Devolution hindering public spending scrutiny, PAC warns

4 May 16

The ability of parliament to scrutinise public spending is being hindered by growing numbers of devolution deals and increasing use of outsourcing for public services, a report by the Public Accounts Committee has warned today.

In a report examining the effectiveness of Whitehall accountability measures, MPs said these complex delivery methods were making it more difficult to hold government to account.

Although today’s Accountability to Parliament for taxpayers’ money report acknowledged that a lack of cost and performance data across government was a long-standing problem, it highlighted instances where complexity was increasing.

“The growing use of complex delivery methods, such as devolution to local areas, outsourced contracts, government companies and cross-cutting initiatives, has often not been accompanied by clarity over accountability arrangements,” the report stated.

For example, departments had been unable to tell the committee who is accountable for elements of City Deals or for contracted-out disability assessments, according to MPs.

PAC chair Meg Hillier said taxpayers were entitled to know how their money is spent and whether they are getting good value.

“Any threat to effective scrutiny requires serious attention as it risks weakening Parliament’s ability, on behalf of the public, to hold the government to account for its spending.

“We are particularly concerned that accountability arrangements have lagged behind changes in the way government conducts its business. Data is persistently inadequate and there is an urgent need for greater clarity on lines of responsibility.”

MPs highlighted that departmental accounting officers (AOs), usually permanent secretaries, had a critical role in ensuring parliament’s ability to hold the executive to account, as they are personally responsible and accountable for their department’s use of public money and stewardship of assets.

In order to improve clarity amid these reforms, the report recommended the Treasury require all departments to prepare accountability system statements to show “who is accountable for what at all levels”. This should cover all of the accountability relationships and processes from AOs down.

In addition to devolution and outsourcing, MPs raised concerns that there were “too many examples” of departmental chiefs allowing projects and initiatives to proceed unchallenged despite strong evidence of poor value for money. These include such as funding to failed charity Kids Company and the e-Borders programme.

Where an AO has serious concerns about value for money, he or she can flag the concern by formally requesting a ministerial direction to proceed. But these were not being used effectively as not all cases where accounting officers have concerns were being brought to Parliament’s attention.

Therefore MPs said AOs should be tasked with preparing assessments of major projects and policy initiatives, in line with Treasury guidance, where they have feasibility or value for money concerns. These assessments should then be made available to Parliament.

Hillier added that these officers “could and should be more robust in standing up for taxpayers’ interests”.

Responding to the report, a government spokeswoman said: "We are committed to delivering value for money for taxpayers, and strongly agree that all public bodies should be fully accountable to Parliament when it comes to public spending.

"Permanent secretaries and other accounting officers continue to do a very important job in implementing government policy and ensuring there is effective decision making on the way public funds are spent‎. We will respond fully to this report in due course.”

Jacqui McKinlay, the chief executive of the Centre for Public Scrutiny, said that the Public Account Committee must accept devolution of scrutiny is part of the package.

“Parliament will need to share accountability with local structures, rather than being the primary focus,” she stated.

“If the PACs report tells people working in local government anything it is that we must get serious about good governance if we want to wield greater powers. If we can’t get our own house in order and demonstrate a robust and locally determined system of devolved accountability, we cannot be surprised when Westminster seeks to maintain oversight of local expenditure.”

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