House of Commons Committee of Public Accounts The centre of government Nineteenth Report of Session 2014–15 Report, together with the formal minutes relating to the report Ordered by the House of Commons to be printed 15 October 2014 HC 107 Published on 22 October 2014 by authority of the House of Commons London: The Stationery Office Limited £0.00 Committee of Public Accounts The Committee of Public Accounts is appointed by the House of Commons to examine “the accounts showing the appropriation of the sums granted by Parliament to meet the public expenditure, and of such other accounts laid before Parliament as the committee may think fit” (Standing Order No 148). Current membership Rt Hon Margaret Hodge (Labour, Barking) (Chair) Mr Richard Bacon (Conservative, South Norfolk) Guto Bebb (Conservative, Aberconwy) Mr David Burrowes (Conservative, Enfield, Southgate) Jackie Doyle-Price (Conservative, Thurrock) Chris Heaton-Harris (Conservative, Daventry) Meg Hillier (Labour, Hackney South and Shoreditch) Mr Stewart Jackson (Conservative, Peterborough) Andrea Leadsom (Conservative, South Northamptonshire) Rt Hon Anne McGuire (Labour, Stirling) Austin Mitchell (Labour, Great Grimsby) John Pugh (Liberal Democrats. Southport) Nick Smith (Labour, Blaenau Gwent) Stephen Phillips QC (Conservative, Sleaford and North Hykeham) Powers Powers of the Committee of Public Accounts are set out in House of Commons Standing Orders, principally in SO No 148. These are available on the Internet via www.parliament.uk. Publications 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 www.parliament.uk/pac. A list of Reports of the Committee in the present Parliament is at the back of this volume. Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee is Sarah Petit (Clerk), Claire Cozens (Committee Specialist), James McQuade (Senior Committee Assistant), Joellen Perry, Sue Alexander and Jamie Mordue (Committee Assistants) and Janet Coull Trisic (Media Officer). Contacts All correspondence should be addressed to the Clerk, Committee of Public Accounts, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5708; the Committee’s email address is [email protected] 1 Contents Report Page Summary 3 Conclusions and recommendations 4 1 The role of the centre of government 7 2 How the centre works with departments 10 3 Government skills and capability 12 Formal Minutes 14 Witnesses 15 List of printed written evidence 15 List of Reports from the Committee during the current Parliament 16 3 Summary A strong and effective centre of government is vital for the effective operation of government as a whole and for ensuring a focus on improved value for money for the taxpayer. However, there is a lack of clarity about the centre’s precise role, particularly the respective responsibilities of the Cabinet Office, HM Treasury and the Prime Minister’s Office (Number 10), and how they work together as a coherent centre. The centre sometimes intervenes to address issues with high-priority government programmes, but has too often failed to do so effectively or at an early enough stage. In part, this is because the centre does not have a joined-up single view of strategic risks across government, meaning it is often reactive in its response rather than able to anticipate potentially serious problems. There are gaps in key skills at the centre and across departments, such as financial management capability and contracting expertise, which are compounded because government repeatedly fails to learn lessons and share good practice from past experience. After our evidence session in July the Government announced that the roles of Cabinet Secretary and Head of the Civil Service will be combined, and there will be a new Chief Executive post at the centre of government. Implementing these changes may provide an opportunity to make progress on the role of the centre and we intend to return to this topic in a further session before the end of this Parliament, by which time we expect to see significant progress on the recommendations we make below. 4 Conclusions and recommendations 1. The centre of government comprises the Cabinet Office, HM Treasury and Number 10. Together, these central bodies are responsible for coordinating and overseeing the work of government as a whole, to help government achieve its aims and priorities. The centre also works with departments to improve the efficiency and effectiveness of their operations, for example by providing direction on making cost savings, standards for financial management and reporting, and assurance over the delivery of major projects. 2. The current lack of clarity about the precise role and responsibilities of the centre jeopardises government’s ability to deliver value for money in key public spending areas. Correspondence we received indicates that agreement between the civil service and ministers on the role of the centre does not yet exist. The civil service remains committed to departmental autonomy whilst ministers want an effective, smart and challenging centre. This lack of agreement means that there is no clear definition of the role of the centre and the accountabilities for implementing cross- government initiatives are not always clear. We accept there needs to be a balance between central control and departmental autonomy. Nevertheless, too often we see a failure of the centre to intervene appropriately and quickly to avoid poor value for money for the taxpayer. Universal Credit is a case in point. The Cabinet Office, the Treasury and Number 10 need to focus more effectively on their central role and on working together as an integrated centre of government. We welcome the permanent secretaries’ commitment to provide us with a statement of the role of the centre. Recommendation: The permanent secretaries’ statement on the centre should set out: • the role of the centre as one integrated capability; • the respective roles and responsibilities of the Cabinet Office, the Treasury and Number 10; • how these three bodies work together; and • how the centre works with other central government departments. As a starting point, they should use the suggested responsibilities of the centre set out in the Comptroller and Auditor General’s report.1 3. The centre is not working effectively with departments to maintain a focus on timely implementation of cross-government priorities. Departments are making unacceptably slow progress on some central efficiency initiatives such as shared services, resulting in taxpayers’ money being wasted. The centre needs to challenge departments more actively on their implementation of cross-government initiatives, 1 C&AG’s Report, The centre of government, Session 2014-15, HC 171, 19 June 2014, para 11 5 like debt collection, including by holding permanent secretaries more strongly to account for departmental performance. While Accounting Officers do have an obligation to deliver value for money across government, as well as within their own departments, they do not then have meaningful incentives to work in the wider interests of government as a whole. Recommendation: The centre should set out how it will improve performance management and incentives, to ensure that departments deliver cross-government priorities successfully and within the intended timescales. 4. The centre does not intervene early enough to prevent major departmental projects and programmes from failing. The permanent secretaries told us that the centre does intervene in individual departments when departmental programmes or projects are at risk of failure or Accounting Officers have failed on the job; although this is not usually done in public and they acknowledged that their interventions tend to occur when there is a crisis. Our examinations of failings with major projects such as Universal Credit indicate the centre is not intervening effectively before serious problems arise. Central departments have various sources of intelligence about strategic risks, such as information from Treasury spending teams, Major Projects Authority assurance reviews, and Implementation Unit stocktakes, and should ensure that this information is used to anticipate significant risks and intervene appropriately. The centre also needs to ensure lessons are learned from past experience of project failures or poor performance, and that this process is formalised. For example, in letting recent renewables contracts, government appeared to have learned little from its experience of PFI contracts in terms of ensuring some clawback of any excessive returns. Recommendation: The centre should: • draw together its strands of intelligence to form an integrated, single view of strategic risks. Where such risks are identified, the centre needs to robustly challenge departments, intervening earlier and more effectively to prevent project failure; and • explain how it will ensure that lessons from past experience are properly considered when planning new projects. 5. Key specialist skills are in short supply and are not distributed effectively between departments and the centre. The effectiveness of government is undermined by shortages in specialist skills and capability, for example there are recognised gaps in commercial, contracting and financial management expertise. Some progress is being made, such