Select Committee on Treasury Seventh Report


SEVENTH REPORT


The Treasury Committee has agreed to the following Report:

PARLIAMENTARY ACCOUNTABILITY OF DEPARTMENTS

1. The annual Departmental Reports, published by each major department in the spring shortly after the Budget, play an important part in keeping Parliament informed of the detail of future spending plans, performance against spending plans, and performance against targets. As Mr Adam Sharples, Director, Public Spending, at the Treasury, pointed out to us,[1] Departmental reports have a specific contribution to make to the process of reporting to the public and Parliament.

2. In parallel with the introduction of resource accounting and budgeting, on which our predecessors took evidence on several occasions, the Government has given consideration to the nature and timing of the provision of financial information to Parliament. It was originally envisaged that the Departmental Report, a forward looking document, would be complemented by the publication in the Autumn of an annual outturn report, consisting of an Output and Performance Analysis and a copy of the accounts for the previous financial year.[2] This new structure would come into effect with the last 'old style' departmental report being published in the spring of 2001 and the first 'backward looking' outturn report in the Autumn of that year. In considering the detailed contents of each of these documents, the Treasury confirmed in December 1998 that the Government wanted to carry out a fundamental review of existing 'core requirements' during the run up to full Resource Accounting and Budgeting implementation in 2001, including the balance of information to be contained in the forward looking plans and the backward-looking reports.[3]

3. In October 2000, the Chief Secretary to the Treasury decided that it would make more sense to move to split reporting from the spring of 2002, as 2001-02 would be the first full year of resource accounting and budgeting. He also decided that, before the new reporting arrangements were introduced, he would review with some users and producers of the reports how to ensure that the new structure best met their needs. Accordingly, he informed our predecessors on 17 October 2000 that he was setting up a working group, with representation from departments, the NAO and some external users, to report by May 2001, and sought the nomination of a Committee clerk to that group.[4]

4. In the event, the working group met for the first time on 18 May 2001. On 16 October 2001, the Chief Secretary wrote to the Chairman proposing a number of changes to the reporting pattern from spring 2002.[5] The spring report would give "a full picture of each department's organisation, aims and objectives, performance and use of resources. Within a framework of core requirements, departments will be given greater freedom to produce streamlined, clearly presented reports accessible to a wider audience...In the autumn departments would publish resource accounts including further contextual information. In addition departments would be asked to publish supplementary performance information updating that in the spring report." Departments would also have greater freedom over the publication arrangements for their departmental reports. One consequence of this would be that responsibility for publication of the main Estimates, which for the first time in 2001 had been incorporated in departmental reports, would revert to the Treasury.

5. The Chief Secretary recognised that his new approach was "a shift in emphasis" from the previous approach to reporting. In view of the timescale for preparing the spring 2002 reports, he proposed to advise Departments to work on the basis of this model as an interim measure for the 2002 reports, having regard to any comments from Committees, and then take stock with Parliament in the light of experience with these reports on the best way forward for the longer term.

6. In view of the fact that the timing of the review meant that there had been no opportunity for departmental committees to make a direct input, we decided to take evidence from Treasury officials and from the Chief Secretary. We also sought the views of other Committees.

7. A number of Committees responded to our invitation to comment on the Government's proposals.[6] The Chairman of the Northern Ireland Affairs Committee wished to be kept informed of developments on the new outturn publication. The Chairman of the Works and Pensions Committee commented on the complexity of that department's report and associated accounts. He favoured "any improvement in the presentation and content of the report which made the document clearer" and believed that the proposals of the Chief Secretary "will assist in this regard". The Chairman of the Defence Committee felt that it was "probably too soon to judge whether the Treasury's revised proposals will be an improvement" but considered that they might make it easier to judge when to report on the accountability cycle. The Chairman of the Education and Skills Committee pointed out that getting a comprehensive view of education spending by local authorities would remain complicated by the fact that most of the income for such spending is derived from the Revenue Support Grant, a responsibility now of the Office of the Deputy Prime Minister. He was also concerned that comparable series of statistics remained available, even when there are reforms to expenditure reporting. The Chairman of the Foreign Affairs Committee was critical of the proposals, principally because of the inconvenience that might arise from fragmentation of information, the possibility that simplification might lead to a reduction in the amount of readily available information, and a reduced relevance to Parliament.

8. We are grateful to all who have made an input to this inquiry. As all of the 2002 departmental reports have now been published, we thought that this would be an appropriate time to make an interim report. We shall seek the views of Committees on the new reports, and on the information provided, in the autumn, and expect to make a further report in time to inform the production of the 2003 departmental reports.

9. In assessing the changes to the financial process put forward by the Government, we have adopted three criteria:

  • the practicability of the proposed revised structure of spring and autumn reporting;
  • whether the new reporting pattern is likely to enhance the House's scrutiny of the Executive; and
  • whether the new style departmental reports are likely to improve public accessibility to information about the work of departments, and improve public understanding of it.


