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SESSION 2001/2002 FOURTH REPORT REPORT ON THE DEPARTMENT OF FINANCE AND PERSONNEL MEMORANDUM
OF REPLY TO THE FIFTH REPORT OF THE PUBLIC ACCOUNTS COMMITTEE (5/00/R) Report: 04/01/R (Public Accounts Committee) PUBLIC ACCOUNTS COMMITTEE FOURTH REPORT Standing Orders under Section 60(3) of the Northern Ireland Act 1998 have provided for the establishment of the Public Accounts Committee. It is the statutory function of the Public Accounts Committee to consider the accounts and reports of the Comptroller and Auditor General laid before the Assembly. The Public Accounts Committee is appointed under Standing Order No. 56. It has the power to send for persons, papers and records and to report from time to time. Neither the Chairperson nor Deputy Chairperson of the Committee shall be a member of the same political party as the Minister of Finance and Personnel or of any junior minister appointed to the Department of Finance and Personnel. The Committee Members were appointed by the Assembly on 24 January 2000. They will continue to be Members of the Committee for the remainder of the Assembly, unless it orders otherwise. The Chairperson Billy Bell and Vice-Chairperson Sue Ramsey were previously appointed on 15 December 1999. The full membership of the Committee is as follows:-
All publications of the Committee (including press notices) are on the internet at archive.niassembly.gov.uk/accounts.htm All correspondence should be addressed to The Clerk of the Public Accounts Committee, Room 371, Parliament Buildings, Stormont, BELFAST, BT4 3XX. The telephone number for general inquiries is: 028-9052-1532. The Committee's e-mail address is: michael.rickard@niassembly.gov.uk Fourth Report Department of Finance and Personnel Memorandum of Reply to the Fifth Report
of the Public Accounts Committee (5/00/R) Proceedings of The Committee Relating to the Report Minutes of Evidence (Wednesday 19 September 2001) Appendices FOURTH REPORT The Public Accounts Committee has agreed Report on the Department of Finance and Personnel Memorandum of Reply to the Fifth Report of the Public Accounts Committee (5/00/R) 1. On 22nd February 2001, the Committee took evidence from Mr Clive Gowdy, Accounting Officer of the Department of Health, Social Services and Public Safety and his staff on the Northern Ireland Audit Office Reports "Health and Personal Social Services - Executive Directors' and Senior Managers' Pay" (HC 396, Session 1999-2000) and "Health and Personal Social Services - Executive Directors' Contracts and Termination Settlements" (NIA 1/00). 2. Having considered both the NIAO Reports and the evidence provided by the Accounting Officer and his staff, the Public Accounts Committee published its own report "Health and Personal Social Services - Executive Directors' and Senior Managers' Pay, Contracts and Termination Settlements (5/00/R)" on 16th May 2001. 3. As is the protocol for such reports, the Department of Health, Social Services and Public Safety had two months to respond to each of the report recommendations via a Department of Finance and Personnel Memorandum of Reply. This was published on 30 July 2001. 4. In general, the Committee considered the response to be satisfactory. However, the specific responses to PAC Conclusions 12 and 13 were considered to be contentious. 5. In the PAC Report, the Committee's view was that it was "unacceptable to have assumed that a Minister's request about limiting pay increases, not backed up the legislative authority, would bring about the requisite result". In the Memorandum of Reply, the Department rejected this conclusion. It claimed that as soon as the problem had emerged it had dealt promptly with the issue by setting a 2.7% pay limit for Senior Executives in 1998-99 - previous experience gave the Department no reason to doubt that it would not be adhered to. It was not until February 1999 that it became apparent that new legislation would be needed. 6. The Committee considered the departmental response and concluded that despite the Department's views, it had been somewhat naïve in assuming that the Trusts would comply with the Minister's request. 7. In the PAC Report the Committee's view was that "It is clear to us that public displeasure at the level of pay awards was the major influence on action by the Department". However, in the Memorandum of Reply, it was stated that "The Department does not accept the Committee's view that public displeasure was the major influence on the Department's actions". The Department pointed to its restriction on pay being notified to the HPSS in April 1998, six months before the newspaper feature in October 1998. 8. In the Committee's review of the response, it recognised that the Department did take action in April 1998 in the form of the Minister's letter to Trusts that restricted pay for 1998-99. However, the Committee had been aware that the matter had received earlier media attention as far back as October 1996. It concluded that the (on-going) media interest in October 1998 followed by the Secretary of State's intervention significantly raised the profile of the issue. This profile was further reinforced by the NIAO report in April 2000 which again drew media attention. 