Ministry of Justice slated for poor financial management

25 January 2011
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25 January 2011 | Angeline Albert

The Ministry of Justice has failed to understand the cost of its services, the Committee of Public Accounts (PAC) has concluded.

The Parliamentary committee, which heard evidence from the ministry last November, criticised the ministry’s poor financial management in a report published today.

Margaret Hodge MP, the PAC chair, said: “If the Ministry of Justice is to minimise the impact on its frontline services of its tough spending settlement, it must fully understand the cost and value of those services. But the ministry and its arm’s-length bodies currently lack that detailed information."

The ministry’s spending review settlement requires a 23 per cent reduction to its budget over the next four years.

Hodge said: “It is not good enough that, by December 2010, the ministry expected to have enough information on only 61 per cent of the cost of its staff activities in its largest agency, with the remaining 39 per cent due by December 2011. This is indicative of the poor state of financial management in this ministry. So is the fact that it was the only government department to miss the deadline for producing its accounts for 2009-10.”

During the PAC hearing, Sir Suma Chakrabarti, Ministry of Justice permanent secretary, identified costs as including commissioning and contracting within the private sector and the public sector.

The committee acknowledged that the ministry has financial management processes in place, but said “to date it has not integrated financial management into its policy and operational workings”.

Ann Beasley, director-general of finance at the ministry, said staff costs, travel and subsistence had been itemised and the ministry now has detailed information on procurement.

Beasley said: “We have incredibly detailed breakdowns now, based on the new procurement system, of the £3.5 billion we spend on goods and services.”

She said that by March 2013 the ministry would have one system to manage HR, finance and procurement. Beasley said the shared service programme cost is just over £50 million, but will deliver savings of £28 million a year by 2014.

In its report the committee said: “Without combined financial and operational performance data and a full understanding of its costs, there remains a risk that, in implementing its spending review settlement, the ministry will not achieve best value for money.”

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