By Alex Klaushofer
12th June 2009
The head of the Home Office has attributed the department’s history of underspending to ‘overoptimism’ when embarking on capital projects.
Permanent secretary Sir David Normington was answering questions at the Public Accounts Committee on June 8 about the department’s accumulated underspend of £725m in the five years to 2007/08.
MP Richard Bacon described the department’s history of underspending as ‘staggering’. He added: ‘Here are public servants who want to do good, and they’ve got the opportunity and budget with which to do things, and they’re not able to get it out the door. You’d think that that problem would get sorted.’
But Normington said that underspending against capital budgets was a common failing. ‘This is a problem all across government of big programmes, big projects, with people being optimistic at the beginning about how quickly they will get off the ground, how quickly contracts will be let and how quickly the money will get out of the door. We’ve been slow to learn that lesson.
‘Most of our capital is spent on big complex projects, and frankly, we have a history of being overoptimistic about how much we will spend on those projects, and profiling the amounts of money wrongly,’ he added, citing the government’s Intercept Modernisation Programme.
An unplanned surplus of £12m generated by the Identity & Passport Office was due to difficulties in forecasting the falling demand for passports created by the recession, he added.
But the permanent secretary said that the recession had allayed the difficulties of recruiting and retaining staff with good financial skills – vital for improving the department’s financial management.
‘It is a little easier now,’ he said, adding: ‘You don’t have to pay them as much as you used to.’
The Home Office had increased the number of professionally qualified staff it employed by 66 over past 18 months, he said. But in-house training was also essential for continued improvement.
‘The long-term solution to this is actually training our own, because what you are effectively doing in the short term is taking people from other places, some from other places in government and the public sector,’ he said.
Staff lacking the necessary financial skills were strongly encouraged to take up the training workshops provided, he said.
‘If they don’t go, they are told they have to go.’
