Managing Public Money

After your staff team, money is your next most important resource. But special rules apply to those who are spending public money; rules that often catch out those who are more used to spending money in the private sector.

First, you must constantly bear in mind three basic rules which are designed to prevent fraud:

You may be tempted, especially towards a year end when you are anxious to spend your budget, to ignore one or more of these rules. You absolutely may never do so, on pain of dismissal, even if your intentions are honourable. (There may be occasions when it does make sense to make stage payments, for instance. But you should try to avoid these and - if you feel they are justified - you should make sure (a) that they are linked to clear, measurable and acceptable progress, and (b) that you boss has also approved the payments, in writing or emails.)

Second,you must constantly bear in mind that you (through the department's Accounting Officer) (and not your Ministers) are accountable to Parliament for your stewardship of public funds, including:

You cannot simply spend money because it obviously makes sense to do so. You need to ensure that Parliament has in advance voted money to be spent in exactly the way you intend to spend it, and that you do not spend more than the money that has been voted for this financial year ending 31 March. You cannot, for instance, carry unspent money forward from one year to another.

You also need to make sure that you stay within both the cash limit and the resource limit (which includes depreciation etc.). And you need to be particularly careful that expenditure on salaries and other compensation (such as that paid on dismissal, and housing allowances etc.) is fully compliant with Treasury rules - which are generally much more restrictive than those found in the private sector. You can of course ask for the rules to be disapplied when necessary, but you need to do this in advance of making the payment - not afterwards!

Further very readable and practical advice, including a chapter on learning from others' mistakes, may be found in‌ Regularity, Propriety and Value for Money.

And much more detail is in The Treasury's Managing Public Money.

Programme Spend: Sop or Lever?

But there is much more to spending money sensibly than merely obeying the above rules. After your staff, money is the other principal resource at your disposal as you seek to achieve your objectives. But will you use it as a sop or a lever?

‘Money may be used as a sop, or it may be used as a lever. When you use it as a sop . . . you get some friendly notes in the press . . . but it is gone. But if you use it as a lever it may be made to influence matters of far greater consequence than is measured even by the actual amount involved’ - Sir Winston Churchill

These words are even more true today than when first written. It is all too easy for both Ministers and officials to kid themselves, and kid others, that they are doing good by spending money. This is particularly apparent at Party Conference time, when every announcement seems to have a price tag, and the larger the better.

The control of large scale projects and programmes is dealt with elsewhere on this website, but I offer the following thoughts on the sensible use of ‘programme spend’ – those budgets which are delegated to individual civil servants and often used to support those projects outside government which contribute to the Government’s wide or narrow objectives. (Other costs, such as salaries & accommodation, are known as Running or Administration Costs.)

It is of course very tempting to throw the Government’s resources behind those seeking to ‘do good’. But don’t rush into a decision. The money will be wasted unless you ensure that the project is structured in such a way as to maximise the chances of it being successfully completed, and of its being good value for money. Pay particular attention to the following:

Martin Stanley

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