Examination of Witnesses (Questions 1
TUESDAY 6 NOVEMBER 2001
1. Good morning, Mr Sharples. Welcome to the
Committee this morning to look over the issue of the review of
the Departmental Reports. For the record could I ask you to introduce
yourself and your colleague?
(Mr Sharples) Good morning. I am Adam
Sharples, Director of Public Spending in the Treasury. This is
my colleague, Allen Ritchie, who heads the team that runs the
database, the General Expenditure Statistics team. We have both
worked on the review of Departmental Reports.
2. Thank you very much. I am in receipt of the
Chief Secretary's letter of 16 October detailing the work that
has been done previously and what is intended to be done. We felt
an evidence session would be important because of the number of
issues which we are concerned with on a minus scale. The key issues
we feel that are raised by the review and the Chief Secretary's
decision would be the timing. Why was the review conducted on
a matter of such importance at a time when the select committees
could not make an input? Also, the stimulus for the review was
the dissatisfaction and the urgency. Why was it essential to put
the new framework in place immediately? Those are a number of
points that come to mind. Why did ministers decide to review the
departmental reports? Was that pressure internal or external?
Was the review process triggered by the perceived shortcomings
of the arrangements which were originally produced in January
(Mr Sharples) There are a number of questions there.
Perhaps I can do my best to explain the background to the review
and the timing of the review. I should say right at the start
that we see Departmental Reports as an absolutely fundamental
part of accountability of government departments to Parliament
and the public. What we are trying to achieve here is a clear
usable set of documents which is useful to Parliament and useful
to citizens who want to know what government departments are doing
with their money. A tremendous amount of effort goes into these
Reports. The Reports this year amounted to some 3,700 pages of
documentation across 22 Reports. You can imagine the amount of
resource and time that goes into the preparation of those documents.
The first impetus for the review was to take stock on the effort
that was going into these extremely important documents and to
ask whether we were best serving the needs both of the producers
of the documents and the users, the readers of the documents,
in Parliament and outside. The timing of the review goes back
to October of last year when the Chief Secretary wrote to your
predecessor as Chair of the Treasury Committee saying that we
intended to conduct a review and inviting participation of Parliament
in that review process. A similar invitation was extended to the
Chairs of the Public Accounts Committee and the Procedure Committee
who also have an interest in this subject. We were disappointed
that we were not able to get the review started for a number of
months because there was no reply from indeed any of the committees,
so this held us up a bit, but we were able in the spring of this
year to get started with the review and we were extremely grateful
for the participation of the then Clerk of the Treasury Committee,
Simon Patrick, who played an extremely helpful part in conducting
the Review. It was perhaps an unfortunate coincidence that, as
the review then got started, the election was called and committees
were not able to meet to give a committee view on the progress
of the review, but we did have extremely helpful input from the
clerks of the committees who were consulted and whose evidence
is recorded in the Report which has been circulated to you. The
review has taken a little bit longer therefore than we had hoped.
We had hoped that it would be over within good time and that we
would have the chance to get a formal view from the committees
on the conclusions. Given the timing of the election, we thought
the best way forward was to set out our conclusions, based on
the evidence that we had received, and discuss those conclusions
with departmentsdepartments, I should say, have strongly
welcomed the conclusions of this reviewand that we should
then set in train plans for next year's reports, being very careful
to explain that both the final form of those reports and the plans
for the longer term will be dependent on views from Parliament.
