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Is a shake-up of government financial control needed?

Tony Travers
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National Audit Office reports provide a fascinating glimpse into the efficiency and competence of central government and its agencies

National Audit Office reports provide a fascinating glimpse into the efficiency and competence of central government and its agencies. With a continuous programme of outputs, we learn about weaknesses in the procurement of aircraft carriers and roads, as well as about the difficulties of driving cost-saving programmes through departments that find it hard to align their budgets and programmes. 

The NAO is a very important body. It is accountable to Parliament and not to government, which gives it independence and freedom from the threat of abolition.

Other regulators, notably the Audit Commission, have discovered to their cost that being creatures of government creates the possibility of reform or closure at the whim of ministers. Interestingly, some select committee chairs are interested in the idea that regulators in the NHS should be answerable to Parliament not to Whitehall.

A recent NAO report on Peterborough and Stamford Hospitals NHS Foundation Trust provides a revealing insight into the kind of financial and administrative weaknesses that appear to exist in parts of central government’s empire. The trust burdened itself with an expensive private finance initiative deal against the advice of Monitor, an NHS regulator. The Department of Health has had to provide additional resources to assist the trust with a growing financial deficit. The DH is criticised by the NAO for not being “sceptical enough” about the PFI’s affordability.

The severity of the trust’s situation was “compounded by weak financial management”. In 2011-12, its operating costs were about £58m (31%) higher than forecast in the scheme’s business case. The trust “failed to control its costs”. Overall, the result was an example of poor decision making and management. A significant deficit had been built up by the end of 2011-12.

Just imagine the criticism that would have been heaped on a council that got into this kind of mess. Ministers would have been quick to blame councillors and officers. As it is, because the NHS is within central government’s ambit, there is very little comment. NAO reports on central government spending programmes suggest there is much room for improvement and for a shake-up of Whitehall financial control.

Tony Travers, director, Greater London Group, London School of Economics

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