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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 the Environment whether he will make a statement on the effect on his Department of the financial management initiative.

The approach embodied in the FMI is changing working assumptions throughout my Department. Results are reported annually to the House in the public expenditure White Paper (currently, Cmnd. 56) as well as in such reports as the White Papers on the FMI and the annual reports by major sponsored bodies.The range of systems reflecting this approach include:

  • The MINIS top management system which reviews the progress against objectives and the future targets of all parts of the Department.
  • Line management systems (LMS) in all parts of the Department, giving positive reporting on delegated responsibilities.
  • An organisation for financial management (OFM) system of delegations identifying responsibilities in the policy line for financial management of each public expenditure sub-programme and vote sub-head. This system is being extended to running costs. Six hundred officials have been trained in financial management.
  • Devolved budgeting and monitoring throughout the Department for an increasing range of running costs. This system has recently been simplified, and the scope for virement between budget centres improved.
  • In common with the rest of the Civil Service, annual staff reports now review progress against the personal objectives and work plans agreed at the start of the reporting period.

Similar systems are in operation in the Property Services Agency, adapted to suit the agency's roles of managing the civil and defence estates and providing the Government's accommodation services. The major changes over the last eight years have been the introduction on the civil estate of the property repayment services scheme which has transferred to the client the responsibility for funding most accommodation services and the introduction in the defence estate of local works maintenance budgets.

For the longer term, we shall shortly be getting the results of a study of improvements to the agency's accounting systems which I hope will lead to a more commercial approach to its operations and an ability to compare PSA services directly with those provided by the private sector.

Effective corporate planning processes link the Department to all its major sponsored bodies. These focus on ministerial objectives, progress towards them and cost-effectiveness.

Outside the Department, the independent Audit Commission for local authorities is spreading the many lessons that can be learnt from the best of local authority financial management.

Since 1979, manpower has fallen by 35 per cent. in the Property Services Agency, including the Crown Suppliers. Other departmental staff have been reduced by 42 per cent., 2,500 of the savings being due to improved efficiency. Productivity is still rising.