House of Commons

Procedure Committee

Authorising Government expenditure: steps to more effective scrutiny: Further Government Response to the Committee’s Fifth Report of Session 2016–17

Second Special Report of Session 2017–19

Ordered by the House of Commons to be printed 9 September 2019

HC 2649Published on 16 September 2019

by authority of the House of Commons

Procedure Committee

The Procedure Committee is appointed by the House of Commons to consider the practice and procedure of the House in the conduct of public business, and to make recommendations.

Current membership

Sir Charles Walker MP (Conservative, Broxbourne) (Chair)

Bob Blackman MP (Conservative, Harrow East)

Kirsty Blackman MP (Conservative, Aberdeen North)

Mr Peter Bone MP (Conservative, Wellingborough)

Bambos Charalambous MP (Labour, Enfield, Southgate)

Sir Christopher Chope MP (Conservative, Christchurch)

Nic Dakin MP (Labour, Scunthorpe)

Chris Elmore MP (Labour, Ogmore)

Sir David Evennett MP (Conservative, Bexleyheath and Crayford)

Helen Goodman MP (Labour, Bishop Auckland)

Mr Ranil Jayawardena MP (Conservative, North East Hampshire)

Sir Edward Leigh MP (Conservative, Gainsborough)

David Linden MP (Scottish National Party, Glasgow East)

Melanie Onn MP (Labour, Great Grimsby)

Nick Smith MP (Labour, Blaenau Gwent)

Gareth Snell MP (Labour (Co-op))

Mr William Wragg MP (Conservative, Hazel Grove)

Powers

The powers of the Committee are set out in House of Commons Standing Orders, principally in SO No. 147. These are available on the internet via www.parliament.uk.

Publication

© Parliamentary Copyright House of Commons 2019. This publication may be reproduced under the terms of the Open Parliament Licence, which is published at www.parliament.uk/copyright.

Committee reports are published on the Committee’s website at www.parliament.uk/proccom and in print by Order of the House.

Committee staff

The current staff of the Committee are Martyn Atkins (Clerk), Dominic Stockbridge (Second Clerk), Jim Lawford (Committee Assistant) and Alasdair Rendall (Media Officer).

Contacts

All correspondence should be addressed to the Clerk of the Procedure Committee, House of Commons, London SW1A 0AA. The telephone number for general enquiries is 020 7219 3351; the Committee’s email address is proccom@parliament.uk.

You can follow the Committee on Twitter using @CommonsProcCom

1Further Government Response to the Committee’s Fifth Report of Session 2016-17

Second Special ReportThe Procedure Committee published its Fifth Report of Session 2016–17, Authorising Government expenditure: steps to more effective scrutiny, HC 190, on 19 April 2017.

A Government Response to that report was sent to the Committee jointly by the then Chief Secretary to the Treasury, Rt Hon Liz Truss MP, and the then Leader of the House, Rt Hon Andrea Leadsom MP, on 20 December 2017. The response was reported to the House by the Committee and published on its website on 10 January 2018: it was also reproduced as an Appendix to the Committee’s Third Report of the present Session, Debates on Estimates days: piloting new arrangements, HC 739, on 22 January 2018.

A further Government response was received from Rt Hon Liz Truss MP on 19 July 2019, and is published as an Appendix to this Report.

Appendix: Further Government Response

Adjustments to the appearance of Supply Estimates

Following the Parliamentary Procedure Committee’s 5th Report of Session 2016–17: Authorising Government expenditure: steps to more effective scrutiny, HM Treasury and the Parliamentary Scrutiny Unit have been working closely to take forward improvements to the appearance of Supply Estimates.

Although these changes are mainly associated with the appearance of the Supply Estimates, we decided it would be prudent to clear the changes with the ‘Alignment Review Committee’ as per the Estimates Manual (pg 19). This committee is part of the agreed protocol for agreeing changes to Estimates. It is managed by the Treasury and consists of representatives from the Treasury, other departments, National Audit Office, House of Commons Scrutiny Unit, Financial Reporting Advisory Board and Office for National Statistics. The House of Commons Supply Clerk has also been consulted on the proposed changes.

