Select Committee on Treasury Minutes of Evidence


Examination of Witnesses (Questions 1 - 19)

TUESDAY 6 NOVEMBER 2001

MR ADAM SHARPLES AND MR ALLEN RITCHIE

Chairman

  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 1999?
  (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 departments—departments, I should say, have strongly welcomed the conclusions of this review—and 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.

Mr Mudie

  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 participation.

  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 comment on.

Kali Mountford

  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[1], 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 objective.

  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.

Mr Mudie

  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 Chairman—that is why it sparked me off—you 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 looming—I assume you read the newspapers—and 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 you—it is a perfectly simple question—is 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, did you?
  (Mr Sharples) We pursued this with the Clerk of the Committee.

  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.

Mr Ruffley

  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 conclusion?
  (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 reasons—the 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 document—it 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.

Kali Mountford

  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


 
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