Home Office needs better control of savings

25 Apr 12
Auditors have found gaps in the Home Office’s savings plan and called for it to be managed more effectively.

By Richard Johnstone | 26 April 2012

Auditors have found gaps in the Home Office’s savings plan and called for it to be managed more effectively.

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But the department is providing value for money and exercising control over its core activities, according to the National Audit Office.

The watchdog was following up its 2009 report, which raised concern about the department’s ‘understanding’ of spending.

Its latest report, Financial management in the Home Office, found improvements had taken place, including the recruitment of qualified finance staff at senior levels.

There were also strong control mechanisms for capital spending, and the key elements of financial control – good planning, monitoring and reporting – were being carried out well, the auditors said.

But many of the strengths that the department demonstrated in its day-to-day work were ‘less apparent’ across its reform programme, which must be better managed, the NAO added.

In 2010/11, the Home Office spent a total of £12.2bn, around 70% of which went on grants, including £6.5bn to police forces in England and Wales.

It plans to reduce costs in its core activities, such as paying for policing, but as much as half of its proposed £1.1bn annual savings to 2014/15 are uncertain, the auditors said.

For example, funding reductions meant that police forces had to cut around £1.5bn by 2014/15. However, in 2011, around two-thirds of forces had shortfalls in their cost reduction plans, amounting to £500m.

In addition, some parts of the department had not examined whether the proposed cuts were the most appropriate to maintain its efficiency and effectiveness. The departmental board had considered the saving plans only briefly, while its five directorates had yet to examine whether they could make greater savings by working closer together.

Auditor general Amyas Morse said: ‘The Home Office has further improved financial management over the past three years and is delivering value for money in terms of exercising financial control over its core business activities. Its plans for making savings in those activities appear to be sound.

‘However, there is more work to do. It needs to examine its activities as a whole when looking for additional savings and there are clear risks to the successful delivery of its programmes to develop and phase out agencies. The department should ensure that the key financial skills it is demonstrating at the centre are similarly demonstrated within these programmes.’

Responding to the report, a Home Office spokeswoman said: ‘The National Audit Office’s conclusion that Home Office Financial Management provides value for money is recognition of the significant improvements we have made in recent years. 

‘At a time of reducing budgets, we are working to ensure we get the best value from every pound spent on protecting the public. By improving efficiency, driving out waste, and increasing productivity, we can maintain a strong police service, a secure border and effective counter terrorism capabilities while delivering significant savings.’

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