03 September 2013

The accounting officer system is a well-established part of how Whitehall manages public money and allows permanent secretaries to register formally their concerns with ministerial spending decisions. As discussed in a new Institute for Government publication, however, this has not happened since 2010.

Earlier this year the Major Projects Authority gave 31 out of 191 government projects an Amber/Red or Red rating, signalling that there are problems with implementation. Yet all of these projects have had the implicit endorsement of the permanent secretary of the department responsible as being both good value for money and feasible – will their confidence be vindicated?

The Coalition government has been less than sure that their policies have civil service support. Francis Maude – the minister responsible for civil service reform – has repeatedly referred to some ‘obstructive’ officials blocking policy implementation.

There is no excuse for this. Former Cabinet Secretary Robert Armstrong famously said that civil servants have "no constitutional personality separate and apart from that of the government of the day". Their job is to implement government policy – irrespective of what they might think of it.

But there is one role that gives the Civil Service a licence to question a policy decision publicly by requiring direct ministerial authorisation before proceeding: the role of the accounting officer, which is the subject of a new Institute for Government research paper published today.

Each permanent secretary is the accounting officer for their department, directly accountable to parliament for public spending. As accounting officer, a permanent secretary has the right to object formally to a ministerial decision to spend money if it does not meet the Treasury criteria of regularity, propriety, value for money, and feasibility. If a spending decision breaches any of these criteria, the accounting officer must ask for a written direction to continue from the secretary of state. The accounting officer then implements the decision – but it is the minister who bears responsibility for that use of public money.

While regularity and propriety relate to spending within parliamentary authorisation, the newer criteria of value for money (introduced in the 1990s) and feasibility (introduced in 2011) concern the effectiveness of spending. Of the 37 directions issued to accounting officers since 1997, 26 reflected concerns about the value for money of government spending. The amount of money at stake can vary hugely – from the vast sums involved in the Treasury’s Asset Protection Scheme in 2009, to the modest amount of £500 for the MoD to pay for flights to Croatia for a member of the public to attend the trial of those accused of murdering his son, a British serviceman.

There have so far not been any directions since the 2010 election. Under the last government, the number of directions peaked in the final two years of the parliament – perhaps reflecting permanent secretary caution ahead of a change of government. We might therefore expect directions to begin occurring again over the next two years. If this happens, is it a bad thing?

Not necessarily. Although directions are often seen as signs of failure in the relationship between ministers and mandarins, a direction can be a helpful way to clarify when ministers have taken a political decision to proceed in spite of civil service concerns.

For example, then permanent secretary of DCLG, Sir Peter Housden, received a direction in 2010 from the Communities Secretary, John Denham, over the creation of unitary authorities in Devon, Norfolk, and Suffolk. Housden felt this did not represent value for money; Denham disagreed – subsequently saying, ‘There is no point in having a democracy if ministers are unable to make a judgement that civil servants are wrong.’

Francis Maude thinks that permanent secretaries should feel freer to ask for directions, and ministers should be more relaxed about giving them. “Any minister should be confident enough in the judgement he or she has made to be willing to justify it in public”, he said in a recent speech. In turn, it might help the Civil Service if it was free to be clearer about the advice it has given – and the reasons why this has been rejected.

However, permanent secretaries have strong incentives to avoid asking for directions. They are reluctant to expose differences with their secretary of state. But by not asking for a direction they give Parliament and the Treasury – as well as the public – their personal assurance that taxpayer money is being spent on policies which are feasible and good value for money. If this later turns out to have been over-optimistic, then they must stand prepared to be held to account in the bear pit of the Public Accounts Committee.

In the course of the Institute for Government’s research on accountability in central government over the past year, one permanent secretary suggested to us that any move to increase accountability should be aimed at reducing ‘fuzziness’ in terms of who is responsible for what. The accounting officer’s power to ask for a ministerial direction – and the secretary of state’s power to insist upon a decision in spite of their permanent secretary’s doubts – is one tool the government already has to do just that. It just isn’t being used.