Government tightens controls on departmental spending

25 April 2012

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25 April 2012 | Adam Leach

All UK government departments must provide the Treasury with monthly updates on their spending in a consistent format to enable the government to keep tight controls on the public purse.

In a speech at the Institute of Fiscal Studies on Monday, Danny Alexander, chief secretary to the Treasury, reaffirmed the coalition’s commitment to tackle “wasteful spending”. He announced new measures that he said would lead to improving monitoring, management, oversight and scrutiny of spend.

The increase in data flow will, according to Alexander, enable a more collaborative and responsive approach to fiscal management. He said the data would enable “a shared understanding of where the risks lie and how they are, as and when they arise”.

As part of the new approach, departments will be rewarded for good management and punished for bad. This, Alexander said, was supported by the move in the spending review to keep financial reserves within departments small, which results in departments having to deal with problems from within their own budget.

Strengthening this approach, all departments are being asked to identify around five per cent of their resource budget that could be reprioritised if a shortfall or financial pressure emerges. And departments that perform well with these policies will be rewarded.

He said: “In future, I will take performance in financial management into account when deciding whether to grant claims on the reserve. That means punishing poor management, but it also means rewarding those with a record of good financial management with greater freedom over budgets.”

He also revealed he would write to secretaries of state and the head of the civil service if he has concerns over departmental spending.

Describing the overall aim of the spending controls, he said: “We need to ensure that old habits that led to waste and unnecessary spending cannot re-emerge, and that the new focus on getting better for less is permanently ingrained.”

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