The National Audit Office (NAO) said the Treasury should ask them to provide assurance ahead of key financial decisions after it found the incentives on AOs (usually the permanent secretary) to safeguard value for taxpayers’ money are weak compared to those associated with the day-to-day job of satisfying ministers.

The NAO says that AOs appear to lack confidence to challenge ministers where they have concerns about the feasibility or value for money of new policies or decisions, not least because standing up to ministers is seen as damaging to a civil servant’s career prospects.

Part of the reason for this is the more ‘executive’ role of ministers in specifying the detail and timing of policy implementation (and consequently AOs being held responsible for implementation decisions not directly under their control); ministers seeking greater involvement in the selection of civil servants appointed to senior posts; and concerns over the influence of special advisers to ministers.

The watchdog’s report said that the AO’s power to request a formal ‘ministerial direction’ is not being used effectively as an accountability control to safeguard value for money.

The NAO points out that major projects where there were clear value for money concerns, such as the FiReControl Project (2004-2011 which had cost £635m when it was cancelled) or the National Programme for IT in the NHS (costing £11.4bn between 2002 and 2011), were not the subject of directions.

The report says assurance and controls have evolved over the last parliament, with the Treasury making senior responsible owners of major projects (SROs) directly accountable to parliament for project implementation, and improvements in transparency of government’s finances such as the Whole of Government Accounts.

However, it says that while the creation of accountability system statements was another positive development, they are not comprehensive and often are little more than a compliance exercise. The NAO concludes that ‘ensuring the essentials of accountability in some areas of government still seems to be an afterthought’.

Furthermore, it claims the Treasury has not asserted its own key role in setting the overall framework for AO accountability and providing clarity about expectations on AOs.

Among the NAO’s recommendations is that the Treasury should introduce a new requirement on AOs to provide positive, on-the-record assurance ahead of key implementation decisions, which it says would help ensure that appropriate, informed judgements are made before public resources are committed. It also wants more explicit sign-off by AOs at certain implementation stages, such as at business case approval and when major changes to project specifications are agreed.

Additionally, the NAO says the Cabinet Office should identify and put in place specific measures to change incentives for permanent secretaries to emphasise their AO responsibilities, alongside their duty to ministers.

Amyas Morse, head of the NAO, said: ‘AOs have always had to balance this role against other duties to execute policy and support ministers. I think that these ministerial and policy goals have come to weigh more and more heavily. The ever-increasing influence of special advisers, and ministers’ greater involvement in policy implementation and Civil Service appointments, is pressing down on the ‘ministerial’ end of the see-saw further and further, while considerations of value for money and public value rise steadily into the air.’

The report, Accountability to Parliament for taxpayers’ money, is here