Taking aim at a weak Treasury

29 Nov 18

Once departmental budgets are set the Treasury loses interest, says David Walker as he reflects on the NAO’s broadside at government planning and spending.

Significant progress has been made in implementing the government’s financial management review, but the Treasury and chancellor Philip Hammond need to build on what has been achieved to date


Instead of winding down, Sir Amyas Morse is getting more feisty and critical as he nears the end of his service as comptroller and auditor general. Amid the din and distraction of Brexit – about which he has also been voluble – the head of the National Audit Office is crafting a weighty legacy.

The NAO’s latest barrage is aimed squarely at the Treasury. It bombards the myth that British government is top heavy and run from the centre – in fact the centre is oddly weak and often ignorant about what is happening in departments, agencies, the NHS and local government. It opens a flank attack on the bright young things at the Treasury by extolling their control of public spending before showing they haven’t much of a clue how money is spent or even why.

It’s as if once budgets are set, the Treasury loses interest. Whether the spending secures value for money is left up to departments and whether they know or care isn’t the Treasury’s concern.

The NAO’s timing is of course not accidental. This is a pre-emptive shot, just in time for the spending review the chancellor Philip Hammond has said will go ahead next year, though Brexit and parliamentary circumstances drop a large dollop of scepticism on this and all other predictions.

The NAO doesn’t quite say the Treasury employs girls and boys to monitor spending once it has been allocated, but it comes close

The report savours a paradox. The Treasury wins points for delivering aggregates – when it forecasts government spending it usually gets pretty close. But, says the NAO, its time horizons are wincingly short. It set up the Office for Budget Responsibility, which does think longer term. But the Treasury itself abandons strategy and high-level objectives for public spending in favour of ensuring next quarter’s or next year’s totals add up. That’s why (as the NAO has reported) the financial sustainability of local government isn’t an issue for Whitehall; if the Treasury doesn’t care what happens two or three years or more down the road, why should the Ministry of Housing, Communities and Local Government? That’s why assets are sold off too cheap – net debt is reduced, regardless of the longer run consequences for government efficiency and effectiveness.

The NAO doesn’t quite say the Treasury employs girls and boys to monitor spending once it has been allocated, but it comes close. Spending teams at the Treasury are underpowered, turn over rapidly and lack experience of actually delivering public services.

Departments (naturally) pull the wool over their eyes. In 2016 the Treasury asked Whitehall to create ‘value maps’ and scope efficiencies but within a matter of months abandoned the ask. Why? Because self-reporting by departments was “too subjective” and departments “were not always open about the gaps in their understanding”. They are meant to present “single departmental plans” but, it turns out, they aren’t comprehensive nor are they properly plans, in the sense of statements of strategy and priorities. “Unwillingness to make politically difficult prioritisation decisions – to match plans to available resources – is an entrenched issue,” the report said.

The name of the next C&AG is due to be made public shortly, once the Queen has signed off on the appointment. With reports like this one, it’s as if Morse wants his successor to inherit a sustained critique of Whitehall’s capacity to raise and spend public money. It will be his job to try to improve things.

  • David Walker

    former managing director, public reporting at the Audit Commission and deputy chair of an NHS trust

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