5.1 By convention all government spending needs the approval of the Treasury. In practice the Treasury gives departments the freedom to spend their budgets according to their own priorities, subject to their internal approval processes, except for the very largest procurements, by setting financial limits for each department: the delegated authorities. Departments have full responsibility for expenditure below the limits, while above the limits they need the explicit approval of the Treasury.
5.2 Even in the latter case, however, it should be stressed that the departmental Accounting Officer, usually the Permanent Secretary or departmental head, has the final sign off and is ultimately accountable to Parliament for the decision to commit public money to a project. Treasury approval is a necessary, but not a sufficient, condition for a project to proceed. This is an important principle because it means that accountability for ensuring value for money rests with the department with the budgetary and policy responsibility.
5.3 While most spending authority within departments is likely to be cascaded down to more junior levels, Accounting Officers will normally personally approve the largest and most important items of spending. It is normal practice in departments for some form of investment board, or the main departmental board itself, to scrutinise the largest projects, to assist the Accounting Officer in making the value for money judgement. For Public Private Partnership (PPP) projects, departmental private finance units provide additional support.
5.4 Departmental delegated authorities reflect the different nature and complexity of the projects the particular department tends to undertake, their track record on delivering them and on financial management more generally. While scrutiny arrangements need to reflect differences in departmental capability, and the nature of their projects, the Government is taking a more systematic, risk-based approach.
5.5 Departments provide returns on the projects that are over their delegated authorities, including standard basic information on projected costs and where they are in the procurement process. This enables the Treasury and departments to plan how and when scrutiny will take place.
5.6 Departments that can demonstrate a good track record on delivering projects to time and budget should expect this to be reflected in their delegated authorities. Reviewers are also likely to factor in departmental capability when carrying out their project scrutiny.
5.7 When scrutinising a project the Treasury's focus is largely on policy questions around value for money and affordability. This will include whether the project is aligned with departmental objectives, whether the department has considered sufficiently alternative means of delivering the policy objectives that might be more cost effective and whether the department has the resources available within its budget to fund the project.
5.8 The Treasury challenges departments on these important issues before they commit substantial resources to these projects. The Treasury intends to focus more in future on scrutinising specific aspects of a project, such as the delivery model and the procurement process and their likely impact on the timely delivery of objectives. It will use, and be expecting departments to use, the principles outlined in Box 4.1.