Leigh: Warning to Whitehall

A powerful committee of MPs has warned Whitehall's big spending departments to keep a tight grip on their finances as the Treasury provides more funds.

In a report released on Tuesday the Commons public accounts committee said the £61 billion extra being invested in just three ministries between 2002 and 2005 needs to be carefully managed to avoid being wasted.

The call came a day after new statistics showed NHS productivity had fallen under the Labour government as output has not risen in proportion to extra cash.

Although the health secretary has disputed the figures, claiming that they do not show improvements in the quality of staff and care, parliament's spending watchdog said there was a real risk that extra money would fail to meaningfully improve capacity in the departments of health, education and transport's programmes.

The three fiefdoms received the lion's share of the chancellors 2002 spending review largesse, but the MPs argued that they all need to do more to check progress on efficiency, curbing excess regulation and improving the standards of service offered in schools, hospitals, roads and railways.

Committee chairman Edward Leigh said: "It is vital that government departments charged with spending billions of pounds of extra taxpayer’s money, particularly in health, education and transport, make this count, resulting in real improvements in our public services.

"There are a number of key risks that must be properly managed to avoid this investment being swallowed up in extra bureaucracy, red tape and inefficiency.

"To take one example, extra resources may be used to fund pay settlements for existing staff without expanding capacity or improving productivity.

"I urge departments to ensure that increases in public sector pay are directly linked to a better quality of service to the public."

Delivery

The report pointed to the need to ensure government "delivery partners" such as local education authorities, NHS trusts and rail firms are spending money efficiently.

"The Department for Transport, for example, relied on Railtrack to deliver upgrades to the West Coast Mainline but mismanagement led to serious cost and time overruns," it said.

The committee also argued that while some performance targets may be a hindrance to delivery, ministers need to be ready to step in where services are not up to scratch.

"The departments of health and education need to balance devolving responsibility for service delivery to the local level with not letting wider service improvement be jeopardised by pockets of poor or failing performance," the MPs said.

"In devolving responsibility departments seek to respond to the demands and expectations of service users at the local level.

"They need, however, to retain sufficient leverage, including contingency plans, so that they can take prompt action to deal with unacceptable variations in service quality."