The Treasury Committee has agreed to the
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,
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.
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. 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. 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.
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.
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
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
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
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.
The Treasury subsequently told us
that in respect of 2000-01, of the 52 resource accounts, 13 were
ready to publish
by 1 November 2001. A recent Parliamentary Answer
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."
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
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".
He also told us 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.
He expected the new style departmental reports to be "shorter
and better focussed."
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.
Mr Sharples gave a number of reasons for this. First, he maintained
that there was limited interest in Estimates outside Parliament.
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.
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. We agree
with this, but note that the more relaxed timetable introduced
this year for publishing departmental reports militates against
this. 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.
He described this as "the bedrock of performance reporting
in the departmental report".
The new arrangements would, he considered, provide more information
than at present.
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.
21. Besides their use by Parliament, we were
interested to find out who else made use of departmental reports.
Figures provided by the Treasury
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
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.
There is also a marked lack of correlation between the length
of the publications and their cover prices.
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.
These costs will now fall on departments.
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
was that Internet usage was around 1000 hits a month, compared
with total sales of 976 hard copies, 693 of them to the Department
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
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
"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.
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'
1 Q35 Back
See Sixth Report from the Procedure Committee, Session 1998-99
(HC 295), Appendix 14, p.69, and HC 308-i (1999-2000), paras.
HC 308-i (1999-2000), para 108 Back
The then Clerk of the Treasury Committee was a member of the working
Ev p.1. For a summary of the conclusions of the Review, see Ev.p.2.
See also Q2 Back
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
Q80, 83. See also Q36 Back
Ev. 20 Back
'Ready to publish' means signed by the Accounting Officer and
certified by the Comptroller and Auditor General Back
Official Report, 30 April 2002, Vol. 384, col. 722-6w. Back
Appendix4 to the Minutes of Evidence. Back
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
Q53. See also Q143 Back
Q17. See also Qq39-40, 48 and 90. Back
For sales figures for Estimates volumes, see Appendix 5 of the
Appendices to the Minutes of Evidence. Back
Ev p18. The complete set is available at a discounted price. Back
Q23. The main Estimates for 2002-03 were agreed by the House
on 27 June. Back
In 2002, Departmental Reports were published over the period from
24 April to 18 July. Back
QQ23, 29, 98 See also Q33 Back
QQ57-8. See also QQ63-72 Back
Ev p19 Back
See Appendix 2 to the Minutes of Evidence Back
Ev p.19. See also QQ120-2 Back
Appendix 5 to the Minutes of Evidence Back
Appendix 5 to the Minutes of Evidence Back
Q130, 132 Back
Q130. See also QQ13-8 Back