Treasury Committee: Press Notice

Chancellor’s departments failing to lead by example, MPs say

The Treasury Committee today (March 7) publishes its seventh report of session 2007-08, entitled, The  Administration and expenditure of the Chancellor’s departments, 2006-07  (HC 57).  It constitutes the first report by the Committee’s Sub-Committee on its annual scrutiny of the Chancellor’s departments.

Michael Fallon MP, Sub-Committee Chairman, commented:

 “The Chancellor’s departments, which are the engine of Government spending, should be able to demonstrate clear progress against their targets. Sadly in some areas, such as the Value for Money Delivery Agreements, we have found them failing to lead by example. If they can’t get this right, how can any other department be expected to?”

The Report reviews the Value for Money Delivery Agreements, which were intended to give further detail about individual departmental efficiency programmes, over the Treasury Group as a whole. In view of the extent to which these agreements were portrayed by the Government as a new departure in efficiency reporting, the Committee finds the Treasury Group’s Delivery Agreement disappointing in its failure to fully address the key issues of disclosure, measuring quality of service and the need for external challenge. The Report also notes the worrying conclusions of the recent Capability Reviews of HMRC and HM Treasury.

HMRC’s Annual Performance

The Report discusses progress made towards HMRC’s Public Service Agreement targets and raises concerns about slippage on a number of targets. HMRC’s continued failure to meet its target of processing VAT receipts and to improve the administration of tax credits are cause for particular alarm.  The Report questions the ongoing headcount reductions at HMRC and calls on the Government to urgently address the decline in the quality of HMRC’s services.

 “HMRC appears to be rewarding failure. Complaints about the tax credits system are at the highest level for five years, there has been a considerable deterioration in its vat service and yet senior staff have received on average a 60 percent increase in their bonus payments. These payments appear completely unjustified,” Mr Fallon  said.

Financial management in Government

One measure to professionalize financial management within Government which the Treasury has used has been progress in appointing professionally-qualified Finance Directors in departments. The Report calls on the Government to explain why the Treasury’s objective for the appointment of professionally-qualified Finance Directors in all departments by December 2006 has still not been met. It also recommends a relevant accountancy qualification as an essential criterion for posts of departmental Finance Directors.

Michael Fallon said:

“I find it astonishing that the Government has recently recruited a Finance Director with no relevant professional qualifications to the Ministry of Defence to run one of the most significant departmental budgets.”

The Royal Mint

The Report welcomes the Royal Mint’s return to profitability and evaluates the methods the Mint used to improve its financial performance, but raises concerns regarding its ambitious government profitability target for next year.

Mr Fallon said

“Considerable work has been undertaken in the last year to enable the Royal Mint to return to profitability. While we congratulate all those involved in the turnaround, we will be keeping a keen eye on the department’s progress.”


Mr Fallon is available for comment on the report on 07973 676 506 (mobile) or 020 7219 6482 (Westminster office).

Embargoed copies of the Report will be available to witnesses, Government departments and accredited members of the press from 11.00 am on Thursday 6 March in PDF format only.