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Civil service failing to hold ministers accountable on spending – NAO

Mismanagement of taxpayers’ money including funding the collapsed charity Kids Company could have been avoided if senior civil servants were more accountable to Parliament, a National Audit Office (NAO) report has found.

The report, Accountability to Parliament for Taxpayers’ Money, says that departmental Accounting Officers (AOs), usually the permanent secretary of a department, who are responsible for stewardship of the department’s resources, are failing to challenge ministers about the value for money of new projects.

It says that there is little transparency in Parliament over the role of AOs, and that AOs have insufficient incentive to challenge ministers because their role as a permanent secretary means they are encouraged to work with ministers to implement policy, and ministers also have control over civil service appointments.

Amyas Morse, head of the NAO, said: “Accounting officers are responsible for the delivery of value for money – the economy, efficiency and effectiveness of public projects and programmes. In this they converge closely with the Committee of Public Accounts and, of course, the NAO.

“AOs have always had to balance this role against other duties to execute policy and support Ministers. I think that these ministerial and policy goals have come to weigh more and more heavily. The ever-increasing influence of special advisers, and ministers’ greater involvement in policy implementation and Civil Service appointments, is pressing down on the ‘Ministerial’ end of the see-saw further and further, while considerations of value for money and public value rise steadily into the air.”

There were eight ministerial directions after value for money concerns were raised in 2015, but none at all in 2011-14. A ministerial direction is a formal instruction from a minister to an accounting officer to proceed with the implementation of a policy after the AO has expressed concerns, so that the minister takes responsibility for the spending.

The report says that in June 2015, a minister directed the Cabinet Office AO to award £3m to Kids Company, which closed last year, despite concerns being raised about its financial management.

Decisions where AOs raised concerns about value for money but did not seek a formal ministerial direction included the failed FiReControl project to build regional control centres for fire and rescue services, which cost £635m, and the National Programme for IT in the NHS, which collapsed in 2012, five years after it was originally due to be delivered, at a cost of £11.4bn.

It also warns that departments have poor oversight of their grants to local authorities. They awarded £7.8bn non ring-fenced grants for specific purposes, but received no clear information on how £2.8bn was spent.

The NAO’s recommendations include a clear expression of financial commitments and objectives, robust performance and cost data, and clear accountability of individuals with a formal mechanism or forum, preferably public.