Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 620 - 639)



  620. It will not have a staff like the old central policy review staff that is looking to see where they are pointing and whether they are pointing in the right direction?
  (Mr Gieve) There is nothing quite like the old CPRS. There are, as you know, new units in the Cabinet Office which do similar things in some respects, notably the Performance and Innovation Unit which produces reports for the Cabinet and the Prime Minister on aspects of policy which seem to be of concern. That was a function that the old CPRS did. For something as central as whether or not departments are meeting their targets it would be odd to divorce that into a special unit in the Cabinet Office. This is the key concern of the departmental staff themselves and, of course, the Treasury and the Cabinet Office.

  621. I am sorry to press this point hard but the six secretaries, and you mentioned yourself as one of them, where are they drawn from? Are they drawn from mainly the Treasury or from other places?
  (Mr Gieve) Three of them are from the Treasury and three of them are from the Cabinet Office Secretariat. It is a special Secretariat in that respect. Normally a formal Cabinet Committee has a Secretariat drawn from the Cabinet Office Secretariat under Sir Richard Wilson, but in this case there is a joint Treasury and Cabinet Office Secretariat which reflects the fact that most of the co-ordinating work around Spending Reviews and around the PSAs is being done in the Treasury.

  622. How many times have you been through this process of it being reviewed by this committee in this way?
  (Mr Gieve) We have had numerous meetings of the committee.

  623. A formal annual review of where things are?
  (Mr Gieve) Quarterly reports started in 1999, so we would have had about seven or eight of them.

  624. So it is meeting quarterly?
  (Mr Gieve) It meets much more than quarterly. The PSX met throughout the Spending Review taking not only progress reports on where we had got to but also considering the new PSAs and also considering what funding was necessary for that. So it both oversees the Spending Review, if you like, and then also monitors the results of that Spending Review.

  Mr Beard: I see. Thank you.


  625. Does the system miss the CPRS in this context that we have been discussing?
  (Mr Gieve) No.
  (Sir Andrew Turnbull) Effectively the same kind of work is being done in different places in Government, the rather more political end of it done by the Policy Unit, or by the Performance and Innovation Unit whose reports are very similar to CPRS reports. Their focus is not so much looking at the targets that have been set but identifying an issue, particularly an issue that has a cross-departmental aspect to it, which is rather difficult to handle, and looking forward at trying to find solutions. The innovation part is innovation in policy that they are concerned with, I think that is quite similar to the CPRS. I do not think the CPRS was ever really a kind of quasi-auditing, performance monitoring body, it was producing a series of ad hoc studies, in other words finish one, write a report, find someone to take responsibility for delivery and then move on to another one. The apparatus John has described are all long standing pieces of apparatus that will continue.

  626. Do you think that the Treasury has too many PSA objectives? It has got nine, I think. Is that too many?
  (Sir Andrew Turnbull) Given the extent of our responsibilities, no. It is a feature of the Treasury that it has a wide definition of responsibilities. A number of other countries have actually split them up into separate bodies: treasury ministries, budget ministries or economic ministries, forecasting, other advisers. Given the extent of our role this is about the minimum you could sensibly have without people saying there is some important part of the Treasury's work that is not reflected. These nine objectives cover pretty much the major blocks of work and nothing is left seriously uncovered by it.

  627. But you have reduced the PSA targets from 33 to 12.
  (Sir Andrew Turnbull) Yes.

  628. What were the criteria for that?
  (Sir Andrew Turnbull) The same as John was describing for Government as a whole, to try to assign to each objective what was a target which encapsulated as much of that objective as possible. The more detailed or process questions were then put into the SDA. If we take the two together, it is rather similar to the previous PSA but we have gone through the same process of hierarchy as has been done for all other government departments.

  629. For instance, you dropped the environmental objective that was underpinning the tax system. What was the reason for doing that?
  (Sir Andrew Turnbull) On the tax incentives to work, save and invest, we could have gone for proliferating targets to illustrate all sorts of aspects of that but we have chosen what we think is the most important of them and we are not withdrawing from the others. We still have, we recognise, the environmental dimension of tax, it is still very important to us, but this is a question of making a selection and setting our priorities.

  630. If I can switch very briefly to the Service Delivery Agreements. The statements here seem to be pretty vague and I suppose historical. Example: you say you intend to tackle internal fraud by keeping the existing procedures under review. That is a bit apple pie and motherhood, is it not?
  (Sir Andrew Turnbull) This is a reference to the work of the Internal Audit Committee.

  631. But you do not feel that those SDAs need to be sharpened up a bit?
  (Sir Andrew Turnbull) I think they are an improvement on what has gone before and I am not saying they will not get better in future rounds. We will respond to this through a process of iteration. Select Committees may have certain preferences: "We wish you had included this", or "We regret that you dropped that". We will work to this and then when we come back, probably in two years' time, we will refine these again.