Due to their nature, most of these changes do not need explicit approval from the Parliament and therefore HM Treasury will make these improvements as soon as possible—these are covered in section 1 below. The changes associated with simplifying and streamlining the document listed in section 2 will need explicit approval from the Procedure Committee before we can proceed.

HM Treasury is currently adding a new I.T. system and therefore these changes need to feed into the development of the key reports over the summer. It is therefore essential HM Treasury takes this opportunity to make the agreed improvements in section 1, and potentially section 2 with the Procedure Committee’s approval.

Further Government Response to the Committee’s Fifth Report of Session 2016-172

Section 1—Improving the content and appearance of Supply Estimates

Design of Estimates document. This change is purely around modernising the look of the tables/text in the Estimate document when it is produced from the HM Treasury data collection tool and removing repetition of text across each departmental estimate (e.g. the repeated standard wording on the accounting officer note). These potential changes can be seen in the attached draft that provides a selection of tables in a sample DFID estimate (annexed). The exact format and style is subject to change but the improvements should help with the both the readability and usability of the Supply Estimates. The aim is a cleaner, less cluttered look.

Total Resources. Add a total ‘resources’ column in part 2. Currently users have to add up the administration and programme totals manually to determine the overall ‘resource’ budget. This will assist users comparing resources across years.

Excel information. Publish all Estimates data in a usable excel format to allow users access to the base data presented in the hard copy and PDF.

Guidance. Incorporate ideas put forward by the Scrutiny Unit to align HMT’s guidance on preparing Estimates with the Scrutiny Unit’s guidance on Estimates Memoranda, in particular:

a) Suggest departments make links to single departmental plans (SDP) or SDP objectives in the [Main Estimates] introduction.

b) Ensure changes at Supplementary Estimates are organised into consistent categories. This has already been included in the memoranda guidance.

c) Simplify and shorten ambits where possible.

d) Make sure all Estimates lines are self-explanatory and represent logical groupings.

HMT changes. HM Treasury are also going to work with the Scrutiny Unit on some additional changes such as improving the introduction and table titles with easier to understand descriptions and links to other documents such as the memoranda.

Section 2—Simplifying and streamlining the document

Statement of Comprehensive Net Expenditure (SOCNE). Recommend removal of the SoCNE table (Part 3 note A). This table provides a technical reconciliation with budgeting as well as an explanation of the differences between the various spending controls (accounting, budgets and Estimates). The purpose of the alignment project was to eliminate these differences as far as possible and, as a result, the reconciliations are much simpler. Estimates are now driven by the budgeting rather than accounts.

For the majority of departments these numbers are identical. As a result, we feel the table has now served its purpose after the CLOS project. The annual report and accounts (ARA) shows the SoCNE for the last year and the Parliamentary accountability section in the report shows outturn expenditure against budgets.

3Further Government Response to the Committee’s Fifth Report of Session 2016-17

Six months outturn. Recommend removal of Table 6 (Six month’s forecast outturn by department) summary table in the Supplementary Estimates. Forecast outturn is already available in the more comprehensive and accessible Forecast Outturn Quarterly releases. https://www.gov.uk/government/collections/hmt-oscar-publishing-from-the-database

Both of these potential changes have been agreed by the Alignment Review Committee.

Other data sources for scrutiny

Supply Estimates core purpose is to publish the numbers and ambit that need to be subsequently included in legislation to be approved by parliament. The figures are used for auditing departments and form the key parliamentary control totals across all departments. The Estimates also provide the exact amount of cash that can be released from the Consolidated Fund. HM Treasury does not believe that any of these changes or recommended changes above have a negative impact on that purpose.

It is important to note that Supply Estimates are just part of the suite of tools available for scrutiny of public spending. The main forms of government financial reporting are outlined in the visualisation below. Further details of these products and their respective roles can be found in the Government Financial Reporting Review: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/791567/the_government_financial_reporting_review_web.pdf

In addition, you will also be aware, the Parliamentary Scrutiny Unit, following close liaison with HM Treasury and departments, has reviewed and updated guidance on producing Estimates Memoranda (see parliament.uk). This is the main tool for explaining the context and the changes present in the Supply Estimates documentation.

