Civil Servants are employed to implement Ministers' decisions – irrespective of what they might think of them, except that every Permanent Secretary (Head of Department) is the Accounting Officer for their department, which means they are directly accountable to Parliament for public spending. They must therefore seek Ministerial cover for a decision to spend money if it does not meet all of the four tests of regularity, propriety, value for money, and feasibility. The Accounting Officer must in these circumstances ask for a written direction to continue from the Secretary of State. The Accounting Officer then implements the decision – but it is the Minister who bears responsibility for that use of public money.
- Regularity which means the requirement for all expenditure and receipts to be dealt with in accordance with the legislation authorising them, any delegated authority and the rules of Government accounting.
- Propriety which is a further requirement that expenditure and receipts should be dealt with in accordance with Parliament's intentions and the principles of Parliamentary control, and in accordance with the values and behaviour appropriate to the public sector.
- Technical Directions (in affect a form of Propriety Direction) were introduced in 2018 so as to permit expenditure in advance of the necessary Brexit legislation.
- Value for money (VFM) is pretty well self-explanatory.
- Feasibility is a fairly new test, introduced in 2011. It is a bit more ambiguous than the others - see further below.
- This test applies within Great Britain only - not in Northern Ireland.
The amounts of money at stake have varied hugely – from the vast sums involved in the Treasury’s Asset Protection Scheme in 2009, to the modest amount of £500 for the MoD to pay for flights to Croatia for a member of the public to attend the trial of those accused of murdering his son, a British serviceman.
Evidence of Ministerial/Official Disharmony?
Directions gained a poor image in the 1970s when left-wing Minister Tony Benn instructed his very reluctant civil servants to invest in three workers' cooperatives. They were then for many years regarded as 'the nuclear option' - evidence of officials 'blowing the whistle' on crazy Ministers. So neither Ministers nor officials wanted to use them.
(But it is interesting to read the farewell letter, to Mr Benn, from the Industry Department's Permanent Secretary.)
Over time, however, they have become seen as quite useful and transparent tools. It is, after all, quite proper for Ministers to take wider considerations into account, whether humanitarian - see the Croatian example above - or the need to ease the pain caused by large numbers of redundancies in an area of high unemployment. A slightly different but good example was the Transport Minister's decision to require potential North of England rail franchisees to invest in 120 new vehicles. Officials not unreasonably thought this large expenditure went beyond what was necessary, and therefore might cost more than a pure ‘value for money’ franchise. However, as the Secretary of State wrote: “I believe there are wider issues to consider which I accept fall outside the remit of the Accounting Officer but that I consider material ... uncomfortable and low quality [trains are] incompatible with our vision for economic growth and prosperity in the north”. Public finance rules don’t take personal comfort of commuters into account!
The need to move quickly following the Brexit referendum, and the rapid (and often necessarily untargeted) response to the 2020 COVID-19 pandemic, both required a number of Directions. through which Ministers took responsibility for possible inefficiencies and losses due to fraud, deadweight etc. ('Deadweight' occurs when an activity is subsidised across the board even though some or much of that activity would have taken place anyway - so some of the subsidy is wasted.)
Minister John Denham, back in 2010, quite correctly said that ‘There is no point in having a democracy if Ministers are unable to make a judgement that civil servants are wrong.’ Cabinet Minister Francis Maude, speaking a couple of years later, argued very strongly that Permanent Secretaries should feel freer to ask for directions, and Ministers should be more relaxed about giving them. “Any Minister should be confident enough in the judgement he or she has made to be willing to justify it in public”.
Interestingly, and unusually, the Transport Permanent Secretary was told in 2016 that he was causing "frustration" in "No.10" by requiring that he be directed to put yet more public money behind the (eventually doomed) 'Garden Bridge'. project. But he quite rightly stuck to his guns.
But the new feasibility test (see above) might cause problems in the future. What would one make of a Minister who told his officials that he or she disagreed with their assessment of the feasibility of a new major project. Evidence, yet again, of Ministers unrealistic expectations, driven by short term political considerations? Or evidence,yet again, of pathetic officials being far too cautious, unimaginative and unambitious? But the first feasibility direction - in which a Minister took responsibility for the risks associated with accelerated introduction of new 'T Level' exams - was a perfectly proper use of the mechanism. Further detail is at Example 5 here.
And a 2016 National Audit Office report asserted that Accounting Officers "appear to lack confidence to challenge Ministers where they have concerns about the feasibility or value for money of new policies or decisions, not least because standing up to Ministers is seen as damaging to a civil servant’s career prospects". This startling criticism is discussed in more detail here.
Directions must be formally notified as soon as possible to the Treasury and to the Head of the National Audit Office (the Comptroller & Auditor General) who tells Parliament's Public Accounts Committee. But, with their agreement, the existence of the direction can be remain secret up until the publication of the department’s next annual accounts. Delayed announcement often makes sense when publication would damage the organisation receiving the money, for instance when Ministers want to throw a financial lifeline to a struggling entity. An announcement of a bailout which was charcterised as poor value for money might well alarm the organisation's creditors who might then take immediate action to get paid, so undoing the good that the payment was intended to achieve.
Examples and Statistics
It is also worth noting that the Prime Minister was in 2020 asked to authorise compensation of c.£250k to be aid to the outgoing Cabinet Secretary Mark Sedwill There was nothing improper about the payment (so it was not formally a Direction) but there was no-one else to authorise it that did not report to the Cabinet Secretary.
The Formal Rule
Where an Accounting Officer of a government department considers that a Minister is contemplating a course of action that would be likely to infringe financial propriety or regularity, or the Accounting Officer’s wider responsibilities for economy, efficiency and effectiveness, it is the duty of the Accounting Officer to so advise the Minister. If that advice is then overruled the Accounting Officer will be required to seek a written Direction from the Minister to enable that action to be carried out. If such a Direction is issued by the Minister, the Accounting Officer must comply with it but must also notify the Treasury and pass the relevant documents to the Comptroller and Auditor General as soon as possible.