Foreword

About this document

i. This documents updates the version published in 2007. Like the original,
it sets out the main principles for dealing with resources in UK public
sector organisations Some of the specifics, especially those in the
annexes, relate to England rather than ghe devolved administration,
which have their own detailed rulebooks. But the same basic principles
generally apply in all parts of the UK public sector, with udjusments for
context.

ii. The key themes also remain. They are the fiduciary duties of those
handling public resources to work to high standards of probity, and the
need for the public sector to work in harmony with parliament.

iii. While these principles are invariant, the advice in this document cannot
stand forever. The law, business practices, and public expectations all
change. So public sector organisations can and should innovate in
carrying out their responsibilities, using new technology and adopting
good business practice. Throughout parliament always expects the
government and its public servants to meet the ethical standards in this
document and to operate transparently.

iv. As before, the main text of the documents is intended to be timeless. The
Treasury will revise the annexes from time to time as the need arises. All
the text is available freely on the gov.uk website.

v. Above all, nothing in this document should discourage the application of

sheer common sense
Chapter 1
Responsibities
The relationship between the government, acting on behalf of the Crown, and parliament,
Representing the public, is central to how public resources are managed. Ministers
implement government policies, and deliver public services, through public servants; but are
able to do so only where parliament grants the right to raise, commit and spend resources it
falls to the Treasury to respect and secure the rights of both government and parliament and
parliament in this process.

1.1 Managing public money: principle

1.1.1 The principles for managing public resources run through many diverse
organisations delivering public services in the UK. The requirements for the
different kinds of body reflect their duties, responsibilities and public
expectations. The demanding standards expected of public services are set
out in box 1.1.