10. A central element in the proposed system has always been the autumn package of information, although its proposed scope has now changed. This is intended to consist of the audited resource accounts and further contextual material. In particular, the material presented in the autumn should enable a complete picture to be given of the previous financial year. Mr Sharples told us[7] that the length of potential delay from the end of the financial year to the publication of audited accounts was one factor which influenced thinking on the idea of having two part reporting (spring and autumn reports). He envisaged[8] that if the accounts were delayed into the following calendar year "it will be extremely unfortunate if the performance information is delayed so long, and it may be that one wanted to get performance information out in the autumn in any event".

11. Mr Sharples[9] was "a bit concerned" about the present length of the delay from the end of the financial year to the publication of audited accounts and was trying to speed up the process, as was the Chief Secretary.[10] The Treasury subsequently told us[11] that in respect of 2000-01, of the 52 resource accounts, 13 were ready to publish[12] by 1 November 2001. A recent Parliamentary Answer[13] shows that only nine had been published by 30 November 2001. It also revealed that five departments had failed to meet the statutory deadline of 31 January for laying their resource accounts for 2000-01 before Parliament, and that seven departments had failed to publish their accounts by 24 April 2002.

12. An updated and corrected version of the table given in the Answer referred to in the previous paragraph is given in the Annex. This data gives us little confidence that the publication of audited resource accounts for 2001-02 this autumn is likely to be achieved by the majority of departments. We have also sought the opinion of the Comptroller and Auditor General on this point, in view of his responsibility for auditing these accounts. In response, the National Audit Office comments that although some improvement is expected over last year, "it is highly unlikely that all the 2001-02 accounts will be published by this autumn."[14]

13. On the evidence we have received, it is unlikely that departments will generally be able for some time to lay audited resource accounts before Parliament in the autumn after the end of the financial year. This knocks a major hole in the Government's revised strategy for financial reporting to Parliament. We look to the Government to ensure that full outturn information is made available in the autumn, and look forward to hearing how it proposes to do this in the period until its original objective of laying audited resource accounts in the autumn can be achieved.

14. We are also concerned at the excessive delays that occurred in publishing some of the 2000-01 resource accounts, given that the documents must be complete before they are laid before Parliament. We do not regard the formal act of laying[15] as an adequate way of informing the House of the content of these documents. The public has a right to prompt publication after laying. We expect to see a marked reduction in publication delays with the 2001-02 resource accounts and look to the Treasury to take steps to achieve this.

15.  A key question of importance to us is whether the new style departmental reports will continue to meet the House's requirements. Mr Sharples told us that the Government "see Parliament as being one of the prime audiences, if you like the joint equal audience [of departmental reports] along with the public".[16] He also told us[17] that the aim of the proposals was 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", and pointed out how different departments might have different approaches, based on their activities and the needs of their readers.[18] He expected the new style departmental reports to be "shorter and better focussed."[19]

16. One of the features of the new arrangements is that the Main Estimates will no longer be included in the Departmental Reports, an arrangement introduced in 2001. They will now be published separately, within 21 days of the Budget, together with supplementary budgetary and financial information to allow a full reconciliation from one to the other.[20] Mr Sharples gave a number of reasons for this. First, he maintained that there was limited interest in Estimates outside Parliament.[21] Second, they are in many cases overtaken by Supplementary Estimates in the course of the year. Third, the arrangements that operated in 2001 had led to significant extra coordination work and there had still been a number of material errors. The Treasury also pointed out subsequently that inclusion of the Estimates represented about 14 per cent of the aggregate size of the 2001 departmental reports, and this would have contributed to the 31 per cent rise in aggregate cost.[22]

17. We believe that there are good practical arguments for responsibility for publication of Estimates to return to the Treasury and that reverting to this earlier practice may act to strengthen Parliamentary control. We note from the comments of Chairmen of other departmental committees that the previous practice of providing them with drafts in advance appears, in respect of the 2001-02 Estimates, to have been honoured more in breach than observance. We recommend that this practice is restored, and that as much advance notice as possible is given to Committees, particularly of Supplementary and Revised Estimates, in order that those can be scrutinised properly before they are voted on by the House.

18. Mr Sharples commented that publishing a departmental report in the spring meant that it could provide contextual information to inform discussion of the Estimates prior to their approval by the House, typically in July[23]. We agree with this, but note that the more relaxed timetable introduced this year for publishing departmental reports militates against this.[24] We recognise the contribution made to consideration of the Main Estimates in particular by material in the Departmental Report. We therefore recommend that all departmental reports are published well before the House is asked to vote on the Main Estimates.

19. We note the suggestion that Estimates might in future be published electronically, with Committees being given printed versions of those relevant to them. We are not convinced that the House as a whole is ready to accept this development.

