Managing Resources in Government Departments

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Managing Resources in Government Departments

• Jane Geraghty
• Team Leader
• Departmental Expenditure and Briefing Team
• Finance and Analytical Services Directorate
• Department for Education and Skills

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What I hope to Cover

• The Government resource management framework
• How the Department allocates and manages its
  resources internally
• How Departments secure resources

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The Budgeting framework

• Each Department presents Estimates to
  Parliament each year to get approval to spend
  money
• But decisions taken through internal Government
  processes managed by HM Treasury about how much
  each department gets

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Decisions on tax and spend

• Tax plans set each March in the Budget statement
• Spending plans for each Department set through
  spending reviews every two years
• Just completed spending review 2002
• Work is about to start on spending review 2004

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Financing Government

• Individual Departments do not generally earn
  money from the provision of services
• (exceptions DVLA, Passport Agency)
• Taxation receipts generally unhypothecated
  source unrelated to where it is spent
• Spending Departments better seen as delivery arms
  of a large company UK Government plc
• HM Treasury is the banker/finance section

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Background - DfES

• Department created June 2001
• Responsible for education and training in England
• Schools funded mainly through local authorities
• Further and higher education funded through
  arms-length bodies (NDPBs)

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The Aim of DfES

• The aim of the Department for Education and
  Skills is
• To give everyone the chance, through education
  and training, to realise their full potential,
  and thus build an inclusive and fair society and
  a competitive economy
• Measured using targets such as
• Universal free nursery education for 3 and 4 year
  olds by 2004.
• By 2010 ninety per cent of young people by age 22
  will have participated in a full-time programme
  fitting them for entry into higher education or
  skilled employment .

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Meeting the aims

• Meeting aims and objectives generally involves
  spending money
• Can be allocated
• To parts of Departments (e.g. agencies) to
  deliver services directly
• To other parts of Government (e.g.
  Non-Departmental Public Bodies)
• To others (e.g. local authorities) to spend

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Managing money within DfES

• Total DfES budget for 2002-03 was 24 billion
• Schools/early years 7 billion
• Lifelong Learning and Youth programmes 17
  billion
• DfES running costs 0.2 billion
• In addition, estimated local authority spending
  on schools 30 billion

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Allocating funds

• Broad allocations decided by Secretary of State
  after each spending review
• Can be allocated
• Within the Department allocated by policy area
• To a Non-Departmental Public Body (NDPB) e.g.
  to allocate HE spending
• To local authorities
• Elsewhere e.g. to a private sector contractor
• Some contingency funds held back to meet
  unexpected problems

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In year management

• Divisions within the Department manage their own
  budgets (running costs and programme)
• Central accounting system to make and record
  payments
• Monthly expenditure reports with explanations of
  any variances prepared for the DfES board.
• Reviews of spending at mid and end year which
  provide opportunity to reallocate any underspends

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After the end of the year

• Published accounts drawn off the accounting
  system and audited
• Any underspends can be carried forward

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Parliamentary accountability

• Departments must present accounts each year,
  which are audited by the National Audit Office
• Civil service head of Department (Permanent
  Secretary) is accountable to Parliament for how
  money is spent
• Can be questioned in public by committee of MPs
  (Public Accounts Committee)

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Getting the money from Treasury

• Treasury allocates funds at fixed points, which
  are opportunity for Departments to secure money
• Main exercise is biennial spending review first
  one completed in 1998
• Longer planning period than previous PES process
  more like private sector
• Sometimes funds also allocated through Budgets or
  pre-Budget Reports
• Additionally, exercises to allocate specific
  funds e.g. Capital Modernisation Fund

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Spending Review process

• Just completed the 2002 spending review
• We considered how Departments programmes can
  contribute to Governments priorities
• Developed policy proposals (spending proposals)
• Presented proposed policies, targets and spending
  to Treasury
• Negotiation on these proposals led to the
  settlement in July 2002
• Decision taken on the allocations for each
  Department reflects wider political agenda
• But good underpinning evidence can strengthen a
  Departments case for resources

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Measuring success

• Our aims are broad, consumer demand high, so
  expectations can probably never be met in full
• Recent trend towards trying to measure specifics
• Labour 1997 Manifesto (e.g. waiting lists)
• Public Service Agreements (PSAs)
• Need to ensure Value for Money (VFM)

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• Any Questions?

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