07 July 2006
Whitehall spending should be made more transparent and scrutinised more rigorously, two reports by influential parliamentary bodies have claimed.
Studies by the Hansard Society and the Commons' Public Accounts Committee have put Whitehall spending activities back under the spotlight, despite government attempts to improve transparency over recent months.
The Hansard study, The fiscal maze, published on July 4, says that although Parliament has the constitutional role of authorising and scrutinising government taxation and expenditure, its 'financial scrutiny system is failing to hold government to account fully for this money and reform is needed'.
In particular, the study claims that 'commercial confidentiality' should not prevent MPs' scrutiny of Whitehall spending that is undertaken in combination with private sector partners or arm's-length organisations.
MPs seeking details of the government's privatisation proposals and the Private Finance Initiative, for example, have regularly been blocked from access to information on company profit levels.
The Hansard Society also calls for a series of new select committees to assess complex spending and taxation plans, as well as events such as the 2007 Comprehensive Spending Review.
The authors suggest that the Revenue and Customs department should be shadowed by a bespoke committee (currently, the Treasury select committees largely monitor R&C activities), while a new taxation select committee could be set up.
Select committees shadowing big-spending Whitehall departments could also set up finance and audit sub-committees, the study suggests.
The Hansard report was published 24 hours after the PAC, regarded as the most influential committee in Parliament, suggested beefed-up powers for committees.
Following a study of congressional committees in the United States, PAC chair Edward Leigh said: 'We have decided to write to the chairman of the Liaison Committee proposing that departmental select committees devote more time to the scrutiny of expenditure plans.
'We will also draw his attention to the willingness of the National Audit Office to provide support for this.'
A short PAC report published on July 3 also reveals that the committee, one of a few with pan-departmental scrutiny powers, could work more closely with the NAO to 'to ensure that its reports on major [public services] programmes are forward-looking and examine how risks to future delivery can be assessed and managed'.
Public sector recruitment growth rate slows
The number of public sector staff, including civil servants, has continued to rise this year, but the rate of growth has slowed as the impact of 84,000 planned job cuts takes hold.
Figures published by the Office for National Statistics on June 30 show that total public sector employment rose by 24,000 in the year to March 2006. That compares with a rise of 79,000 in the year to March 2005.
The slowdown in growth has been attributed partially to civil service job cuts undertaken across departments following Sir Peter Gershon's efficiency review in 2004.
More than 30,000 jobs have already been axed under the plan – including 15,000 at the Department for Work and Pensions – which aims to free resources for frontline services.
Overall, civil service numbers fell by 3,000 in the year to March. Critics have suggested that means that the government's proclamations on the Gershon targets have been inaccurate.
But the Treasury recently said that it had expected some departmental civil servant numbers to rise – therefore masking many of the specific Gershon cuts – because many new 'frontline' posts had been created.
'Where the number of public sector workers has increased, most of these posts are in key frontline services,' a spokesman said.
While this appears to be true – the largest increases in public sector employment in the year to March were in education (24,000) and health and social services (20,000) – neither the ONS nor the government will report on whether new posts are considered 'frontline'.
Competition Commission gets set to cut its costs
The Competition Commission this week confirmed plans to slash its operating costs through 'lighter touch' oversight of some cases.
But the commission, which investigates potential breaches of competition laws through mergers for example, warned there would be no compromise over the quality of its scrutiny.
The commission's annual report is expected to outline plans to fast-track inquiries for less significant cases in an effort to control escalating costs since it took on new responsibilities.
But a spokesman for the body told Public Finance: 'While the aim is to reduce costs and make the commission even more efficient, this would only be undertaken once we were certain that our ability to assess cases in depth and our high standards of scrutiny were maintained.'
Chief executive Martin Stanley recently told the Financial Times that he would aim to cut £3m–£4m from the commission's budget.
The commission's current target for completing investigations referred by the Office of Fair Trading is 23 weeks. This can make the cost of investigating even small cases as high as £400,000.
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