The Government's Response to the Report on the DAR 2003 CM 6157

The Government's Response to the Transport Committee's Report on the Deparmental Annual Report 2003

Presented to Parliament by the Secretary of State for Transport by Command of Her Majesty March 2004

Cm 6157

Introduction

In April 2003, the Department for Transport (DfT) published its first Departmental Annual Report. The Transport Committee held an evidence session in September 2003 to examine departmental spendin, Public Service Agreements and associated targets for the Department in the light of the Departmental Annual Report. The Secretary of State and the Permanent Secretary gave evidence to the Committee on 10 September 2003.

The Government welcomes the Transport Committee's Report on the Departmental Annual Report and the recommendations made by the Committee. This document responds to the recommendations and represents the Government's formal response to the Committee's report.

Response To Recommendations

1. We hope the Department and the Minister will take the opportunity the new Department brings for a period of stability, and focus on delivering improvements to transport services. (Paragraph 3)

The Government agrees with the Committee that the focus of its energy should be on delivering better transport across all modes. This aim is set out clearly in both the progress report on the 10 Year Plan for transport and the Department's annual report.

2. To further enhance accountability, the Committee recommends that the financial information in the Annual Report be supported with more detailed narrative and explanation. (Paragraph 5)

The financial information set out in the Public Expenditure Tables at Appendix A and elsewhere is intended to support the detailed narrative of the Report, which comments on the Department's objectives, work streams and related spending. However, we will consider how accountability might be further enhanced by the use of explanatory notes attached to these tables.

3. The Department should consider with the Treasury whether the Annual Report and the 10 Year Plan Progress Report could be produced at the same time, and be expressly designed to complement each other. (Paragraph 6)

The Government published a progress report on the 10 Year Plan in December 2002. We do not envisage publishing a progress report this year, as we are undertaking a review of the Plan alongside the current cross-Government Spending Review. This is to ensure that the Plan remains up-to-date, reflects new developments and is effective at delivering the transport improvements that we all want to see. We expect to publish a rolled forward strategy after the conclusion of the Spending Review later this year.

4. Where progress falls behind schedule and targets look unlikely to be met, it is vital that the Department demonstrates that it remains absolutely committed to achieving the strategic objectives set out in the 10 Year Plan. (Paragraph 12)

The Government remains fully committed to the strategic objectives set out in the 10 Year Plan, and to investing in delivering real improvements across all aspects of our transport system. The progress report on the 10 Year Plan, published in December 2002, set out progress against our targets and strategic objectives and highlighted areas where further actions may be needed. These will be considered further as part of the reviews mentioned above.

5. We welcome the Department's efforts to reform its relationship with those responsible for helping deliver its policy. We are pleased to see that Department for Transport accepts its overall responsibility for transport matters and is making changes in order to improve engagement with service providers, and facilitate delivery of targets. (Paragraph 22)

The Government is pleased the Transport Select Committee recognises the steps the Department is taking in working more closely with organisations responsible for delivering transport services.

In developing closer relationships the Department is ensuring that our delivery partners understand the importance of improved performance. At the same time efforts to develop these relationships help the Department to understand more clearly the challenges facing our partners and to develop policy more effectively.

However, the Department is also conscious of the needs of the travelling public and other users of transport services and is keen that their views should have a key influence on policy making, performance and delivery.

The importance of working with local authorities and regional bodies in particular is something the Department is committed to developing further. In addition the Department is developing its links with stakeholder bodies that represent a wide range of interests from rail passengers and motorists to the environment and the economy.

6. We recommend that in the future the Department give a detailed breakdown of any significant increase in its administration costs in the Annual Report. (Paragraph 28)
7. It is important that the Department keep a check on the accuracy of its financial reporting, and that somebody senior in the Department actually has an intelligent look at the figures and raises questions where they seem surprising. (Paragraph 29)

The Department agrees that, where there are significant year on year increases in administration resources, it will set out in the Report the reasons why these have occurred.

Steps will be taken to ensure that in future data is more carefully scrutinised at the draft stage in order to minimise the risk of errors occurring.

8. The Committee recommends that the Department takes a closer interest in the accounts and expenditure of the Agencies which spend so much of its money and deliver the overall transport strategy. (Paragraph 35)

The Department already liaises closely with its Agencies on matters related to the effective use of resources in delivering overall transport targets and objectives. This process is kept under constant review with the aim of identifying areas where existing performance could be improved. With that aim in mind, work is in hand to strengthen further the Department's financial management, by improving professionalism, raising accounting standards and strengthening corporate financial management systems. A professional Finance Director has already been appointed for the DVO Group.

9. We recommend that the requirement for detailed financial reporting in the Annual Progress Report be extended to cover all local authorities. (Paragraph 39)

All local transport authorities in England (outside London) are required to submit annual progress reports (APRs) apart from those which have been judged as 'excellent' in the Comprehensive Performance Assessment process. Among the requirements for inclusion in the APRs are the detailed sets of financial information outlined in the Committee's report.

We are currently in discussion with representatives of the 'excellent' authorities to agree what information they will produce to show evidence of delivery of their Local Transport Plan in 2003-04. We would envisage this including some element of financial reporting.

Requirements for this kind of reporting by local authorities in devolved administrations and in London are a matter for the relevant administration.

10. We hope that the Office of the Deputy Prime Minister and the Department for Transport can work together to agree an appropriate and steady level of resource funding for transport. This must be sufficient to enable local authorities to implement the programmes set out in their Local Transport Plans, in order to deliver the Government's transport strategy. (Paragraph 43)

The Department recognises the need to ensure that an appropriate level of resource funding is provided to local authorities, consistent with the programmes in their Local Transport Plans and the capital funding that they are awarded through that process. Resource funding is mainly provided through the Revenue Support Grant mechanism. Provision is not ring-fenced for transport.

The Ten Year Plan for Transport provided a framework for both capital and resource funding. Resource funding for local authorities has been provided in recent years in a way consistent with the Plan.

DfT will be working with ODPM and the Treasury in the 2004 Spending Review to seek to ensure that transport revenue funding requirements are properly taken into account. The Treasury has established a cross-Whitehall Local Services Review in order to draw together the information, analyses and issues necessary to deliver a coherent and effective settlement for local government in SR2004. The Local Government Association is included in that review. The Department is participating in the steering and working groups.

11. De-risking for the private sector involves re-risking for the public sector. Although we understand that the risk is small, the issuing of de-risking grants nonetheless removes a sanction from the Department if a project is run inefficiently. (Paragraph 51)

The Department accepts that de-risking grants can remove the sanction of withholding payment of grants if a project is run inefficiently. However, in the case of the Channel Tunnel Rail Link (CTRL), the Department can use other contractual mechanisms under the Development Agreement to address poor performance by the concessionaire.

The de-risking of grants for the CTRL can be set in the context of the successful completion of Section 1 of the CTRL on time and on budget, and the current progress of Section 2 of the CTRL, which is over 60 per cent complete and is due to be completed in 2007.