9. In considering the departmental response to the committee's conclusions and recommendations, the Committee was willing to take on board departmental counter arguments to the conclusions drawn. However, in the response to PAC conclusions 12 and 13, it was greatly concerned with the tone of the departmental response, particularly the use of the phrases "reject" and "does not accept". The Committee therefore felt that it was necessary to reiterate that it was within its right to come to its own conclusions and that these conclusions should not be "rejected" or "not accepted" by a department. 10. In light of Committee concerns, Dr Andrew McCormick, the Treasury Officer of Accounts was invited to the PAC meeting of 19 September to discuss the Memorandum. During the meeting Dr McCormick informed the Committee that his Office had queried the wording of the response when it was received from Mr Gowdy, but it had not been pursued as it should have been, and thus apologised to the Committee. He also gave an undertaking to write to Departmental Accounting Officers in order to ensure that in all future Memoranda of Reply the language will be both responsive and respectful. This was issued on 25 October 2001 (Appendix 1). 11. Following the Evidence Session, Dr McCormick acquainted Mr Gowdy with the discussion which he had with the Committee on 19 September. Since Mr Gowdy's department largely drafted the Memorandum of Reply, he felt it appropriate to write to the Committee. (Appendix 2). In the correspondence he apologised to the Committee for any offence taken from the wording used in the Memorandum of Reply. He reiterated that no lack of respect was intended but merely intended to draw out again the Department's position on the substance of the issue. PROCEEDINGS OF THE COMMITTEE SESSION 2001-2002 Members Present: Mr B Bell (Chairperson) Mr John Dowdall, Comptroller and Auditor General (C&AG) was further examined Draft Report (The Department of Finance and Personnel Memorandum of Reply to the Fifth Report of the Public Accounts Committee (5/00/r)) proposed by the Chairman, brought up and read. Ordered, That the draft Report be read a second time, paragraph by paragraph. Paras 1 to 11 read and agreed to [Adjourned until Wednesday 23rd January 2002 at 10:30am] * * * * Wednesday 19 September 2001 Members present: Witnesses: 1. The Chairperson: Gentlemen, I would like to welcome you to this public session. You are attending this meeting at the request of the Committee to deal with an issue arising from the responses of your Department and the Department of Health, Social Services and Public Safety to our 5th report on senior executives' pay. 2. The Committee has read your Department's response on the Health Service report, and frankly we are surprised and more than a little annoyed at it - and at conclusion No.12 in particular. It is a pity that a generally constructive response was spoilt by comments that I regard as completely out of order and totally unacceptable to this Committee. The Committee was of the opinion that it was unacceptable to assume that a Minister's request about limiting pay increases, unendorsed by legislative authority, would bring about the requisite result. Your response was to reject this view. 3. Of course a Department may sometimes disagree with one of our recommendations and may want to tell us why. However, the views and opinions reached by the Committee must stand. I will repeat that - they must stand. In this case the Committee took this view after hearing and reading all the evidence presented to it. Are we now to be told by civil servants that our views are to be rejected? 4. I want to find out your views on this response. I am particularly interested to know whether you agree that it is not for any official to reject a judgement of this Committee. Also, the Committee would be interested to know the procedure for dealing with replies in Departments. We would be particularly interested in whether this response to conclusion 12 was discussed and agreed with your Minister and the Minister of Health, Social Services and Public Safety, and whether this is the considered view on how a Department should respond to this Committee. 5. Dr McCormick: There are two aspects to this - the issue of substance and the nature of language and presentation. Both are very important for ensuring that Departments respond appropriately and fully to the views of this Committee. As part of our Department's role we are here to uphold and support the Public Accounts Committee for the purposes of public accountability, and we take that responsibility very seriously. Our intention is to reflect properly what is said this morning in further communication to Departments, so that what we hear and agree this morning can have a genuine effect. 6. There is no question of officials having a right to reject or stand in the way of the views of this Committee. Both the departmental Minister concerned and the Minister of Finance and Personnel always clear memoranda of reply. In practice they have not been subject to much detailed discussion with Ministers, but the language and wording is cleared. 