Office of the Comptroller and Auditor General - Press release Report on VFM examination of administrative budgets in the Irish civil service

Press release issued on 8 May 1997

Report on VFM examination of administrative budgets in the Irish civil service

The Comptroller and Auditor General, Mr John Purcell, has carried out an examination of the system of devolved responsibility for spending on civil service administration. A report on the examination was presented to Dáil ?reann (the Irish parliament) on 8 May 1997.

Background

The introduction of the administrative budgets system was the single biggest initiative in recent years to attempt to contain the growing cost of running the civil service, which in 1996 amounted to ?850m. The system was also intended to increase the efficiency and effectiveness of the civil service by reducing the level of bureaucracy and by giving managers in charge of service provision more freedom to make spending decisions.

The administrative budget system, involving three-year agreements on spending levels, was launched in most civil service departments and offices in 1991. Two cycles of agreements have been completed (1991-1993 and 1994-1996). A third cycle of agreements, covering the years 1997-1999, is currently being implemented.

The examination focused mainly on the extent to which the initiative succeeded in achieving its aims. The main findings of the examination are summarised overleaf.

Main Findings

Between 1991 and 1996, expenditure on administration increased by an average of 2.7% a year, after inflation. However, the introduction of administrative budgets seems to have helped contain the rate of increase in running costs. Furthermore, spending rose faster between 1991 and 1996 in departments and offices where administrative budget agreements had not been introduced.

Running costs as a percentage of total spending, which dropped from 8.6% in 1990 to 7.2% in 1996, may serve as a crude indicator of the relative level of civil service efficiency. The extent to which this improvement is attributable to greater productivity on the part of civil servants is impossible to determine without undertaking an extensive examination of efficiency levels on individual schemes and programmes.

The flexibility allowed to departments by devolved budgets may have been a factor in the upward drift from the Clerical Assistant grade to the Clerical Officer grade which occurred between 1989 and 1996.

Many departments consider that the monitoring groups set up to oversee the implementation of the agreements were ineffective.

Administrative budget agreements required departments to develop measures of the effectiveness of administrative spending, but to very little effect. The factors underlying efficiency and performance are now being identified in the context of the Strategic Management Initiative.

There is little evidence that the system has been reviewed, by the Department of Finance or by other departments, to ensure that staffing is at the minimum required level to provide necessary services. Similarly, no studies of the use of resources freed up as a result of reduced bureaucracy have been carried out.

With a few notable exceptions, departments and offices which operate administrative budget agreements have devolved relatively little budgetary control within their own organisations. By the end of the second cycle of agreements, only three departments had delegated more than 20% of their administrative spending to line managers. At the time the examination was carried out, most departments had no plans to increase the level of internal devolution of budgets.

For further information about the report contents, please contact:

Seamus McCarthy

Tel: +353 1 679 3122

Fax: +353 1 679 3288

e-mail: Seamus_McCarthy@audgen.irlgov.ie

Publication Details

VFM Report No. 15:

Administrative Budgets in the Irish Civil Service

ISBN 0-7076-3828-1

Price ?5

Government Publications Sales Office

Sun Alliance House

Molesworth Street

Dublin 2

Tel: +353 1 661 3111

Fax: +353 1 475 2760


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