We are very pleased to have this opportunity today to explain
the background to the review, discuss the conclusions and explain
some of the thinking. Part of your question was about the internal
and external pressures for the review and the perceived deficiencies
of the reports as they stand. There have been a number of issues
raised about the reports. There is quite a strong feeling that
as the Reports have grown longer and longer, they have become
for many users less and less useful because the information that
we are providing, particularly the financial information, has
become more technical, more complex and, to be honest, I think
in some cases more difficult to use. If I could quote one example
of what I see as the sort of problem that has emerged, the Home
Office Report, in many ways an excellent report which follows
the guidelines that we set out, is nearly 200 pages long with
over 50 pages of financial tables, but I would challenge anyone
to look at that report and say how much are we spending on the
police, which you would have thought is a pretty basic question
that we ought to be able to answer, and what is the trend in that
spending on the police? Is it going up or down? How does that
relate to performance? There has been a feeling that was expressed
by a number of departments at the time of this year's reports,
but also expressed by a number of the committee clerks in their
responses to our consultation, that the sheer volume of information
had not necessarily been matched by clarity and usefulness. We
thought this was therefore a very good time to take stock, partly
because, as you will know, some changes had been envisaged in
the structure of reporting next year, flowing from resource accounting
and budgeting. Before moving to that new structure which had been
envisaged we thought it was important to consult and to take stock
with users of the reports. The final part of your question I think
was why is it essential that this should come in immediately?
The answer to that is that it is not. What we have proposed is
a way forward that we think will help to get some of the benefits
of this review put into place quickly. Essentially what we are
proposing is that for the 2002 Reports each department produces
a report in the spring which is a comprehensive report with financial
information, performance information, organisational information;
we publish the Estimates separately from the Departmental Reports
together with supplementary budgetary information which provides
reconciliation to the Departmental Reports, and in the autumn
of next year we publish departmental accounts with some additional
contextual information and a supplementary performance report,
so we are proposing to maintain the two-part cycle to reporting
with a spring report and an autumn report, but to divide it up
slightly differently from what had been proposed before to ensure
that the spring Report gives a comprehensive and clear picture
of what the department is doing.
3. You mentioned the spring Report and the autumn
Report. That was contained in the January 1999 proposals for what
you said and from my reading of that a spring Report was there
to produce a forward-looking view and the autumn Report was to
have a backward-looking review to see how things got on. Do you
not think, in the light of the outcome of the review, that there
were shortcomings in your approach to the January 1999 Report
and what exactly is the difference now between the January 1999
proposals and what you are proposing now?
(Mr Sharples) First of all, as the Chief Secretary
acknowledged in his letter to you, this is a change in emphasis
from the approach set out in the spring of 1999. We made no excuses
for that. We have done this review precisely in order to assess
with users of the Reports whether this is the best way forward.
We thought that rather than plough on with something it was better
to take people's views and reach conclusions on how we could deliver
the most usable, clear set of reports. Why have we shifted the
emphasis a bit? I think the arguments were set out very clearly
in the responses we had from a number of the committee clerks
which are recorded in the report of this review. The points that
they made were essentially that when you are looking at a department's
activity it is very much easier if you can look at one document
and get a comprehensive picture of how that department is organised,
what it is doing with the money, what it is trying to achieve,
what its targets are, and how it is doing against the targets.
If you separate those things then life becomes more complicated,
you have to cross-refer between different documents. It may be
that things have moved on between one set of documents and another
and it is difficult to reconcile the two. It may be that a certain
amount of repetition occurs because the contextual information
has to be repeated in both documents which creates more work for
everyone, more volume of paper, without improving the comprehensibility
of the documents. There are a number of reasons why people argued
that having a comprehensive report in the spring was the best
way forward. This would help the committees to take a view on
the performance of departments and it would certainly help the
public to understand what was going on in departments. We stick
by the points we made in the 1999 memorandum about the importance
of the accounts and the extra information provided in the resource
accounts. We also stick by what we said about the importance of
proper performance reporting and that is why we are proposing
that as well as the spring performance Report, which will be part
of the comprehensive Report, there should be supplementary, updated
performance reporting in the autumn alongside the accounts. It
is a change in emphasis rather than a fundamental tearing up of
what was proposed before.
Chairman: Rather than pose another question
I want to comment before I hand you over to Mr George Mudie. We
feel that this perhaps could have been done in a different way
and there is a view that, as you mentioned in your answer about
the committee clerks, you put them in an invidious position because
there was no committee response to issues such as this, so that
is why you are having this hearing today and will perhaps be having
further hearings on that.