7. The guidance we issue on memoranda of reply is based on the Treasury's guidance. Clarity of response is the first thing; the Treasury's guidance says that the Department should make clear whether or not it accepts a conclusion. The Department has sought to do this. 8. Where a Committee makes a recommendation for action that the Minister decides is not the right thing to do, the memorandum of reply would rightly say that the Department considered taking the view of the Minister and that the course of action recommended by the Committee was not appropriate. Subject to ministerial authority, the Department is entitled to take that view. That is the more straightforward kind of case where it is down to action or no action. 9. The case before us is more difficult, as it is a matter of drawing a conclusion and reaching a view when there may genuinely be differences of opinion and interpretation as to what happened. Again, it might be appropriate for a Department - with the Minister's approval and subject to the Minister's direction - to explain that having looked at the facts, its view of the facts and their interpretation differs from that expressed by the Committee. If that were the case, the memorandum of reply would clearly say so. 10. The Chairperson: But would it include the word "reject"? 11. Dr McCormick: Language and presentation are equally important, and must be dealt with very carefully. I do not defend the language here; with hindsight it is not appropriate language. It might have been more appropriate to say that the Department disagrees with the Committee's view; or perhaps that the Department notes the Committee's view but lists points which illustrate why it sees things differently. 12. It would be helpful to establish what language would be appropriate and acceptable to the Committee in those circumstances where for genuine reasons, after departmental consultation with the Minister, there is a difference of opinion. As that kind of case could arise again, we would like to ensure that the preference of the Committee as regards language and presentation is known to Departments, so it can then be reflected in memoranda. 13. The Chairperson: This Committee was set up by the Northern Ireland Assembly, a corporate body, as its watchdog. We feel that it is quite inappropriate for Departments to use the language of the memorandum in question. 14. Mr Dowdall, as Comptroller and Auditor General, have you ever witnessed a situation where a Department has rejected a Committee report, either here in the Northern Ireland Assembly or from the Public Accounts Committee at Westminster? 15. Mr Dowdall: No, Chairman. I can remember memoranda of response going back more than 20 years at Westminster, and I cannot remember the word "reject" ever having been used. I agree with Dr McCormick that there are occasions when the Departments disagree with the Committee's recommendations; they are generally handled quite reasonably, within the guidelines that he has suggested. That was a step forward in language, to which you are right to draw attention, and it is encouraging that Dr McCormick says that it would not have been used in hindsight. 16. The Chairperson: Mr Dallat raised the question in the Assembly recently and feels very strongly about it, as I do. 17. Mr Dallat: I feel strongly about it for two reasons. As Chairperson of the Audit Committee, which must justify a budget for the Comptroller and Auditor General to the Assembly, I expect the work of the Comptroller and Auditor General to be taken seriously. I do not expect the word "reject" to appear more than once in the memorandum, to put it bluntly. Also, given that it may be just 72 hours until the suspension of the Assembly and that the Department, during the dark days of direct rule, had an appalling record, it makes me extremely nervous that all symptoms of the past are not yet out of the system. While I know that you are here to take the brunt, it is clear that someone in the Department has not learned that, at least for the moment, democracy prevails. 18. The Committee is primarily concerned about conclusion 12, but I want to talk about conclusion 13, which I also found surprising. The Department does not accept your view, but says that public displeasure was not the major influence on its actions, and that the Department had acted before the media interest. That is inaccurate; the Department has claimed that it first became concerned in late 1997, yet Nigel Gould exclusively revealed the extent of pay increases for health chiefs in the Belfast Telegraph of 4 October 1996. I will read from the article. 'The wages bill for 12 of Ulster's 20 health trust chiefs tops more than £1m a year, the Belfast Telegraph can reveal today. And this year some of the top money-earners have has pay increases of up to a staggering £15,000." The article goes on to mention that school principals are winning pay rises of up to £10,000, yet at the same time nurses were getting a paltry 3% increase. 