MoDs finances come under fire

20 Jan 00
Whitehall's poor management skills were highlighted again this week with the publication of two reports which call for vastly improved financial management at both the Ministry of Defence and in the National Health Service.

21 January 2000

Auditor general Sir John Bourn, and the chairman of the Public Accounts Committee, David Davis, both called for more experienced staff to help improve financial practices.

In the National Audit Office's Appropriation Accounts 1998/99, Sir John criticised the MoD for its failure to keep within its spending limits, and the loss of £29.7m on two disastrous IT projects.

Leaving MoD accounts qualified for the third year in succession, Sir John said the department's actions were 'clearly a cause for concern'.

The report details a catalogue of weak management in two IT projects – the Common User Data System and the Pay Replacement System 2.

From the start of the contract of the Common User Data System in 1989, the MoD failed to sort out anomalies in the contract. It transferred the system to the department in 1994 without any caveat for functionality.

When the project was terminated in 1997, it had never been operational. The contract was initially valued at £10.2m and was expected to be completed in 1994. In 1998, the MoD implemented an off-the-shelf solution at a cost of £1.3m a year.

Sir John said a consultants' review had advised the use of experienced staff on projects in future and regular reviews for realism and accuracy.

In a separate study, the PAC questioned the financial management of the National Health Service.

In its fifth report, NHS (England) Summarised Accounts 1997/98, the committee said the NHS 'could not afford to handicap itself by tolerating anything other than the highest standards of financial management'.

Chairman David Davis said: 'We found too much evidence that the service's financial affairs had not been handled well. They must do better than this, by developing their staff skills or bringing in more external expertise.'

Last week, the Performance and Innovation Unit at the Cabinet Office suggested Whitehall civil servants needed to give greater emphasis to external advice from service users and deliverers.


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