Further Government Response to the Committee’s Fifth Report of Session 2016-174

5Further Government Response to the Committee’s Fifth Report of Session 2016-17

Annex: Draft sample Estimate with proposed changes

Department for International Development

INTRODUCTION

1 This Estimate provides for expenditure by the Department for International Development (DFID) on the United Kingdom's international development programme including the International Climate Fund (jointly with the Department for Business, Energy and Industrial Strategy (BEIS) and the Department for Environment, Food and Rural Affairs (DEFRA)); the Conflict, Stability and Security Fund and the Prosperity Fund (jointly with a number of Departments); and related administration costs and capital expenditure. The Estimate also provides for expenditure by DFID's Arms Length Bodies (ALBs), the Commonwealth Scholarship Commission (CSC) and the Independent Commission for Aid Impact (ICAI).

2 Further information on the Department's expenditure can be found in DFID's Annual Report and Accounts.

Further Government Response to the Committee’s Fifth Report of Session 2016-176

PART 1: EXPENDITURE AND AMBIT

£ Voted Non-Voted Total

Departmental Expenditure LimitResource 6,693,509,000 483,000,000 7,176,509,000

Capital 2,526,800,000 - 2,526,800,000

Annually Managed ExpenditureResource 94,543,000 - 94,543,000

Capital 897,000,000 - 897,000,000

Total Net BudgetResource 6,788,052,000 483,000,000 7,271,052,000

Capital 3,423,800,000 - 3,423,800,000

Non-Budget Expenditure -

Net cash requirement 10,328,309,000

Development and humanitarian assistance under the International Development Act 2002 through financial and technical assistance to governments, institutions, voluntary agencies and individuals for activities including: strengthening global peace, security and governance; strengthening resilience and response to crisis; promoting global prosperity; tackling extreme poverty and helping the world’s most vulnerable; delivering value for money and delivery efficiency in DFID ; continued assistance to UK Overseas Territories; costs relating to investments in public corporations and shareholdings in private sector companies; spending by ALBs (Commonwealth Scholarship Commission (CSC) on scholarships to individuals from Commonwealth countries, and the Independent Commission for Aid Impact (ICAI), an advisory ALB which provides independent scrutiny of UK Aid in order to promote the delivery of value for money for British taxpayers and the maximisation of the impact of aid); related capital expenditure, administration costs and associated depreciation and other non-cash costs falling in DEL.

Income arising from:

Department for International Development will account for this Estimate.

Amounts required in the year ending 31 March 2020 for expenditure by Department for International Development on:

Income arising from:Non-cash accounting adjustments on the loan portfolio.

Capital repayments and receipt of interest on development assistance and budget support loans; management fees relating to loan guarantees; receipts from overseas governments in respect of bilateral country and sector programmes; refunds of payments made under UK guarantees to the European Investment Bank; recoveries from other government departments; recovery of advances from procurement agents; receipts for seconded officers; rental income; recoveries from staff for use of official vehicles; refund of rental and rates payments; income from debentures/shares issued to DFID by CDC Group plc and other private sector entities; and other income in relation to capital assets.

Annually Managed Expenditure:

Expenditure arising from:Non-cash movements in provisions including contributions to International Finance Facility for Immunisation (IFFIm) and Advanced Market Commitments (AMC); change in fair value of financial instruments and other non-cash costs falling in AME; the re-capitalisation of CDC Group plc.

Departmental Expenditure Limit:

Expenditure arising from:

7Further Government Response to the Committee’s Fifth Report of Session 2016-17

£ Voted Total Allocated in Vote on Account

Balance to complete or surrender

Departmental Expenditure LimitResource 6,693,509,000 3,156,930,000 3,536,579,000Capital 2,526,800,000 1,500,699,000 1,026,101,000

Annually Managed ExpenditureResource 94,543,000 - 94,543,000Capital 897,000,000 - 897,000,000

Non-Budget Expenditure - - -

Net cash requirement 10,328,309,000 4,567,629,000 5,760,680,000

Further Government Response to the Committee’s Fifth Report of Session 2016-178

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9Further Government Response to the Committee’s Fifth Report of Session 2016-17