19. For the record, the top-earning chief executive is Dr Collim Patton of Down and Lisburn Health Trust, who received a £7,000 pay increase, bringing his earnings at that time to £91,000. William McKee, chief executive of the Royal Group of Hospitals, received an increase of £9,000. At Craigavon and Banbridge Community Trust, someone got a £15,000 rise, bringing him up to a modest £92,000. That was all revealed in the Belfast Telegraph before the Department acted, yet the Department claims that it was not responding to public pressure. I think that the Department did respond to public pressure and was concerned about it. 20. The Committee believes that the media attention and the Secretary of State's intervention gave the pay issue much greater momentum and led to a public expectation that action would be taken quickly. Indeed, the Secretary of State responded to media coverage by describing the pay increases as scandalous and instructing the Minister for Health to investigate them. To my personal embarrassment, that was all discussed on the 'Talkback' radio programme, and I foolishly phoned the show to congratulate the Secretary of State on his wonderful wisdom, yet nothing happened. There was no legislation put in place to stop it, and it happened again. 21. Consequently, the Committee's view was that public displeasure had a major influence in moving events forward. This is not personal, Dr McCormick; you must give the Committee a much better explanation than we have received so far. 22. Dr McCormick: It is said that context is everything. In 1996 the context was very different from that of 1997, because of the general election. Under the Conservative Administration, the thrust of policy was to delegate to the trusts, and part of the purpose behind the health service reforms was to establish greater independence and delegation of responsibility. In that context, Government policy within which the accounting officer was working emphasised that better results could be obtained through delegation of responsibility. It also allowed organisations such as the trusts to proceed on some issues as they judged fit. This meant that different pay settlements for chief executives, according to the environment in which they worked, was also part of the policy. 23. The publicity surrounding what happened in 1996 was in a very different context. Having talked to Mr Gowdy, I believe it would not have led the Department to action, as such action would have run counter to the aims of the Conservative Administration. 24. After the general election in 1997, Mr Worthington was the Minister responsible for the Department of Health and Social Services, and in that period there was concern both within the Department and at ministerial level before the publicity in 1997. Those concerns were reflected in the focus and nature of the Audit Office's report on the events and accounts 1997. Therefore, the accounting officer stands by the view that his department was in action to deal with the matter and apply pressure in a new political environment before the publicity in 1997 surfaced. 25. Mr Gowdy mentioned advice to Ministers, and has advised me that there was direct, behind-the-scenes ministerial involvement in dealing with these issues. Mr Gowdy also pointed out that not all the trusts had been established at that time; some were still in the process of formation. The full picture and the right, formal policy response was not clear at that time. 26. Mr Dallat: I do not want to labour the point, but to tell us that the change of political opinion in Britain is to blame is just not good enough. Government Departments are expected to be run efficiently and to attend to their duties in a professional manner, and that was not done. One could accept that during the dark days of direct rule this place was run damned badly, but one cannot accept that a memorandum of response to a report prepared by the Public Accounts Committee under the aegis of democracy still has the word "reject" appearing twice. I have heard nothing this morning to reassure me that, should there be another suspension, your Department has learnt any lessons from the past. The arrogance displayed must be curbed if there is to be proper respect for the work of this Committee and for the taxpayers who fund it. 27. Dr McCormick: I strongly emphasise that respect for the Committee, for the principles of accountability, efficiency, effectiveness and economy in the management of public finance is a primary concern of the Department of Finance and Personnel. In writing to the Department's accounting officers after this morning's session, I shall underline that precept. That must apply whatever the political context. We must ensure that the language is respectful and responsive to what is being said, and I undertake that we shall act accordingly. 28. Mr Close: We are all on a learning curve, but surely professional civil servants should have learnt something by now. Hindsight is an exact science. This has happened before when the Committee has been about to embark upon an inquiry. 29. Making a pre-emptive strike seems to be a practice of Departments. I have a suspicious and perhaps a cynical mind and I wonder whether the thinking is "We shall get away with whatever we can, and if it is discovered we shall excuse it afterwards". I think the phrase used was "language not appropriate in hindsight". Earlier, you said that this memorandum had been cleared. Was it cleared by two Ministers? At what level was it cleared by civil servants? 