual bodies; and individual public bodies to account for their use of taxpayers' money.


All bodies which receive public funds are well governed and have robust financial management arrangements in place. Departments are responsible for ensuring that the bodies through which they choose to deliver public services spend public money properly and with regard to value for money and are subject to adequate audit.



 
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© Parliamentary copyright 2011
Prepared 5 April 2011