4. If I may take up something you said to the
Chairman, you sound as though you have framed the response in
your future policy in response to committee clerks. Is there a
wider audience? You specifically said, "As a result of the
response we have had from committee clerks". Is that the
extent of your audience?
(Mr Sharples) Not at all, but Parliament is clearly
a very important audience for these reports and so their views
were extremely valuable to us. In the course of the review we
consulted all departments at every stage of the review. We asked
departments to consult readers of their reports and we circulated
questionnaires to each of the audiences. We consulted commentators
of different kinds and we engaged outside experts on our review
group. We went to some lengths to consult everyone we could identify
as a potential user of these reports and took account of their
views as well as the committee clerks. Perhaps if I could respond
to the point, why did we just take the views of committee clerks
rather than committees? As I explained earlier, this was an accident
of timing, that first the election and then the summer recess
meant that committees were not sitting and available to give a
view. I would say two things in response to that. First, committee
clerks were very careful to explain that they were giving a personal
view, and their views are recorded as such but, given their experience
in handling these reports and advising the committees, their view
is a very valuable one. The second point I would stress is that
we are absolutely committed to taking the view of Parliament before
settling the long term future of these Reports. Essentially what
we are proposing is an interim solution for 2002 given the problems
of timing in getting a formal view from the committees. We are
asking for support for this interim solution and then we would
ask you to make a judgement on the product that emerges and then
we can take a view on where we should go for the longer term.
5. So I was not mistaken then. That second part
of your answer is that the voice of Parliament was not Members
but was expressed through the voice of committee clerks who had
not had the opportunity (and we have no reasons to fault that)
to speak to committee members, so that was the voice of Parliament
as expressed in this review.
(Mr Sharples) That was the best possible voice we
could get in the period of this review. I would come back to the
point that I made at the start, that this whole process was started
by a letter from the Chief Secretary to your predecessor as Chair,
inviting the participation of Parliament in this review. We see
Parliament as being one of the prime audiences, if you like the
joint equal audience, of this report along with the public. We
want to make sure that these Reports are meeting Parliament's
needs effectively. That is why we began by inviting Parliament's
6. But you had not got it.
(Mr Sharples) As I say, we were disappointed not to
get a response from the committees for the six months while they
were sitting and considering this letter.
Chairman: That is something I cannot
7. I am looking at the list of people you consulted
and I completely accept Mr Mudie's point about committee clerks
not really representing parliamentarians given that how people
read reports and access information in them varies. The people
you have listed here will all have had different purposes in reading
the report and want different things out of it. An academic would
look at the report in an entirely different way than would a departmental
secretary or indeed a Member of Parliament. How have you gone
about giving weightings to opinion and unravelled the information
that has been presented to you from its source? Have you given
some assessment about how the user is accessing that information?
(Mr Sharples) As I was saying earlier, we did our
very best to construct a review team that would include representation
of different interests. We had the National Audit Office represented,
we had several departments. We had outside communications experts
and representation from CIPFA,
and so we feel that we did have a balanced review team. Secondly,
we went to considerable lengths to identify who might have an
interest in these reports and consulted them. As I said, we designed
a detailed questionnaire which was sent to all departments. We
asked departments to send copies of that questionnaire to people
they thought were users of their reports. In all of this work
we were advised as a member of the review group by Sir Andrew
Likierman who, as you may know, has taken an interest in Departmental
Reports since their inception and is one of the world's experts
on these reports. I feel that we put a lot of effort into getting
a balanced view of the Departmental Reports and how they can best
serve the users of them.
8. That is a useful answer but that was not
actually the question. What I am trying to understand is how you
made sense of the data from different individuals who were using
the reports in a different way for their own purposes. If, for
example, all the users were presenting you with similar criticisms
and similar data, then the source of the criticism does not matter
too much, but if they are coming at it from a different point
of view and are criticising it in a different way, some sort of
weighting and prioritising of information would surely have been
appropriate. I was wondering what thought you had given to that.