30. Dr McCormick: The accounting officer cleared it, and I cleared it. 31. Mr Close: Am I right in assuming that those who read it said that it was OK? 32. Dr McCormick: Yes. 33. Mr Close: You are making my point for me. The mindset of the people who cleared it must have been that it was all right to reject the recommendation and conclusion of the Committee. A belated admission that the language might have been "inappropriate" displays a dismissive attitude towards elected representatives and democratic Committees. The direct rule mindset of "it will not be examined; it does not matter" does not seem to have changed. 34. Things, however, have changed. Do senior civil servants recognise the meaning of democracy and the rights and responsibilities of elected representatives? We are not doing this for ourselves; we are doing it for the taxpayer. People's democratic right to form their conclusions must be asserted; the right language must be used from the beginning - not in hindsight. 35. Did you also refer to guidance notes? 36. Dr McCormick: Yes, we consulted the Department of Finance and Personnel's guidance on the preparation of memoranda of reply. 37. Mr Close: May we have a copy of that? 38. Dr McCormick: Yes. 39. Mr Close: Then we can be absolutely clear on language and on what we can expect in future. 40. Dr McCormick: Yes. 41. Mr Close: It is a learning curve for us all. The Chairperson has already emphasised that. Mistakes and excuses will not be accepted: we act on behalf of the people and not on our own behalf. That message must go out loud and clear. 42. Dr McCormick: The point is taken entirely. There were some queries about the words at the time, but they were not pursued as they should have been. I accept that and I apologise. 43. I emphasise the distinction between how it was expressed and its substance. If a Department disagrees, it must express its disagreement in acceptable language. It could perhaps be with a form of words such as "disagrees" or "notes the Committee's view"; a form of words, however, that would point out how best to find the right language. 44. Should there be a genuine difference of opinion, I should pass on the strong views of the Committee on matters that should not have arisen and that, with hindsight, are not acceptable. I also wish to help Departments to find the right words. How can I do that? 45. Mr Close: Perhaps the Committee only received a few memoranda, although I seem to remember a great many having been provided. The Comptroller and Auditor General said that in his 20 years' experience this is the first time the word "reject" has been used. That underlines my concerns. The necessary experience exists. It is new to us; it should not, however, be new to people who have 20 years' experience. 46. Dr McCormick: It is probably true that there are more memoranda of reply because there are more issues to respond to. That is one of the major steps up for us all under devolution. One or two PAC reports a year used to be sent to a few Departments; now they are more frequent. I take the point that the word "reject" was not used before. Were there differences of opinion in memoranda on other occasions? I cannot speak of previous differences of opinion. This is slightly different. 47. The Chairperson: The responses in general have been constructive, but this one stuck out like a sore thumb and really got to the core of the Committee. I accept your answer to Mr Close; but if in future you do not get it right, we shall - I hope - be here to remind you 48. Mr Carrick: Language is important, and Dr McCormick has admitted that, in hindsight, different language should have been used. 49. I return to the substance, and in particular to Mr Durkan's response to Mr Dallat's supplementary question in which he said "I am sure that the Department concerned is well aware of the need for urgent and effective action should a similar situation occur". What action was taken by the Department of Finance and Personnel before the Minister made that statement? What enquiries were made? What procedures were invoked to give the Minister the confidence to say "I am sure"? You said that after this meeting you would send a letter to accounting officers. Was written instruction to that effect given to accounting officers before the Minister made his statement in reply to Mr Dallat? 50. Dr McCormick: The Department of Finance and Personnel and the Department of Health, Social Services and Public Safety discussed the matter. The undertaking emerged from that, so it became a matter for discussion between Mr Gowdy and me. At present, it exists in the form of preparatory work on supplementary answers for the Minister. That point, however, was discussed specifically and explicitly with the accounting officer. We shall confirm this in the follow-up letter to accounting officers. 51. Mr Carrick: Again in hindsight, given the Minister's request for urgent and effective action, perhaps that should have been put in writing then rather than waiting until this meeting to do so. 52. Dr McCormick: In future, a Department in a similar situation should take urgent action. As soon as a Department becomes aware of such a problem it should take appropriate action - before media publicity or other pressures are involved. 