Press Notice No. 14 of Session 2002-03, dated 17 April 2003
FOURTEENTH REPORT: ROYAL MINT TRADING FUND 2001-02 ACCOUNTS (HC 588)
Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, today said that the £6.5 million operating loss at the Royal Mint reflected a seriously flawed expansion strategy and urged the Mint's management to get a proper grip on its costs.
Mr Leigh was speaking as the Committee published its 14th Report of this Session, which examined the deteriorating financial performance of the Royal Mint in recent years, the control weaknesses which gave rise to thefts of banknotes in 1997 and 2001, and allegations of improper payments by the Royal Mint.
The Committee found that the profitability of the Royal Mint has continued to decline, culminating in an operating loss of £6.5 million in 2001-02, in spite of the previous Deputy Master's statement in July 2001 that the decline in the Royal Mint's financial performance had been arrested and reversed. The Royal Mint's management needs to take a firm grip on costs and productivity, in order to restore its trading operation to overall profitability.
The Royal Mint's decision to embark on a £25 million expansion programme in 1996-97 was seriously flawed. Their 'euro strategy' was nave, failed to achieve its objectives and has resulted in the need for a restructuring exercise costing a further £12 million and involving 220 redundancies.
As a result of the lax attitude of the Royal Mint's management to basic financial controls and physical security, two thefts of banknotes occurred. The Royal Mint failed to learn lessons from the first theft, and its Accounting Officer will need to show that controls are now tight to prevent any further recurrence.
Allegations that the Royal Mint made improper payments are now the subject of an investigation by the Serious Fraud Office (SFO) to establish whether criminal offences may have been committed. The new Deputy Master has acted promptly and appropriately in investigating these allegations, and will need to deal vigorously with associated shortcomings in management and corporate governance. As a publicly-owned commercial enterprise, the Royal Mint has an obligation to maintain the highest ethical standards in conducting its business.
Mr Leigh said today:
"The Royal Mint's decision to embark on a major expansion programme to produce new coins for the launch of the Euro was seriously flawed. These failings caused over 200 people to lose their jobs. The continued losses must be addressed by getting a firm grip on costs and productivity. The Mint must also make sure that recent improvements in physical controls and security are enough to prevent further thefts of banknotes."
to view the Report