PART 2: RESOURCE TO CASH RECONCILIATION

£000s 2019-20 Plans

2018-19 Provisions

2017-18 Outturn

Net Resource Requirement 7,271,052 7,210,272 7,860,338Net Capital Requirement 3,423,800 3,863,980 3,108,305Accruals to cash adjustments 116,457 -1,055,846 -282,321 Of which:

Adjustment for ALBs:

Remove voted resource and capital -31,086 -29,491 -

Add cash grant-in-aid 30,995 30,011 29,907

Adjustments to remove non-cash items:

Depreciation -19,000 -18,000 -9,686

New provisions and adjustments to previous provisions -277,693 -105,390 -473,160

Departmental Unallocated Provision - - -

Supported capital expenditure (revenue) - - -

Prior Period Adjustments - - -

Other non-cash items 34,446 30,459 7,583

Adjustments to reflect movements in working balances:

Increase (+) / Decrease (-) in stock - - -

Increase (+) / Decrease (-) in debtors - - -

Increase (-) / Decrease (+) in creditors 230,091 -1,112,913 -

Use of provisions 148,704 149,478 163,035

Removal of non-voted budget items -483,000 -513,000 -439,000 Of which:

Consolidated Fund Standing Services -483,000 -513,000 -439,000

Other adjustments - - -

Net Cash Requirement 10,328,309 9,505,406 10,247,322

Further Government Response to the Committee’s Fifth Report of Session 2016-1710

PART 3: NOTE B - ANALYSIS OF DEPARTMENTAL INCOME

£000s 2019-20 Plans

2018-19 Provisions

2017-18 Outturn

Voted Resource DEL

AdministrationB: Total Operating CostsSales of Goods and Services -6,500 -4,500 -Other Income - - -182

Total Sales of Goods and Services -6,500 -4,500 -Total Other Income - - -182Total Administration -6,500 -4,500 -182

ProgrammeB: Total Operating CostsSales of Goods and Services - - -2Other Income - - 113

E: Regional ProgrammesSales of Goods and Services - - -33Other Income - - -1

F: Other Central ProgrammesSales of Goods and Services - - -10Interest and Dividends - -1,183 -3,576Other Income -1,789 -868 -1

G: Policy Priorities, International Organisations and HumanitarianOther Income - - -1,016

Total Sales of Goods and Services - - -45Total Interest and Dividends - -1,183 -3,576Total Other Income -1,789 -868 -905Total Programme -1,789 -2,051 -4,526

Total voted Resource DEL -8,289 -6,551 -4,708

Voted Resource AME

ProgrammeJ: Other Central ProgrammesOther Income -37,946 -33,959 -Total Other Income -37,946 -33,959 -Total Programme -37,946 -33,959 -

Total Voted Resource Income -46,235 -40,510 -4,708

Voted Capital DEL

ProgrammeE: Regional Programmes - - -21,179Sales of Assets

F: Other Central Programmes

Sales of Assets - - -217

Other Income - -313,828 -

Repayments -24,572 -25,933 -

Total Sales of Assets - - -21,396Total Other Income - -313,828 -Total Repayments -24,572 -25,933 -Total Programme -24,572 -339,761 -21,396

Total Voted Capital Income -24,572 -339,761 -21,396

11Further Government Response to the Committee’s Fifth Report of Session 2016-17

PART 3: NOTE D - Explanation of Accounting Officer responsibilites

Accounting Officer: Matthew Rycroft, CBE

ALB Accounting Officers:Richard Middleton - Commonwealth Scholarship CommissionAndrea Baron - Independent Commission for Aid Impact

Note: Please see 'Section 2 - Format of Supply Estimates' for an explanation of Accounting Officer responsibilities

PART 3: NOTE E - ARM'S LENGTH BODIES (ALBs)£000s

Section in Part II: Subhead Detail Body Resources Capital Grant-in-aid

A Commonwealth and Scholarship Commission 27,319 - 27,319C Independent Commission for Aid Impact 3,767 - 3,676

Total 31,086 - 30,995