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Financial Management Initiative

Volume 114: debated on Thursday 9 April 1987

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asked the Secretary of State for Defence whether he will make a statement on the effect on his Department of the financial management initiative.

The Ministry of Defence's response to the financial management initiative, which incorporated developments already in train, primarily involved the introduction of a top management information system and managerial budgets with associated delegated powers (executive responsibility budgets and staff responsibility budgets). The Public Accounts Committee took evidence on this programme from the permanent under secretary on 17 December 1986. Changes stemming from MINIS include the reorganisation of the Ministry of Defence which came into effect on 2 January 1985 (Cmnd. 9315). The basic purpose of executive responsibility budgets, which now cover a very wide range of support activities in the United Kingdom, is to enable managers to carry out their tasks more efficiently and economically. The current programme involves some 340 units, with operating costs of about £3·5 billion a year. Although the final stages of the implementation process have yet to be completed there are already indications that this new budgetary system is helping to promote greater cost consciousness and providing a basis for more effective planning and decision making. Examples of benefits in terms of better value for money include a significant improvement in engine repair times at a naval helicopter repair depot; a more economical system for the testing of blood specimens at an Army hospital; and increased productivity at RAF supply depots.The Department's financial training programme has been substantially expanded in the light of the financial management initiative. Training is being provided for service personnel as well as civilian staff.