Public Accounts Committee reports on Ministry of Justice financial management
20 March 2012
The Commons Public Accounts Committee publishes its 75th Report of the Session, on the basis of evidence from the Ministry of Justice.
The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:
"Financial management at the MOJ has improved since we last reported. However, the Ministry remains unable to deliver timely and accurate financial accounts.
This is unacceptable and undermines public confidence in the Ministry’s stewardship of public funds.
The Ministry has to make £2 billion of savings per year by 2014-15. Given the workload pressures it is under, including those largely outside its control such as increases in the prison population, it has its work cut out.
Without full information on its costs, there is a risk that savings will be made through unnecessary cuts to frontline services essential to the poorest in the community, rather than through genuine improvements in the Ministry’s efficiency.
The Ministry has not made enough progress in maximizing its income. It has increased the amount of money collected through fines but this is being outpaced by the growth in fines outstanding. Fee recovery levels in courts have shown no sign of improvement. And the Ministry acknowledges that 60% of the money outstanding under confiscation orders may never be recovered.
The Accounting Officer was straight with the Committee and would not commit to meeting the Government timetable for the 2011-12 accounts. While we welcome his candour, this is not a tenable position. The Ministry must break the cycle of its continuing failure to produce accurate accounts on time."
Margaret Hodge was speaking as the Committee published its 75th Report of this Session which, on the basis of evidence from the Ministry of Justice (the Ministry), examined the Ministry's progress in improving financial management.
The Ministry has improved its financial management since the Committee's last report in January 2011. Many of the Ministry's processes have improved, including modelling and forecasting, but the Ministry has not achieved significant improvements in the delivery of key financial outcomes and therefore has much still to do.
The most serious issue is the Ministry's inability to report its financial affairs on a timely and accurate basis. The Ministry's own resource accounts for 2010-11 were delivered late and there were significant problems with the accounts produced by two of its major arm’s length bodies. The Legal Services Commission was again unable to produce accounts sufficiently free from error to gain a clear audit opinion and the Ministry could not produce auditable data to support HM Courts Service’s Trust Statement, produced for the first time in 2010-11.
The Ministry faces significant accounting challenges for the 2011-12 financial year, due to the more demanding requirements of the Clear Line of Sight initiative which requires earlier publication of the accounts. The Ministry has acknowledged that it might not be possible to produce its accounts in time for them to be certified before the end of June 2012 deadline. It needs to break the cycle of continuing failure to produce accurate and timely accounts.
The Ministry also faces considerable challenges in meeting its tough spending review commitments given the demand-led nature of its business. Although the Ministry has advanced its work on costing since our last report, it is still not complete. Without a full understanding of its costs, the Ministry risks unnecessarily cutting frontline services, which are critical to the poorest in the community, rather than ensuring savings are achieved through genuine efficiencies.
Maximising the income it obtains will help the Ministry deal with the current spending constraints, but it has not made enough progress in this area. Fine collection is improving, but it is being outpaced by the growth in fines outstanding. No progress has been made in improving fee recovery levels in the courts. Substantial sums of money are outstanding under confiscation orders and it is not clear how much of this money can really be recovered. The Ministry has recognised the need to improve its joint working with the Home Office on this issue and the Committee welcomes the creation of the joint Ministerial-led board to address confiscation orders.
Excellent financial management is critical to the Ministry's future success as it seeks to achieve significant efficiency gains while coping with workload pressures, such as increases in the prison population, that are largely outside its control.