05 September 2008
Budgetary control in the Department for Environment, Food and Rural Affairs has come under fire from the Public Accounts Committee.
Between 2006 and 2008, Defra planned spending in excess of its actual funds, with a detrimental effect on service delivery, according to a PAC report published on September 4.
Mid-year budget reductions of £170m in 2006/07 meant that the Marine and Fisheries Agency had to defer its vessel decommissioning grants scheme for trawler owners intending to leave the fishing industry.
PAC chair Edward Leigh said: 'This is a clear example of poor financial management harming the delivery of services. The department has now established more rigorous financial and outcome monitoring systems but the many lessons of what had gone wrong should be closely studied.'
The committee conceded that unexpected events, such as floods and outbreaks of animal disease, put a strain on the £3.6bn budget. Nonetheless, it said, Defra needed to establish a 'taut financial management culture'.
According to the report, Defra failed to allocate final budgets to each of its business areas until halfway through the 2007/08 financial year, precisely because planned expenditure was in excess of the funds provided.
Budget-holders did not declare all financial commitments from the outset, and the costs of the unforeseen floods and the outbreaks of animal disease had to be managed.
The report also conceded that the department's problems in managing its spending were exacerbated by the challenges of sponsoring 31 delivery bodies, each with its own administrative functions.