The Treasury acts as both the finance ministry and economic ministry but it appears to neglect its role as finance ministry. Its own accounts are impenetrable and there are many instances of poor decision making by departments, which the Treasury could and should have prevented. While staff turnover fell in 2011-12, it is still very high. Furthermore, the Treasury remains committed to cutting its headcount by a third and there are still very few women at senior levels. The support provided to banks in the last crisis helped prevent the banking system from collapse. The Treasury has successfully withdrawn nearly all of the taxpayer guarantees to banks but the taxpayer still owns some £66 billion of shares in RBS and Lloyds, a sum which is yet to be recovered. The Treasury has not convinced that it understands either the risks it has taken on by indemnifying the Bank of England against losses on Quantitative Easing or the expected economic benefits. Some £375 billion has so far been injected into the economy as an 'experiment' but the Department could not explain what the effect has been on the whole economy or on different parts of society. The National Loans Guarantee Scheme achieved just 15 per cent of its intended take-up and has now been superseded by a more generous Bank of England scheme. The Treasury needs to be clear what it wants this Bank of England scheme to achieve, and how it intends to monitor it.
The 2012 Civil Service Reform Plan (the Plan), published in June 2012, outlines plans to transform the civil service so that it is sharper and quicker, more delivery-focused, and has sufficient commercial, digital, project and change management skills. The Cabinet Office is responsible for overseeing implementation of the Plan. The Committee hope that the reforms and enhanced capabilities will help prevent the failures in project and programme delivery it has seen so often, but is concerned, however, that government has not set itself objective measures for assessing the impact of its reforms. If the public is to have confidence in the system for holding permanent secretaries accountable, the Government must be clear about the detail of what each permanent secretary is expected to achieve and how their performance will be assessed. Commercial and contracting skills in the civil service remain weak and underdeveloped, despite the many attempts to address this skills deficiency in recent years. Efforts to fill skills gaps are hindered by real or perceived barriers to recruiting people with the necessary expertise and paying them enough. The process for overseeing major projects lacks real teeth and is seemingly unable to stop ill-conceived or poorly-managed projects. Yet the Government will only be successful in cutting public spending with minimum impact on frontline services if it finds new and innovative ways to deliver its programmes. This innovation can only be implemented if the Civil Service has the necessary skills and competencies.
The National Offender Management Service directly manages 117 public prisons, manages the contracts of 14 private prisons, and is responsible for a prisoner population of around 86,000. It commissions and funds services from 35 probation trusts, which oversee approximately 165,000 offenders serving community sentences. For 2012-13, the Agency's budget is £3,401 million. The Agency achieved its savings targets of £230 million in 2011-12 and maintained its overall performance, despite an increase in the prison population. However, the Agency's savings targets of £246 million in 2012-13, £262 million in 2013-14 and £145 million in 2014-15 are challenging. The Agency believes it has scope to make the prison estate more efficient by closing older, more expensive prisons and investing in new ones. These plans, however, assume the prison population will stay at its current level. Furthermore, the Agency has not yet secured the up-front funding for the voluntary redundancies needed to bring down prison staffing costs. Unless overcrowding is addressed and staff continue to carry out offender management work it is increasingly likely that rehabilitation work needed to reduce the risk of prisoners reoffending will not be provided. The Agency has not done enough to address the risks to safety, decency and standards in prisons and in community services arising from staffing cuts implemented to meet financial targets. The Agency plans to increase the role of private firms and the third sector in probation but the probation trusts don't appear to have the infrastructure and skills they need to commission probation services from these providers effectively
