09 April 2004
Sir Andrew Turnbull, the head of the civil service, has rejected MPs' accusations of 'financial mismanagement' at the Cabinet Office following concerns raised by the National Audit Office.
Appearing before the Commons' public administration select committee on April 1, Turnbull said the department's finances were healthy and that it was ready to lead the civil service reform programme.
Committee members had been alerted to financial concerns by the NAO's decision to issue a 'disclaimer' on the CO's accounts for the 2002/03 financial year. That is worse than accounts being 'qualified' and means the auditor could not reach an opinion on them.
Turnbull told PASC chair Tony Wright that the accounts were simply late and that, as he understood it, the NAO did not have any serious financial misgivings.
However, auditors had indeed queried the department's financial activities. MPs pressed Colin Balmer, managing director at the Cabinet Office, for more information on a mysterious £4.5m 'write-off' by the Office of the e-Envoy, part of the CO, and a broader overspend of £2.3m during the financial year.
Auditors had asked the CO to change the way it accounted for the £4.5m, described as 'items that did not come into use'.
Asked by committee member Ian Liddell-Grainger what items were involved, Balmer could say only that it related to the government's Gateway [IT] Projects and other 'portal projects'. Refusing to let the matter lie, Wright has asked the CO to provide details.
Balmer was able to offer reasons for the £2.3m overspend, claiming it related to items he 'didn't seek parliamentary approval for' because they arose, unexpectedly, shortly before the annual accounts deadline.
Later, Turnbull rejected MPs' assertions that the CO is too close to the Prime Minister's Office and stuck in a state of 'permanent revolution' because of Labour's dramatic post-1997 overhaul of departments and the civil service.
'What's the basis of this [criticism]?' he asked. 'Ultimately, we are judged by outcomes. In the past we have had moderate success. That is now improving.'
One area in which outcomes would be in line with ministers' ambitions, he promised, was the aims of the Lyons review – to relocate 20,000 civil servants to the regions – and the overhaul of Whitehall that will follow the wider Gershon review on efficiency.
MPs fear the savings identified by Gershon could be hard to achieve. But Turnbull said: 'When you think about the power of technology and
e-enablement, there are major savings that can be made. And the advice we get from the sector about procurement is that we still have greater scope to drive harder bargains and improve.'
DWP imposes pay deal as PCS members prepare to strike
Relations between Whitehall employers and the civil service's biggest trade union reached breaking point this week following the Department for Work and Pensions' decision to impose a controversial pay deal on staff.
Public Finance has learnt that the Public and Commercial Services union twice turned down what employers described as 'the highest possible pay award' to end the ongoing dispute because of concerns over bonus structures. Employers claim that left them with no alternative but to impose the improved deal.
Tensions escalated further, however, when a leaked memo, sent to DWP Secretary Andrew Smith, outlined plans to extend performance-related pay systems, which are 'a contributory factor in reducing the unions' grip on pay decision-making'.
The union had told PF that, because the new pay deal had been imposed, it was 'looking to the next year's pay round to haul back ground lost this year'. That will be a tough task if the leaked memo is accurate.
Whitehall is now bracing itself for further national strikes and work-to-rule practices as the PCS reacts to the embarrassing snub, amid the threat of widespread job losses linked to the Lyons and Gershon reviews.
DWP permanent secretary Sir Richard Mottram announced the decision to impose the improved offer — limited by the Treasury's strict ceiling for pay rises — ahead of PCS strikes scheduled for April 13 and 14.
The DWP and the PCS were involved in talks at Acas throughout March in an attempt to reach a settlement.
The department's initial offer promised 45,000 workers pay rises of 7%—9%, while 86,000 would have received more than 5%.
The improved package brings a further 11,000 civil servants up to the 7%—9% bracket and provides every worker with a £100 lump sum. PCS leaders dismissed the proposal, claiming it guaranteed workers just 2.6% and did not dispel fears over bonuses.
On April 7, the union unveiled a national pay claim — although developments at ministerial level suggest there is little appetite for such a pay structure.
Expected participation in next week's strikes escalated this week, when staff at the Office for National Statistics joined the DWP and Prison Service in the dispute.
PCS general secretary Mark Serwotka called the DWP's action 'arrogant and high-handed,' claiming it 'will serve to only harden the resolve of staff, making more industrial action likely'.