DCMS took crude hatchet to arm's-length bodies, NAO finds

9 Mar 11
The Department for Culture, Media and Sport 'salami-sliced' the budgets of its arm's-length bodies without calculating the financial consequences, a National Audit Office investigation has found
By Mark Smulian

10 March 2011

The Department for Culture, Media and Sport ‘salami-sliced’ the budgets of its arm’s-length bodies without calculating the financial consequences, a National Audit Office investigation has found.


Financial management in the DCMS, published today, said that when the DCMS responded to last autumn’s Comprehensive Spending Review, it applied flat-rate cuts to each organisation without taking account of their existing cost bases.

‘Undifferentiated top-slicing of budgets can leave organisations exposed and unprepared for the future, and can lead to higher overall costs or the displacement of costs elsewhere,’ the NAO report noted.

The DCMS made the cuts without adequate data on the cost of lease cancellations, redundancies and pensions.

‘The decision was also not informed by an estimation of future savings or what the payback period would be,’ the report said.

Cuts of 15% were imposed on one group of bodies, including the Football Licensing Authority and the British Film Institute.

Another group, including the Royal Parks Agency and Chatham Historic Dockyard, had 20%–25% cuts imposed.

The report also criticised the DCMS for persistently over-committing its budget for arm’s-length bodies. It ‘has a history’ of this, the report said, citing a £95m capital over-commitment in 2009/10 and £110m the following year.

‘The impact of over-programming budgets can be significant and can lead to situations where areas of spend may need to be reduced regardless of their strategic importance,’ it said.

NAO head Amyas Morse said: ‘Financial management has improved, but there is still a way to go before I can say [the DCMS] is achieving value for money.

‘Some decisions have been made based on insufficient financial information and analysis, as exemplified by the decisions to merge and close some arm’s-length bodies.’

A DCMS spokeswoman said: ‘We welcome their acknowledgement of how quickly we took funding decisions following the Comprehensive Spending Review. We had consulted extensively over the summer with our bodies, which meant that we could take swift and informed decisions immediately after the settlement.

‘We have worked hard to protect frontline delivery and ensured that ALBs have access to a number of different funding routes to secure this. We continue to work closely with our diverse range of sponsored bodies, striking the balance in each case between giving them due freedom and exercising proper oversight.’

The report did not cover the London 2012 Olympic Games, which is monitored separately.

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