(Mr Sharples) It is a slightly difficult question
to answer because
9. That is why I asked it.
(Mr Sharples) I will do my best to answer. Inevitably,
when you consult you get slightly different views from different
people and the point I was making was that by constructing a representative
and balanced group to review the responses we were able I think
to reach a pretty strong consensus on the best way forward. We
then tested that consensus with departments, circulating our proposals
and inviting their comments. I would emphasise however that in
looking at the substance of these recommendations I would hope
that there is little there to argue with. What we are proposing
is that when departments put a lot of time and effort into publishing
a report about their activities they should do so in a way that
gives useful, clear information about their performance, about
their use of public money, about their organisation, to Parliament
and the public. We would be absolutely delighted to have any further
comments from this Committee, from other committees of Parliament
and from users of the Reports about how we can best achieve that
10. So there is another opportunity for parliamentarians
to have a direct say?
(Mr Sharples) Indeed. There are two opportunities.
First of all, we would very much welcome views from this Committee
and other committees of Parliament about the 2002 Reports. As
I said earlier, we have set out some proposals and because these
documents have a long lead time we have had to set in motion a
process with departments to set this work in hand, but if there
are views from this Committee as to particular additional information
that would be needed or different presentations you would like
to see, we will do our very best to make sure those are fed into
the process for the 2002 Reports.
11. Do you not feel that you let Members down?
We backbench Members are supposed to scrutinise expenditure and
the Executive. Departmental Reports and the Estimates and the
financial information are very important documents. You review
them. You are going to change them. You go to the people who are
producing them. You may go to the auditor and you maybe even go
outside Parliament but you get to this stage and you do not see
the importance of asking Members. Our job is to keep this Executive
in check, to look over this expenditure in detail. It is a hard
enough job. You decide you are going to review it and change it
and you do not ask us.
(Mr Sharples) Can I make absolutely clear that we
want the views of Members of Parliament on the Departmental Reports.
We see Parliament as a prime user of these Reports and we would
be absolutely delighted to have more input from Parliament into
shaping these Reports and ensuring their usefulness.
12. Yes, but when you came
(Mr Sharples) If I can finish my answer, that is precisely
why we began this process by inviting Parliament's participation
and it is precisely why we are delighted to have this opportunity
today to discuss these Reports and to get your views which we
can feed into the design of them.
13. Those are words, Mr Sharples. When you answered
the Chairmanthat is why it sparked me offyou indicated
that you had consulted Parliament and when I asked you who you
had consulted in Parliament it was committee clerks, so you cannot
make a virtue of seeking to serve us when you answered in your
first question that you had got the voice of Parliament and it
was committee clerks. That seems to me quite a slur on ordinary
backbench members of Parliament who are trying to do a difficult
job. I am finished, Mr Chairman.
Mr Ruffley: Just pursuing this point,
Mr Sharples, it seems to me that George Mudie is absolutely right.
You have not consulted as fully with MPs as you should have done
and you can see that. But the first reason you ascribed for the
delay in getting this review going, which led to the rather inadequate
consultation with clerks over the summer, was this. You said we
did not reply, this Committee did not reply, for six months. What
I would like to know is first of all why did you wait six months
to receive a reply which allegedly you did not get from this Committee?
Let us just assume that you did not get that reply. Why on earth
were you sitting there for six months because, if you had not
sat there for six months, you could have got this process up and
running a lot earlier and you would not have had to go to clerks,
which is the point Mr Mudie is complaining about, I think, and
all of us are complaining about? What is the answer to that?
(Mr Sharples) I am very sorry but we did not sit there
at all. We spoke on several occasions to the Clerk of the Committee
to ask what had happened to the letter. As I said earlier, we
were disappointed not to get more interest from Parliament at
that stage when we were seeking to launch what we saw as a very
important review in which we saw it as absolutely essential to
get the views of parliamentary committees and indeed backbench
MPs as well. We wanted that parliamentary input. That was a key
factor for us.
