The Home Office and Department of Constitutional Affairs have been forced to make financial reports every month as part of 'special measures' imposed by the Treasury to improve their financial performance.
Treasury public services managing director Nick Macpherson revealed the new constraints after being pressured during a House of Commons Public Accounts Committee hearing after refusing to name the three worst performing government departments.
The disclosure – after a furious row at the hearing – is a huge embarrassment to two of the highest-profile ministers in the cabinet: David Blunkett, in charge of the drive to reduce crime, and Lord Chancellor Charles Faulkener, the former minister for ‘The Dome’ who is rushing in plans to end the judicial role of the Lords and set up a supreme court.
The committee was grilling Macpherson and Prof Sir Andrew Likierman, the Treasury’s managing director of financial reporting and audit, and other senior accounting officers on how they are managing resources to deliver better public services.
Macpherson initially refused to name the departments ‘because it would be invidious’.
He said the Treasury action against the two departments was intended to satisfy itself that there was sufficient information about expenditure month by month ‘in order that we did not get into a situation of reserve claim and overspends’.
MPs used the hearing two weeks ago to follow up on a National Audit Office report suggesting a third of government departments have made limited progress using resource accounting to improve efficiency, and significant over and underspending at year end. News of hearing emerged after the transcripts were recently published.
Macpherson said the number of qualified departmental accounts had fallen from 30 in 1998-99 to six in 2001-02 – the MoD, ONS, Defra, DWP, Home Office, DfES and the Security and Intelligence agencies. He claimed departments were ‘moving in the right direction’.
Lickierman said that although all departments have had finance directors since 1 December, 2003, only 23% are qualified accountants. He amended this claim within minutes to further admit that in some cases it was ‘not appropriate’ to have a finance director on the departmental board at all so long as there was ‘someone who is financially qualified who is credible at all levels of the department’.