Whitehall blasted for poor financial management

by Our Parliamentary correspondent

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03 Mar 2011

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National Audit Office

THE CIVIL service has been slammed for failing to take financial management to its heart and for failing to place it at the centre of deficit reduction plans, the public spending watchdog has concluded.

A National Audit Office report on improving financial management in government said that Whitehall departments would need to improve financial management and accounting skills if they are to meet the demands of the government's cuts set out by George Osborne in June 2010. It said finance departments were weak at monitoring balance sheets and cash-flow.

The report said there had been progress. "However, achieving further progress will require all Accounting Officers as the leaders with the most influence on Whitehall culture to demonstrate clearly, through their leadership of departments, their commitment to putting financial management at the heart of their organisation."

MPs lined up to criticise. Lib Dem MP Stephen Williams, who has previously challenged the competency of civil servants, said: “It almost beggars belief at this time when the government has imposed incredibly tight budget settlements to have departments whom we cannot be confident can deliver spending reductions if the departments do not have the professional expertise of qualified accountants to monitor progress against the CFR figures.

“It is disappointing that the Civil Service does not embrace the importance of having staff with the appropriate qualifications.” He added that recruitment plans needed an “urgent” rethink. 

Senior Tory public accounts committee member Richard Bacon said: “The fundamental problem is we are still trying to get rid of the culture that has been there for generations which has not really taken a serious interest in the careful husbandry of resources and marshalling them to achieve specific ends.”

Bacon recalled one permanent secretary saying of accounts: “It is only numbers.”

The NAO report concludes that departments “do not fully understand the cost of their activities” and that good information is “rare” in some cases. It said management tends to focus on performance against annual sending budgets rather than balance sheet information or stock levels and investment in assets.


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