53. Mr Carrick: I do not wish to labour the point, but it has been demonstrated that such things can happen, and it is incumbent on the Department to inform every accounting officer in writing of the danger as early as possible. 54. The Chairperson: Dr McCormick, does Mr Gowdy agree with your remarks? 55. Dr McCormick: Yes. 56. The Chairperson: Mr Dowdall, would you like to say anything in conclusion? 57. Mr Dowdall: No. 58. The Chairperson: Thank you for coming, Dr McCormick, and for batting our questions back. I hope that our meeting bears fruit. 25 October 2001 MEMORANDA OF REPLY TO THE PAC (MOR) - REVISED GUIDANCE Introduction 1. This letter advises Departments of the need to ensure that the language used in Memoranda of Reply should show proper regard for the authority of the Public Accounts Committee. It also covers a revised version of the guidance on the preparation of DFP Memoranda of Reply, adapted to the context of devolution. Background 2. Following the publication of the Memorandum of Reply on HPSS: 'Executive Directors' and Senior Managers' Pay, Contracts and Termination Settlements', the Committee held a separate hearing on 19 September to take evidence from DFP on the preparation of the Memorandum of Reply and on the MOR procedures in general. I undertook to the Committee that I would pass on the main concerns raised at that hearing, and hence this letter. Memoranda of Reply 3. The purpose of each Memorandum of Reply is to set out the considered view of the relevant Departments on the matters arising from the PAC report on the topic in question. This can include giving further account for past decisions and actions, but mainly involves addressing the Committee's recommendations for action. The Memorandum should reflect the fact that actions on recommendations require decisions by Ministers, and hence that the reply is not simply further evidence by officials but the formal view of the responsible political authorities. Guidance 4. I would draw your attention in particular to the following key points, regarding the revised guidance:
5. The Memorandum of Reply is laid before the Assembly as a DFP document. It therefore falls to DFP to ensure that there is a consistent and high standard of accountability that the responses are appropriate, that good practice is shared among departments and that there is consistency of style in responding to PAC. This may result in amendments to Departmental draft responses. Any amendments by DFP will be discussed with the responsible Departments before the Reply is formally submitted for Ministerial attention. 6. I would be grateful if you could also note the revised handling arrangements for Memoranda of Reply at paragraph 6 of the attached note. Public Accountability - Timely Action 7. At the hearing on 19 September, the Committee also commented on the need for departments to ensure that decisive and effective action is taken where this is necessary to protect public funds. I would remind you, therefore, that should any such issue arise, every effort should be made to ensure that the necessary procedures are put in place urgently. Oral Evidence: New Information 8. The conventions on PAC business include the well established principle that NIAO reports are agreed with the Departments concerned in respect of all matters of fact. This is to ensure that any oral evidence taken by the Committee can be based on a clear analysis of the facts of the case. Departments are aware of the need to ensure that this is reflected in all oral evidence, and that answers given must not re-open matters of fact reflected in the NIAO Report. 9. If new information, which would be material to the issues covered in the Report, comes to hand between the final agreement of the Report and any subsequent stage of consideration of the issues, it is essential that this is drawn to the attention on the NIAO as soon as possible. This is particularly important in the preparation for any oral evidence session, as the Committee may find difficulty with any answers which are inconsistent with the agreed Report. Cancelled Guidance 10. This letter supersedes the requirements of the previous guidance which issued undercover of a letter to Principal Finance Officers entitled 'DFP Memoranda Of Reply to PAC Reports' and dated 14 September 1998. Action 11. I should be grateful if Accounting Officers would acknowledge the requirements of the Memorandum of Reply procedures, and ensure that this letter is brought to the attention of those staff involved in drafting responses for Memoranda of Reply. I would also strongly recommend that staff working in these areas should ensure that they are well acquainted with the appropriate guidance. Copies of this letter should also be sent to sponsored bodies. GUIDANCE NOTE FOR DFP MEMORANDA OF REPLY (MOR) TO PAC REPORTS 1. This note provides guidance for Departments on the production of the Department of Finance and Personnel Memorandum of Reply (MOR) to PAC reports. Procedure 2. It falls to the Department or Agency concerned to draft each response, in consultation with DFP. The completed MOR is laid before the Northern Ireland Assembly, by submission to the Assembly Business Office. The MOR is presented as a Northern Ireland Assembly (NIA) Paper in the name of the Minister of Finance and Personnel and so the text is subject to his approval. Timetable 3. DFP seeks to publish the MOR to a PAC report within two months of that report's publication which is in accordance with the timescales for responding to Committee Reports as detailed in the Departmental Guidance on Assembly Committees. The two month period includes the time required to obtain the necessary approvals from DFP, the Departmental Accounting Officer and the Departmental and DFP Ministers, and to meet publication deadlines. The timetable for completion and publication of the MOR is therefore tight and should be adhered to closely. 