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Counting the Cost: Financial Scrutiny of the Department for Transport 2011–12

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Counting the Cost: Financial Scrutiny of the Department for Transport 2011–12 House of Commons Transport Committee Counting the cost: financial scrutiny of the Department for Transport 2011–12 Fifteenth Report of Session 2010–12 Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/transcom Ordered by the House of Commons to be printed 7 February 2012 HC 1560 [Incorporating HC 1713-i] Published on 23 February 2012 by authority of the House of Commons London: The Stationery Office Limited £12.00 The Transport Committee The Transport Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Transport and its Associate Public Bodies. Current membership Mrs Louise Ellman (Labour/Co-operative, Liverpool Riverside) (Chair) Steve Baker (Conservative, Wycombe) Jim Dobbin (Labour/Co-operative, Heywood and Middleton) Mr Tom Harris (Labour, Glasgow South) Julie Hilling (Labour, Bolton West) Kwasi Kwarteng (Conservative, Spelthorne) Mr John Leech (Liberal Democrat, Manchester Withington) Paul Maynard (Conservative, Blackpool North and Cleveleys) Iain Stewart (Conservative, Milton Keynes South) Graham Stringer (Labour, Blackley and Broughton) Julian Sturdy (Conservative, York Outer) The following were also members of the committee during the Parliament. Angie Bray (Conservative, Ealing Central and Acton) Lilian Greenwood (Labour, Nottingham South) Kelvin Hopkins (Labour, Luton North) Gavin Shuker (Labour/Co-operative, Luton South) Angela Smith (Labour, Penistone and Stocksbridge) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at http://www.parliament.uk/transcom. A list of Reports of the Committee in the present Parliament is at the back of this volume. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee are Mark Egan (Clerk), Jessica Montgomery (Second Clerk), David Davies (Committee Specialist), Tony Catinella (Senior Committee Assistant), Edward Faulkner (Committee Assistant), Stewart McIlvenna (Committee Support Assistant) and Hannah Pearce (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Transport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6263; the Committee’s email address is [email protected] 1 Contents Report Page Summary 3 1 Introduction 5 2 Department for Transport’s expenditure 6 Presentation and information 6 2010/11 underspend 8 Regional spend 9 Regional Growth and Growing Places Funds 10 Regional Growth Fund 10 Growing Places Fund 11 3 Project appraisal 12 4 Performance reporting 14 Measuring progress 14 Transport security 14 5 Conclusion 15 Conclusions and recommendations 16 Formal Minutes 18 Witnesses 19 List of printed written evidence 19 List of additional written evidence 19 List of Reports from the Committee during the current Parliament 20 3 Summary Throughout 2011–12 we have followed announcements on public expenditure from the Department for Transport, culminating in the new transport projects announced in the Chancellor of the Exchequer’s autumn statement. We commend the department for simplifying the way in which it presents financial information so that it is now possible to compare future plans with past outturns. However, we recommend that more information should be published about in-year changes to budgets. We note that the department’s underspend for 2010–11 was larger than the cuts to its budget during the year. We recommend that the department could do more to ensure that its expenditure plans involve a fair allocation of resources across the nation and we seek information about how the department’s funding of the Regional Growth and Growing Places Funds has been used. Although we welcome the additional investment in road and rail infrastructure projects announced in the autumn statement we have some concerns about how the projects were chosen. We recommend that the new rail schemes be regarded as additional to those which the Government will agree to fund as part of planning for the 2014–19 rail spending period. Finally, we are critical of the thin account of the department’s performance in its annual report for 2010–11. There is no agreed way of measuring the department’s performance which again highlights the absence of a strategy for transport. We again recommend that the Government publish such a strategy. 5 1 Introduction 1. Government spending—how much money is spent on which activities and projects and how decisions are taken to determine priorities—is an issue at the heart of British politics. It is especially significant during a time of austerity, when the focus is on where to make cuts and the impact these might have on service provision, public welfare and employment. The Government’s Spending Review in autumn 2010 was unprecedented in modern times in envisaging at least five years of austerity, in order to reduce the budget deficit. The impact of the Spending Review on transport has underpinned several of our inquiries and in January 2011 we published a strategy for financial scrutiny of the Department for Transport (DfT).1 This report is the first in what we intend will be a series of financial scrutiny reports arising from that strategy. We comment on what has happened to the DfT’s budget since the Spending Review, the department’s business plan and its annual report. 2. We are also taking this opportunity to follow up some of the recommendations we made in our report Transport and the Economy which was published in March 2011.2 This report’s recommendations on the appraisal of transport projects and the wider strategic context are particularly relevant in the light of the host of new road and rail projects approved by the DfT as part of the Chancellor of the Exchequer’s autumn economic statement in November. 3. Throughout the last year we have corresponded with the DfT on its financial announcements. We also took oral evidence from Rt Hon Justine Greening MP, the Secretary of State for Transport, and Lin Homer, then Permanent Secretary, on the work of the DfT on 19 October and from the Secretary of State and Steve Gooding, a senior official, on the autumn economic statement on 14 December. We publish all of this material with this report. We acknowledge the assistance we received from the House of Commons Scrutiny Unit in analysing financial information for us and drawing our attention to the salient issues. 1 Financial scrutiny of the Department for Transport, Second Report, Session 2010-12, HC 683 (hereafter Financial scrutiny). 2 Transport and the economy, Third Report, Session 2010-12, HC 473 (hereafter Transport and the economy). 6 2 Department for Transport’s expenditure Presentation and information 4. Government finances are notoriously complex, with distinctions between different forms of expenditure (for example, resource and capital spending; departmental expenditure limits and more volatile annually managed expenditure) and complicated adjustments to the figures to ensure that cash and resource budgets and outturns can be kept in line. In the past there were different bases for expenditure plans and outturn figures, which made it difficult to compare planned spending in one year with what actually happened. There has been some simplification in recent years, as a result of the Treasury’s Alignment project. Last year we welcomed the intention of Rt Hon Philip Hammond MP, the then Secretary of State for Transport, to go beyond the requirements of the project to simplify the DfT’s annual budget (its Main Estimate).3 We saw the first fruits of this work with the publication of the DfT’s annual report and accounts for 2010–11, which includes a three-page table showing outturn and estimated expenditure for the period from 2005–06 to 2014–15 itemised by some 20 comprehensible categories.4 Figure 1 uses this information to show the department’s overall spending profile for the decade. We commend the Department for Transport for simplifying the structure of its Main Estimate and publishing detailed information about spending for the 2005–15 period, which enables us to see more clearly where the department spends money and trends over time. Figure 1: DfT expenditure 2005–15 18 16 14 12 10 Resource 8 £ Millions Capital 6 Total 4 2 0 Notes: Annual Report and Accounts 2010-11, pp35-37. Figures are provided in cash terms (ie without accounting for inflation). The 2010–11 figures are estimated outturns. Figures for subsequent years are for planned expenditure. 3 Financial scrutiny, paragraph 7. 4 Annual report and accounts 2010-11, DfT, HC (2010-12) 972 (hereafter 2010-11 report and accounts) pp35-37. 7 5. Each year the DfT provides us with a memorandum to explain its annual Main Estimate—we publish the memorandum for 2011–12 with this report.5 These have become more useful documents, with clearer explanations of how the figures have changed. However, there remains a problem with inadequate explanation of in-year budget changes. Three recent examples stand out. Firstly, after the 2010 election the new Government reduced the DfT’s budget by £683 million, as part of a wider programme of cuts in public expenditure ahead of the Spending Review. Information about where those cuts would be made was released in response to a parliamentary question, rather than proactively by the department.6 6.
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