  632. How seriously do you take them? For instance, you have got a target that determines employment policy and mix of employees. If you do not meet those objectives, what do you intend to do about it? Do you intend to take action after a certain period?
  (Sir Andrew Turnbull) Some of these targets are part of the wider Cabinet Office programme of modernising the Civil Service. The targets on women in the senior Civil Service, targets about people spending time in other organisations, these are collective Civil Service targets on which we are under scrutiny from the Cabinet Office ourselves as delivering our contribution to this wider Civil Service objective.

  633. Can I just turn briefly to the relationship between the Treasury and, I do not know what you call them exactly, the associated bodies that we have been looking at in the last two or three years and have been producing reports on. How seriously do you take what presumably is called your responsibility for these bodies, or at least your association with them? I would just like to probe a bit as to how exactly you do see your relationship with these bodies.
  (Sir Andrew Turnbull) These bodies are government departments. When we produce an annual report we produce a report on the Chancellor's Departments. They have their own Department of State, their own Permanent Secretaries and Accounting Officers. With the exception of the DMO and the OGC they are not agencies of the Treasury, they report direct to ministers. In that sense they are equal with us in the formal sense. Nick Montagu and Richard Broadbent do not report to me, they are Permanent Secretaries in their own right reporting to ministers. The Treasury has a kind of scrutiny role over them in terms of their expenditure in the same way as any other department so we look at them, at the running costs and we look at the performance of the revenue departments. Also, we have an informal co-ordinating role or, in the case of tax, it is probably more formal, it is institutionalised. I think people sometimes mistakenly think that ONS is simply a part of the Treasury. ONS is not a part of the Treasury, ONS reports to the Chancellor and that is quite a deliberate part of the constitutional construction. I think it is better for the integrity of national statistics, it is not simply part of the Treasury.

  634. But as the Permanent Secretary do they not report to you as well as the Chancellor?
  (Sir Andrew Turnbull) No.

  635. Right. So what then is the point of your having designated officials who are in some way responsible for them or in some way connected with these agencies?
  (Sir Andrew Turnbull) I would substitute the word "responsible" for working with, co-ordinating. Let me illustrate in the area of tax. The Treasury has for many years had a tax division or team—I worked in it 30 years ago—it still does. It is now called tax policy, it was then called fiscal policy. There are understandings between that group and the revenue departments of the relative responsibilities of each, the comparative advantage. What does each bring to this process? If you take the revenue departments, what are their strengths in areas of tax? They know the tax system, they know the law, the international dimensions of it, their comparative advantage on compliance costs, on the difficulties of delivering, what it costs to deliver these taxes, the collection costs and on issues of fraud and evasion. The Treasury team is not trying to duplicate that but there is some value added which is we can look at the thing as a whole. We can see the wood for the trees. We can prepare and draw together packages, for example, in responding to initiatives like Lord Rodgers on urban policy or the hauliers package. We can draw across the whole of the revenue departments. We have the relative expertise in the economic impact, the way these things also fit in to the fiscal arithmetic. Also, the whole overall presentation of a Budget is something which is allocated to us. That division between us has been around for many years and I think is accepted by them and by us as being (a) workable but (b) something which produces more than the sum of its parts.

  636. Is this relationship, this co-ordinating relationship, one of equals or are you top dog in the co-ordinating relationship?
  (Sir Andrew Turnbull) If you want to know the details of double taxation agreements, taxation of trusts and inheritance, we are not in the game here, they are the experts on this thing and we respect their expertise on it. I do not think it is a question of somebody being top dog, "our word always goes", you know, "it prevails in the end": this is a sort of interactive process. Also, there is a great deal of exchange of personnel between the three parts of this triangle. Quite a large part of the tax policy team is people drawn in on secondment from the revenue departments and that has, again, been going on for many years and it is a very healthy part of the way the thing is set up.

  637. For instance, when this Committee makes a criticism of, let us say, Customs, your men or women who are your designated people responsible for Customs or assigned to Customs, do they get together with Customs and say "Come on boys we have to sort this out" or do they say "It is entirely your responsibility, tell us when you have done it"?
  (Sir Andrew Turnbull) I think probably neither. Particularly if it is an operational matter, the initial responsibility will rest with Customs to respond but very often you are dealing with their effectiveness in delivering, collecting taxes. You are getting a question of resources which comes in and raises Treasury interest. You have to bring the two parties together.

  638. It does raise the question of what is the point of the relationship with the Treasury. Obviously there is a relationship between Treasury and every Department.
  (Sir Andrew Turnbull) Yes.

  639. In terms of what Mr Beard was discussing earlier on in terms of budgeting and policy setting, what is the point of having any particularly special relationship between these departments and the Treasury?
  (Sir Andrew Turnbull) If you are a Minister of Finance taxes are a central responsibility of every Minister of Finance in any country.

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