4. Departments should address initial drafts of responses to the relevant DFP Supply Officer, with a copy to DFP Accountability and Accountancy Services Branch (AASB), within three weeks after the publication of the report. Final drafts, agreed by the Departmental Accounting Officer and Departmental Minister, should be addressed to the Treasury Officer of Accounts and copied to AASB and the DFP Supply Officer within five weeks of the publication of the report. Individual Accounting Officers will be reminded of these deadlines in the letter formally requesting the responses. 5. Except in the circumstances described in paragraph 12, it is unnecessary for the initial drafts prepared by Departments to be formally cleared by Accounting Officers and Ministers before being sent to DFP, particularly if doing so would endanger the timetable. If, when considering their response, Departments foresee problems which will require discussion with DFP, they should approach DFP straightaway, rather than leaving the discussion until the date for the first draft. When the final text of the MOR has been agreed with DFP, it should be submitted by the Department to the Accounting Officer and to the Departmental Minister for approval. Any changes required by Departments at this stage should be cleared with AASB before the final draft is formally submitted to DFP on or before the date specified in the DFP commissioning letter. 6. The Treasury Officer of Accounts will draw each MOR to the attention of all Ministers and invite them to note the contents. If a Memorandum of Reply includes a substantive issue which affects one or more Departments which were not directly involved in the NIAO study and PAC hearing and Report, DFP will advise its Minister to seek agreement from the Executive on the response to the PAC recommendation before finalising the MOR. This would normally be preceded by consultation with all affected Departments, led either by DFP or the subject Department as appropriate in the context. In such cases, issues should be cleared at an early stage so that the above timetable is achieved. Style and Format 7. Departments should respond to PAC conclusions as fully and as positively as possible. Clear explanations should be given of the actions that the Department has taken, or will take, to implement those recommendations which are accepted together with, if possible, target dates for their implementation. 8. Replies to PAC Reports should make it clear whether each PAC conclusion that requires a response in the MOR has been accepted or not and the reasons for the response should be clearly stated. Ministers may decide that a recommendation by PAC is not the most appropriate course of action in the circumstances. In that event, the MOR will explain why the recommendation is not accepted, and provide assurance that the action which has been or will be taken will address the relevant issues and secure propriety, regularity and the best possible value for money. 9. In the case of a conclusion on a matter of opinion, it may be that, having considered all the evidence and the points made by the Committee, the Department's view of the facts and/or their interpretation differs from that expressed by the Committee. In such cases, it may be appropriate for a Department, with its Minister's approval, to state its view. However, any disagreement with the Committee should be expressed with respect for the Committee's role and responsibilities, as its conclusions will reflect the considered view of the issues based on the evidence presented. 10. Obviously, disagreement with a recommendation or a matter of fact or opinion should be soundly based and the reasons and evidence for that disagreement should be clearly set out. DFP can advise on suitable wording in such cases. 11. It is also important for the responsible Minister or Ministers to be consulted before a disagreement is included in the draft MOR for consideration by DFP. Assuming DFP officials accept that disagreement should be recorded, they will also draw the issue to the attention of the Minister of Finance and Personnel. 12. Replies should not appear to set the Northern Ireland Audit Office (NIAO) against the Committee by implying that non-acceptance or criticism of a PAC recommendation is justified because it was not reflected in the NIAO report which gave rise to the hearing. 13. Statements should not be included in the MOR unless they accurately reflect the position at the time of publication. Where at the time of drafting a statement needs to be confirmed, or further action is anticipated by the date of laying, it should appear in square brackets in the draft. Departments should inform AASB of any later information that may need to be added to the text, so that this is not overlooked in the final run-up to publication. 