20. A vital part of the work of departmental committees is monitoring departments' performance against their PSA targets. Mr Sharples told us that, under the new arrangements, the spring departmental reports will include a report on performance against each of the PSA targets and the supplementary information published in the autumn will provide an update on that, to include financial data to 31 March and performance data to the latest available date. He added "the PSAs remain central to reporting and accountability.[25] He described this as "the bedrock of performance reporting in the departmental report".[26] The new arrangements would, he considered, provide more information than at present.[27] One of the factors on which we will base our judgement of the success of the new arrangement is whether it improves Committees' monitoring of departments' levels of success in meeting PSA targets. In this context we note the work that is in hand to improve the transparency of performance reporting, and its validity.[28]

21. Besides their use by Parliament, we were interested to find out who else made use of departmental reports. Figures provided by the Treasury[29] show a number of interesting features. First, Parliament is very much a minority consumer of departmental reports. Second, print runs vary markedly and are primarily determined by the number of copies taken by departments for their own purposes. We have therefore sought information from departments as to the uses they put these copies to. This reveals a wide range of practices by departments.[30] While we welcome the fact that Departmental Reports have a wide readership, and provide useful reference points for departments, we look to departments not to lose sight of their primary function, which is to report to Parliament.

22. One of the issues which concerned us in relation to public access to departmental report was their cost, some of which had risen very markedly between 2000 and 2001.[31] There is also a marked lack of correlation between the length of the publications and their cover prices.[32] We are therefore pleased to note that cover prices are now standardised according to a scale of charges and a standard specification, and will no longer reflect additional costs arising from special requirements which departments may have.[33] These costs will now fall on departments.[34]

23. Only a relatively small number of copies are sold outside the sponsoring departments and Parliament. However, the Chief Secretary supported improvements in making the reports available on the Internet. Evidence from DTI[35] was that Internet usage was around 1000 hits a month, compared with total sales of 976 hard copies, 693 of them to the Department or Parliament.

24. We support the idea of greater accessibility of departmental reports through the Internet, but not at the expense of producing a non-electronic version. We agree with the Chief Secretary[36] that it is important to retain the paper version.

25. We explored with the Chief Secretary whether the changes might lead to departmental reports becoming less factual in their content, and that departments might seek to portray their performance each year in the most favourable light. The Chief Secretary commented[37]:

"I understand the reason for the suspicion...I would seek to dispel it, first of all, by stressing we do take seriously ...the importance of these documents and records and accountability to Parliament. We have made clear that the alteration in the format and the presentation is not to deny Parliament information, indeed all of the information that was available in last year's report will be available in the new style reports...it is the explanation of what is in the reports about which departments want greater flexibility and not the content".

26. We welcome the Chief Secretary's assurances about the content of the new style reports, and that there will be no overall loss of comparative information.[38] The latter point is of considerable importance to departmental committees seeking to form a view of trends. We reiterate the point made by the Chairman of the Education and Skills Committee that, besides information being given on a comparable basis in year, it needs to be capable of reconciliation with previous years' data.


1   Q35 Back

2   See Sixth Report from the Procedure Committee, Session 1998-99 (HC 295), Appendix 14, p.69, and HC 308-i (1999-2000), paras. 106-117. Back

3   HC 308-i (1999-2000), para 108 Back

4   The then Clerk of the Treasury Committee was a member of the working group. Back

5   Ev p.1. For a summary of the conclusions of the Review, see Ev.p.2. See also Q2 Back

6   Copies of the letter sent to Committee Chairmen by the Chairman of the Treasury Committee, and the responses

received are set out at Appendix 1 to the Minutes of Evidence. Back

7   QQ80-1 Back

8   Q82 Back

9   Q80, 83. See also Q36 Back

10   QQ175-6 Back

11   Ev. 20 Back

12   'Ready to publish' means signed by the Accounting Officer and certified by the Comptroller and Auditor General Back

13   Official Report, 30 April 2002, Vol. 384, col. 722-6w. Back

14   Appendix4 to the Minutes of Evidence. Back

15   This involves Departments delivering two copies of the document concerned, which must be complete but need not be in the final form in which it will be published, to the Journal Office. These copies are subsequently sent to the Library. Such delivery, which is formally recorded in the Votes and Proceedings, discharges any statutory obligation to lay the document before the House. Back

16   Q5 Back

17   Q9 Back

18   Q61 Back

19   Q53. See also Q143 Back

20   Q17. See also Qq39-40, 48 and 90. Back

21   For sales figures for Estimates volumes, see Appendix 5 of the Appendices to the Minutes of Evidence. Back

22   Ev p18. The complete set is available at a discounted price. Back

23   Q23. The main Estimates for 2002-03 were agreed by the House on 27 June. Back

24   In 2002, Departmental Reports were published over the period from 24 April to 18 July. Back

25   Q31 Back

26   Q62 Back

27   QQ23, 29, 98 See also Q33 Back

28   QQ57-8. See also QQ63-72 Back

29   Ev p19 Back

30   See Appendix 2 to the Minutes of Evidence Back

31   Ev p.19. See also QQ120-2 Back

32   Q120-2 Back

33   Appendix 5 to the Minutes of Evidence Back

34   Appendix 5 to the Minutes of Evidence Back

35   Q133-4 Back

36   Q130, 132 Back

37   Q130. See also QQ13-8 Back

38   QQ145-6 Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 2 August 2002