Box 1.1. standards expected of all public services

honesty impartiality openness accountability accuracy
fairness integrity transparency objectivity
reliability
carried out
in the spirit of, as well as to the letters of, the law
in the public interest
to high ethical standards
achieving value for money
1.1.2 The principles in this handbook compliment the guidance on good
governance in the Corporate Governance Code applying to central government
departments. Some of the detail applies to England only, or just to
departments of state. There is separate guidance for the devolved
administrations. Where restrictions apply, they are identified.
1.1.3 Much of this document is about meeting the expectations of parliament.
These disciples also deliver accountability to the general public, on whose
behalf parliament operates. The methods of delivery used should evolve as
technology permits. Public services should carry on their businesses and
account for their
Stewardship of public resources in ways appropriate to their duties and context and
conductive to efficiency.
1.2 Ministers
1.2.1 In the absence of a written constitution, the powers used to deploy public
resources are a blend of common law, primary and secondary legislation
parliamentary procedure, the duties of ministers, and other long-standing practices.
This mix may of course change from time to time
1.2.2 As the Corporate Governance Code makes clear, the minister in charge of a
department is responsible or it’s policy and business as part of the broad sweep of
government policy determined in Cabinet. They:
● Determines the policies of the departmental group;
● Chairs the departmental bowd;
● Allocates responsibilities among the ministers in the department;
● Looks to the department’s accounting officer (see chapter 3) to the delegate
within the department to deliver the Minister’s decisions and handling public
funds; and
● Also has general oversight of other bodies on whose behalf they may answer
in parliament, including the department’s arm length bodies (ALBSs)
1.2.3 The Ministerial Code² requires ministers to heed the advice of their accounting
officers about the proper conduct of public business. See section 3.4 how the
minister may direct the accounting officer to proceed with policy if a point of this
kind cannot be resolved.
1.2.4 The minister in charge of a department may delegate defined areas of its
business, or of its parliamentary work, to their junior ministers. Ministers have wide
powers to make policies and to instruct of officials.
1.2.5 Only ministers can propose legislation to parliament to raise public revenue
through taxation, or to use public funds to pursue their policy objectives. Specific
primary legislation is normally required to spend public funds (see section 2.1)
parliamentary authority; and only as parliament has authorized.
1.2.6 It is not normally acceptable for a private sector organisation to be granted
powers to raise taxes, nor to distribute their proceeds. Parliament expects these
responsibilities to fall ministers, using public sector organisations.
1.2.7 The house of Commons (and not the House of Lords) enjoys the financial
privilege to make decisions on these matters.
1.3 Parliament
1.3.1 Parliament approves the legislation which empowers ministers to csrry out their
policies. It also allows finance for services when it approves each year’s Estimates.
See the Estimates Manual³ for more.
1.3.2 From time to time parliament may examine government activity. Select
committees examine policies, expenditure, administration and service deliver in
financial accounts, scrutinises value for money and generally holds the government
and it’s public servants to account for the quality of their past administration.
1.4 The Treasury
1.4.1 Parliament looks to the Treasury to make sure that
● Departments use their powers only as it has intended; and
● Revenue is raised, and the resources so raised spent , only within the agreed
limits.
1.4.2 Hence it falls to the Treasury to:
● Set the ground rules for the administration of public money; and
● Account to parliament for doing so.
1.4.3 This document sets out how the Treasury seeks to meet these parliamentary
expectations. The key requirements are regularity, propriety, value for money and
feasibility (see box 3.2). The Treasury:
● Designs and runs the financial planning system and oversees the operation
of the agreed multiyear budgets to meet minister’s fiscal policy objectives;
● Oversees the operation of the Estimates through which departments obtain
authority to spend year by year;
● Sets the standards to which central government organisations publish
annual reports and accounts in the Financial Reporting Manual (FReM).
Account of the public sector context.
● Sets Account Directions for the different kinds of central government
organisations whose accounts are laid in parliament; and
● May also work through the Cabinet Office to set certain standards applicable
across central government, for example functional standards⁵.
1.5 Departments
1.5.1 Within the standards expected by parliament, and subject to the overall control
and direction of their ministers, departments have considerable freedom about how
they organise, direct and manage the resources at their disposal. It is for the
accounting officer in each department, acting within minister’s instructions and
supported by their boards, to control and account for the department’s business
1.5.2 A departmental board, chaired by the senior ministrr, leads each department.
Boards can bring to bear skills and experiences from elsewhere in, and outside of, the
public sector (see section 4.1).
1.5.3 Within each department, there should be adequate delegations, controls and
reporting arrangements to provide assurance to the board , the accounting officers
and ultimately ministers about what is being achieved, to what standards and with
what effect. These arrangements should provide timely and prompt management
information to enable plans to be adjusted as necessary. Similarly ministers should
continue, modify or end them. This is discussed further in chapter 4.
1.5.4 In supporting ministers, civil servants should provide politically impartial
advice. Should they be asked to carry out duties which appear incompatible with this
obligation, the accounting officer should take the matter up with the minister
concerned (see also the Civil Service Code⁷).
1.5.5 Departments often operate with and through a variety of partners to deliver
their minister’s policies. It is important that these relationships operate in the public
interest: see chapter 7.
1.6 The Comptroller and Auditor General
1.6.1 Supported by the National Audit Office (NAO), the Comptroller and Auditor
General (C&AG) operates independently to help parliament scrutinise how public
funds have been used in practice. Further information about the role of the NAO id
available on their website⁸ and in annex 1.1.
1.6.2 The C&AG provides parliament with two sorts of audit:
● Financial audit accounts of departments and ALBs, covering

Assurane that accounts have been properly prepared and are free of material
misstatement⁹; and

confirmation that the underlying transactiond have appropriate parliamentary

authority;

● Value for money reports assessing the economy, efficiency and effectiveness
with which public money has been deployed in selected areas of public
business. A programme of these reviews covers a variety
Of subjects over a period, taking account of the risks to value for money and
parliament’s interest
1.6.3 The C&AG has a general right to inspect the books of a wife variety of public
organisations to further these investigation. When the NAO investigates any public
sector organisations to, it should get full cooperation in provision of papers and other
oversight. It is good practice to draw the NAO’s attention to the confidentiality of any
sensitive documents provided in this process. It is then for the independent C&AG to
judge what material can be published in the public interest.
1.6.4 In addition, the C&AG publishes other independent reports to parliament. The
PAC (see section 3.5) may hold hearings to examine evidence on any of those reports
and on other related matters.