Among those ranged against HMRC are the big four accountancy firms, Deloitte, Ernst and Young, KPMG, and PwC, which earn £2 billion each year from their tax work in the UK. They employ nearly 9,000 people just to provide tax advice aimed at minimizing the tax paid. Between them they boast 250 transfer pricing specialists whereas HMRC has only 65 people working in this area. The firms declare that their focus is now on acceptable tax planning and not aggressive tax avoidance however they continue to sell complex tax avoidance schemes with as little as 50 per cent chance of succeeding if challenged in court. The large accountancy firms are in a powerful position in the tax world and have an unhealthily cosy relationship with government. They second staff to the Treasury to advise on formulating tax legislation. When those staff return to their firms, they have the very inside knowledge and insight to be able to identify loopholes in the new legislation and advise their clients on how to take advantage of them. This is a clear conflict of interest which should be banned in a code of conduct for tax advisers. The UK must also take the lead in demanding urgent reform of international tax law, so that companies have to pay a fair share of tax where they actually do business and make profits. Furthermore, the job of simplifying our tax code needs to be taken seriously; yet the Office of Tax Simplification has just 6 people working in it
The Department for Transport works with local partners to deliver many of its policies. Local authorities play a key role in planning and commissioning transport services, such as bus and light rail, and providing and maintaining roads and other local infrastructure. They spent a total of £8.5 billion on transport in 2010-11. The Department provided around a quarter of this (£2.2 billion), with the rest raised locally from council tax, from the £411 million surplus raised from parking levies, or from the Department for Communities and Local Government formula grant. In 2011-12 the Department provided £1.2 billion to local authorities for highways maintenance and small transport projects in the form of two un-ringfenced formula-based grants. The Department does not monitor how un-ringfenced grants are spent and there is insufficient information to determine the impact of the Department's contribution on local authorities' spending decisions and therefore to achieving the Department's objectives. The Department plans to devolve more control over its funding to the local level (raising the proportion of resources which are not ringfenced portion from 60% to around 80%); and new local transport bodies will take on some decision-making responsibilities previously held centrally. Full details of how the new system will work are still to be determined and there is uncertainty over how the arrangements will work in practice.
The Work Programme was introduced in June 2011 to help long term unemployed people move off benefits and into sustained employment. It is estimated to cost between £3 billion and £5 billion over five years. The Programme's performance for its first 14 months of operation - from June 2011 to July 2012 - fell well short of the Department's expectations. Overall, only 3.6% of claimants on the Programme moved off benefit and into sustained employment, less than a third of the 11.9% the Department expected to achieve, and well below the Department's own estimate. Individual Work Programme providers' performance in helping claimants into employment varies widely, but not one of the 18 providers has met their contractual targets. The difference between actual and expected performance is greatest for those claimants considered the hardest to help. The Department's own evaluation suggests that these claimants have been receiving a poor service. Creaming and parking are clear policy concerns. Despite assurances, the Department has not provided the further analysis on such matters. Given the poor performance across providers, there is a high risk that one or more will fail - either they will go out of business or the Department will cancel their contracts. The Committee is concerned about the Department's approach to publishing performance statistics. The Department did not make clear what level of performance it had expected or say why performance was lower than planned. Yet it did publish unvalidated information on performance produced by a trade body.
In 2011-12, 20 million phone calls to HMRC were not answered. It cost the callers £136 million while they waited to speak to an adviser. And, against its target of responding to 80% of letters within 15 days, the department managed to reply to just 66%. Officials are beginning to realize that good customer service lies at the heart of any strategy to maximize revenues while cutting costs. Callers will no longer be forced to use the more expensive 0845 numbers. Other planned changes include the resolution of more queries first time and a call-back service where this is not possible. However, HMRC's new target of answering 80% of calls within five minutes is still woefully short of the industry standard of answering 80% of calls within 20 seconds. Just how the department is going to improve standards of customer service, given the prospect of its having fewer staff and receiving a higher volume of calls, is open to question. HMRC plans to cut the number of customer-facing staff by a third by 2015. At the same time, the stresses associated with introducing the Real Time Information System, Universal Credit and changes to child benefit are likely to drive up the number of phone calls to the department. HMRC is also to close all of its 281 enquiry centres which give face-to-face advice to customers. HMRC considers that it will be able to improve service standards by using its staff more flexibly. It may need to put in additional resources, though, to avoid the kind of plummeting performance we have seen in the past