GOVERNMENT RESPONSE TO THE TREASURY COMMITTEE'S
SEVENTH REPORT, SESSION 2000-01: THE GOVERNMENT ACTUARY'S DEPARTMENT
(a) We appreciate the high regard in which
GAD is held by those who deal with it (paragraph 7).
The Government is grateful for the appreciation of
the high regard in which GAD is held by those with whom it deals.
(b) GAD should continue to play a role in
the supervision of life insurance firms even after the end of
its contractual relationship with the regulator (paragraph 13).
The Government notes this recommendation, but responsibility
for the supervision of life insurance firms is with the Financial
Services Authority. It is for the Financial Services Authority
to decide how best to secure actuarial advice.
(c) We consider it important that Parliament
should be regularly informed about the condition of the life insurance
industry, particularly in light of the recent problems affecting
Equitable Life. GAD is well placed to provide such information,
even after the FSA takes over responsibility for actuarial advice
on life insurance firms, by developing its relationship with firms'
appointed actuaries. We recommend that GAD be given statutory
responsibility for publishing a regular report on the life insurance
industry (paragraph 14).
The Government notes this recommendation. Under the
Financial Services and Markets Act 2000, one of the responsibilities
of the FSA is to make reports to the Treasury at least once a
year on the discharge of its functions. These reports will cover
the FSA's responsibilities in connection with the life insurance
industry and will be laid before Parliament.
(d) We consider it vital that the independence
of GAD should continue to be upheld (paragraph 15).
The Government accepts this recommendation and values
the impartial and independent advice that the GAD is able to provide.
(e) We have received the impression that GAD
is a rather under utilised resource which the Government could
make more use of in the future (paragraph 16).
GAD has been operating under a "net control"
regime since 1989. This flexibility enables the Department to
balance resources in line with demand on a cost recovery basis.
The extent to which Government Departments make use of the GAD's
services is a matter for them.
(f) We recommend that the Government review
GAD's activities with a view to identifying areas where the Department
could usefully make regular reports to Parliament (paragraph 17).
The Government has recently reviewed the activities
of GAD and has no plans to review them further.
(g) We recommend that the Government consider
giving GAD a budget for carrying out work on matters of public
interest, for example when commissioned by select committees (paragraph
If any select committee wished to procure actuarial
advice from the GAD, in principle it is able to do so, on a repayment
(h) We recommend that the Government review
the scope for GAD to be given more commercial freedom to pursue
work overseas (paragraph 21).
Provided there is no conflict of interest, there
is no constraint on GAD's ability to pursue work for overseas
(i) There may be merit in re-examining GAD's
status to ensure that the Government continues to get the best
value actuarial advice (paragraph 22).
The Government has just completed a review of the
status of GAD, which has confirmed that the present arrangements
provide a sound basis for the Department to continue to provide
cost effective and impartial actuarial advice to Government. The
present arrangements do not constrain the GAD's ability to seek
additional work from other public sector organisations.
(j) We look to the Government to ensure that
GAD's expertise is fully exploited in future: this will help it
continue to attract high quality actuarial staff (paragraph 24).
As referred to above, the extent to which Departments
draw on the expertise of GAD is a matter for them.