14. But you see the prospect of a general election
loomingI assume you read the newspapersand it was
perfectly clear there was going to be a timing problem, and yet
you let this ride. Why did you not speak to the ministers and
say, "Look: we are a bit concerned. We have not had the full,
proper response from the select committees that we desire as civil
servants to get on with this important work. There is an election
in the offing. We want to do this properly."? What discussions
did you have with ministers about speeding up what allegedly was
a tardy response from the select committees?
(Mr Sharples) All I can say on this is that we invited
Parliament's response into this review. We were disappointed not
to get an earlier response. We did our best to chase up that response,
but we are delighted to have this opportunity to discuss the content
of the Report.
15. You did your best. What is the answer to
the question: what did you say to ministers?
(Mr Sharples) We talk about all sorts of things with
ministers, but I am not sure that
16. You said you did your best to get input.
What I am saying to youit is a perfectly simple questionis
that you did not get the full reply you wanted. When you did not
get the full reply you wanted did you speak to the ministers who
ultimately you are accountable to in the departments? You do not
make this up on your own, I sincerely hope. Did you say, "We
want to get on with this work, Minister. We do not appear to have
had a reply from the relevant select committees. What shall we
do about it?"? You had that discussion with the Minister,
(Mr Sharples) We pursued this with the Clerk of the
Mr Ruffley: So you did not speak to ministers
about the delay?
Chairman: Could I say that I think it
is a grey area. It is very hard for us to discuss these issues
this morning when it was the remit of the previous committee.
17. I take that point but I think it is important
to have Mr Mudie's objections on the record because I share them.
The only other question in this section, Mr Sharples, is this.
You will be familiar with paragraph 56 of the July 1999 Procedure
Committee conclusions. One of the key sentences for me is this:
"We welcome the fact that the departmental plan will include
the detailed Resource Estimate for the forthcoming year and will
set out the department's plans in the context of comparative data
for the current year. This close association of plan and Estimate
should be helpful." Why is it that your review rejected that
(Mr Sharples) What we are proposing now is that Estimates
should be published alongside the Departmental Reports together
with supplementary financial and budgetary information to allow
Parliament to make a full reconciliation, read-across, from one
to the other. There are a number of reasons why we are proposing
not to publish the Estimate as part of the Departmental Report.
One is that Estimates are documents which are extremely important
to Parliament but do not have wide application and interest outside
Parliament. They are essentially a document for parliamentary
approval. Including them in the Departmental Report makes the
Departmental Report less useful as something for ordinary members
of the public to understand the finances of the department. The
second reason is that Estimates have a rather short shelf life.
They are overtaken quite quickly by Supplementary Estimates. The
third reason is that there are in practice a number of production
problems with including the Estimates in the Departmental Reports.
This year was the first time we had tried to do that and it involved
significant extra work in co-ordination between the Treasury and
departments to ensure that the numbers in these Estimates were
right. Previously the Estimates had been published by the Treasury
and under our control we could be confident that the numbers and
the presentation were correct. This year joint publication meant
that a number of errors crept in which had to be corrected in
some cases in Supplementaries. We feel for those reasonsthe
production problems, the need for clear reports for the public
to use setting out financial information as clearly as possible
and the fact that Estimates are primarily a parliamentary documentit
was best to take that information out of the Departmental Reports
and publish it separately where it can be best used by Parliament.
18. So this desire by the Procedure Committee
of this House that the close association of plan and Estimates
should be helpful, you are confident that that close association
between plan and Estimate will be preserved under your arrangements?
(Mr Sharples) Yes, exactly.
19. I do not want over-labour the point about
parliamentarians being involved, but have you considered contacting
all backbenchers? Not every backbencher is a member of a select
committee and yet we might all have an interest.
(Mr Sharples) We would be very happy to take the advice
of the Committee on this point. The normal procedure would be
to approach the Committee for a view from Parliament but if you
feel that there is value in a wider survey of parliamentary opinion,
we would be delighted to pursue that with you.
Kali Mountford: I can certainly think
of members of standing committees who would be interested.
1 Chartered Institute of Public Finance and Accountancy. Back