WG24091 Managing Welsh Public Money

Managing Welsh Public Money

January 2016

Mae'r ddogfen yma hefyd ar gael yn Gymraeg. This document is also available in Welsh.

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? Crown copyright 2016 WG24091 Digital ISBN 978 1 4734 4530 7

Foreword

The Welsh Government and the public sector in Wales rely on taxpayers' money, and the taxpayer rightly expects us to spend it wisely. It is hugely important people in Wales are able to trust their public services, especially in austere times when these services are relied upon most heavily.

Managing Welsh Public Money sets out the main principles for managing resources and is primarily aimed at organisations within the boundary of the Welsh Government's consolidated accounts, but the principles should hold true across the whole of the Welsh public sector. This document aims to explain how to handle public funds with probity and in the public interest and should be read in conjunction with Managing Public Money (published by HM Treasury) to understand the wider picture of funding and financial control at a UK level.

Managing Welsh Public Money is derived in part from Managing Public Money but is overlaid with the specific aspects of financial management arising from the Government of Wales Act (GoWA) 2006 and the evolving Devolution settlement. The same basic principles generally apply in all parts of the UK public sector, with adjustments for context as necessary. Everyone working in the public sector in the UK should be aware of the need to manage and deploy public resources responsibly, with integrity, transparency and value for money in mind.

There will be occasions where the advice contained herein will change over time. The law moves forward; the standards used in business and public life evolve; new techniques emerge; public expectations change; and the economic climate can have a great impact. Through all these shifts, Parliament and the National Assembly for Wales rightly expect that public funds, whether raised through taxation or public sector charges, will be used properly. They look to HM Treasury and the Welsh Government to help public servants meet these expectations in a transparent, responsible and consistent fashion. Upholding the standards of public administration is one of the most fundamental responsibilities for anyone working in the public sector.

Public sector organisations can, and should, innovate in carrying out their responsibilities, using new technology and taking advantage of best practice in business efficiency. This could mean new kinds of organisations, new institutional arrangements or new delivery methods. Each will need to be evaluated and implemented carefully to protect Parliament's and the National Assembly for Wales' rights to authorise and oversee the use of public resources. Managing Welsh Public Money should not, however, discourage the application of common sense.

So, if you work with public money this document is a must read. For more information about Managing Welsh Public Money or any of the information included, please contact the Welsh Government's Corporate Governance Unit (CGU) Mailbox (CGU@wales..uk).

Contents

Foreword

1 Principles of Good Governance

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1.1 Principles

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2 Use of Public Funds

3

2.1 Conditions for the Use of Public Funds

3

2.2 Regularity and Propriety

4

2.3 Securing Adequate Legal Authority

4

2.4 New Services

4

2.5 The Auditor General for Wales and the Wales Audit Office

5

3 Accounting Officers

6

3.1 Role of the Accounting Officer

6

3.2 Appointment of Accounting Officers

6

3.3 Special Responsibilities of Accounting Officers

7

3.4 Advice to the Welsh Ministers

9

3.5 National Assembly for Wales Committees

9

3.6 When the Accounting Officer is not Available

10

3.7 Conflicts of Interest

10

3.8 Public Bodies

11

3.9 In the Round

12

4 Governance and Management

13

4.1 Governance Structure

13

4.2 Working Methods

14

4.3 Opportunity and Risk

15

4.4 Insurance

16

4.5 Control of Public Expenditure

16

4.6 Receipts

17

4.7 Non-standard Financial Transactions

18

4.8 Unusual Circumstances

19

4.9 Staff

19

4.10 Assets

20

4.11 Standards of Service

20

4.12 Complaints

21

4.13 Transparency

21

4.14 Dealing with Initiatives

22

5. Funding

24

5.1 The Framework for Public Expenditure Control

24

5.2 Parliamentary Estimates and Their Relationship to Wales

25

5.3 Setting the Budget of the Welsh Government

26

5.4 Supplementary Budgets

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5.5 Commitments

27

5.6 Tax

28

5.7 Public Dividend Capital

28

5.8 Borrowing by Public Sector Organisations

28

5.9 External Borrowing

29

5.10 Multiple Sources of Funding

29

5.11 Cash Management

29

5.12 Other Financing Techniques

29

6 Fees, Charges and Levies

31

6.1 Why Charges Matter

31

6.2 Basic Principle

31

6.3 Setting a Charge: Standard Practice

32

6.4 Setting a Charge: Non-Standard Approaches

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6.5 Levies

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6.6 Commercial services

35

6.7 Disclosure

36

6.8 Taking stock

36

7 Working with Others

38

7.1 The Case for Working in Partnership

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7.2 Setting up New Public Bodies

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7.3 What to Clarify in Partnership Agreements

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7.4 Agencies

42

7.5 Working Together

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7.6 Welsh Government Sponsored Bodies

43

7.7 Public Corporations

43

7.8 Trading Funds

44

7.9 Non-Ministerial Departments

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7.10 Local Government

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7.11 Innovative Structures

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7.12 Outsourcing

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7.13 Private Finance

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7.14 Commercial Activity

47

7.15 Working with Third Sector Bodies

48

7.16 Working with Commissioners

49

Glossary

50

Annex 2.1 The Auditor General for Wales and the Wales Audit Office

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Annex 3.1 Governance Statement

63

Purpose

63

Preparing the Governance Statement

63

Content of Governance Statement

64

Localism

66

External Audit

66

Annex 3.2 Conflicts of Interest

67

Consequences

67

Management of Conflicts

67

Annex 4.1 Finance Directors

69

The finance function

69

Financial leadership

69

Internal financial discipline

71

Annex 4.2 Risk

72

The case for managing risk

72

Risk management in practice

72

Identifying risks

73

Responding to risk

74

The Board

75

Departmental Groups

76

Annex 4.3 Insurance

77

Appraising the options

78

Setting fees and charges

78

Claims administration

78

Dealing with losses

78

Claims between public sector organisations

79

Vehicles

80

Loans

80

Employers' liability

80

Annex 4.4 Unallocated

Annex 4.5 Procurement

82

Value for money

84

Legal framework

85

The procurement process and suppliers

85

Collaborative procurement

86

National Procurement Service

87

Taxation

87

Further guidance

88

Annex 4.6 State Aid

89

Annex 4.7 Expenditure and Payments

91

Payments Outside the Normal Pattern

91

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