14. Introductory paragraphs of general material, not connected to specific recommendations, may be included in the MOR only in exceptional circumstances: for instance where there has been a change in organisation or policy since the time of the NIAO report or the hearing which affects the reply. An example would be where responsibility for the subject of the report has been transferred from one Department to another. However, in cases where the opening paragraphs of the PAC report contain summary conclusions or recommendations (sometimes described as "main"or "key" points), DFP will be willing to consider the inclusion of responses addressing these points prior to the responses to the detailed conclusions and recommendations. If the opening "main points" can be covered in the responses to the detailed recommendations, that should be the approach. But otherwise the aim should be to provide direct and succinct responses to the Committee's conclusions and recommendations. 15. PAC conclusions should be reproduced in the DFP MOR subject to the following conventions:
An example of a MOR prepared in accordance with the required format and presentation, is attached. 16. The Department's response will follow the conclusion to which it relates. It is sometimes appropriate to provide a composite reply to two or more related conclusions. In these cases the relevant conclusions should be grouped together. These may be shortened but each conclusion must be kept distinct and the reply should cover every conclusion/recommendation in the group. Publicity 17. AASB will arrange for the approval of the MOR by the Minister of Finance and Personnel and for publication by the Stationery Office. Departments will receive written confirmation from AASB of the dates of laying before the Northern Ireland Assembly in an Alert Notice. 18. The MOR is embargoed until the time of publication. While DFP does not issue a press notice on publication of a MOR, it does circulate a ' Public Audit Business - Alert Notice'. The purpose of the Alert Notice is to inform all Ministers, Accounting Officers and Departmental Press Officers of forthcoming issues of Public Audit Business including Audit Office Reports, PAC Hearings, PAC Reports and MORs. It is however for the subject Department concerned to determine what level of publicity to give to its response to a report by the Public Accounts Committee. Sample MOR 19. The following style conventions should be employed:
20. If you have any queries about producing your response to a PAC report, please contact AASB. Correspondence of 27/09/01 from Mr Gowdy, Accounting Officer of the Department of Health, Social Services and Public Safety SENIOR EXECUTIVES REMUNERATION Dr McCormick has acquainted me with the discussion which he had with the Committee on 19 September. Since the Memorandum of Reply was largely drafted in my Department I felt that it would be appropriate if I were to write to the Committee. The first and foremost point I would wish to make is that there was no discourtesy intended in any aspect of the response to the Committee's Report. I and my colleagues in this Department have a proper respect for the institutions of the Assembly and would not wish to see any impression created to the contrary. The preparation of the response to the Committee's Report was conducted within the framework of the guidance provided by the Department of Finance and Personnel, which is in effect the guidance from HM Treasury. In this guidance Departments are asked to indicate whether they accept the conclusions of a PAC Report. The use of the word "reject" was used as the antonym of "accept". It had no more pejorative meaning than that. Having learned of the reaction of Committee to this word, I can see that it would have been more appropriate to use a less blunt form of words. I would apologise to the Committee for any offence which the use of this particular word has created. The point which we were seeking to make, and which we would have to continue to make, is that the committee's conclusions 12 and 13 state an assessment of what happened which does not take account of the fact that, with the direct and personal involvement of the then Ministers, the Department had been acting to address the issues irrespective of press reporting and had weighed up all of the options. I can assure the Committee that the Department and the then Ministers did all that was possible to address the problem at the time. Thus for us, this was not a matter of interpretation, but rather a matter of fact that the Committee's conclusions on these points did not reflect what actually happened at the time. In the interests of accuracy, we therefore needed to put this on the record. I hope that this letter helps to confirm that no lack of respect was intended and to draw out again the Department's position on the substance of the issue. I would be happy to provide any additional clarification that you or the Committee might wish to have. |
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