Report on financial management at Home Office

• Report: Financial Management in the Home Office
• Public Accounts Committee

Edward Leigh MP, Chairman of the Committee of Public Accounts, said:

"The Home Office has come a long way since 2006 when its basic financial systems and processes were in disarray. Such has been its progress in improving its financial management that it is now being extolled by the Cabinet Office as a model of good progress in the Civil Service.

"This does not mean that sound financial management has now been established at all levels throughout the Home Office and in all its business activities. That must be the overriding objective.

"But there has been great improvement and things are going in the right direction. The department must build on the momentum it has achieved.

"As constraints on resources tighten, the department must understand better, for each area of its business, just what it is getting for the money spent in terms of its strategic objectives.

"And it should make sure its systems have the flexibility, capacity and capability to respond to new challenges, as well as being able to tackle existing ones such as knowing who is in the country and the clearance of asylum legacy cases."

Mr Leigh was speaking as the Committee published its 46th Report of this Session which, on the basis of evidence from the Home Office (the Department), examined its newly-developed financial management capability and capacity, and the challenges it faces to embed sound financial control at all levels across its business.

The Department has made significant improvements to its financial management capacity, capability, processes and procedures over the past three years and it was encouraging to take evidence on the positive steps they have taken in response to the constructive criticism offered by this Committee some three years ago.

In these three years the Department has undergone major changes. Its policy responsibilities have been rationalised and it responded well to a weak Capability Review assessment in 2006, so that the Cabinet Secretary commended the Department to us as an exemplar of positive change in the Civil Service at our recent Hearing on the Capability Review programme.

The Department is progressing and has, for example, strengthened its financial management by recruiting capable professionally qualified accounting staff and deploying them in key finance roles throughout its business units.

Over 70 per cent of the Department’s gross budget of £11.8 billion is paid out as grants to partner organisations, notably police authorities. The department has responsibility for paying these grants but accountability for performance and value for money rests with local police authorities.

To strengthen accountability, the Department is expanding HM Inspectorate of Constabulary’s role and moving to a single national target to increase public confidence in the police. This is a bold step and only time will tell if it results in greater accountability.

The Home Office assured us that it is ‘ready for anything’ and is confident of its ability to identify its priorities and respond appropriately to changes in them.

It recognises, however, that it has more to do. It still does not fully understand the full costs of delivering its Departmental Strategic Objectives and has continuing issues with fees and charges.

To drive financial skills into its core business, the Department must go beyond its commitment to press on with its programme of continuous improvement and to refresh its financial improvement strategy.

Only by putting in place sound financial management in all business units and raising the level of financial awareness of its staff can the Department truly embed the skills it needs to manage its business well and respond effectively to changes in its business environment.