Government could save billions
A new report from MPs concludes that Government departments can save billions if they worked more efficiently.
The Commons Public Accounts Committee (PAC) examined how central government departments have made use of resource accounting and budgetary frameworks introduced by the Treasury.
These include preparing budgets and accounts on a commercial style accruals basis, three year budgets and giving departments the flexibility to carry forward unspent resources at the end of the year.
The MPs suggest that the new methods provide “a sophisticated means for departments to identify on a consistent basis the full costs of their activities, rather than knowing simply what is paid out in cash.”
If used properly departments can identify efficiencies, waste and low productivity, the MPs say.
However, some departments are not using the new methods effectively.
Edward Leigh, Conservative MP and committee chairman, said: “Departments now have highly developed mechanisms to help them use their resources more productively. Many departments are not yet using them properly. If they did, they could identify areas of waste of low productivity. Just a small proportion of efficiency gain could save billions of pounds for the taxpayer.”
He added: “Resource accounting and budgeting must not be a superficial change focusing only on end of year accounts; it must be embedded at the heart of how departments manage their business.”
Mr Leigh also stressed that senior staff in all departments “must have the skills and expertise need to make these changes”.
Though the committee welcomes the Treasury aim that all finance directors should be qualified accountants as “laudable”, it points out that in 2004 only 39 per cent of department finance directors were qualified accountants, compared to 84 per cent in the FTSE 100.
It calls on departments to “take positive steps” to raise the number of qualified accountants including succession planning, staff transfers or direct recruitment.
