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Accounting Officer System Statement

October 2017

Protecting and advancing the principles of justice

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© Crown Copyright 2017

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Contents

1 Scope of the Accounting Officer System Statement 2

2 A diagram showing all parts of the system 3

3 Responsibilities within the core department 4

4 Relationships with Executive Agencies 10

5 Relationships with ALBs 11

6 Third party delivery partnerships 15

7 Grants to private and voluntary sector bodies 18

8 Major contracts and outsourced services 20

9 The distribution of funding 21

Annexes

1 Board and committee structures 23

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1 Scope of the Accounting Officer System Statement

Principal Accounting Officer’s statement

I am the Principal Accounting Officer for the Ministry of Justice. This system statement sets out all the accountability relationships and processes within my Department, making clear who is accountable for what at all levels of the system.

My Department delivers some of the most fundamental services to the public, with the Department working directly with victims of crime, witnesses, people in trouble, offenders and vulnerable children and young people. We are responsible for a number of different parts of the justice system – the courts, tribunals, prisons, legal services and access to justice, youth justice and probation services. Our work transforms the lives of offenders and puts victims at the heart of the justice system, helping to create a safer and better society.

As Principal Accounting Officer, I am personally responsible for safeguarding the public funds for which I am accountable under the Ministry of Justice Estimate and Spending Review1. Where I have appointed additional Accounting Officers, their responsibilities are also set out in this system statement.

It covers the core Department, and its arm’s length bodies. It describes accountability for all expenditure of public money through my Department’s Estimate, all public money raised as income, and other publicly owned assets for which I am responsible.

This system statement sets out how I am fulfilling my responsibilities as an accounting officer, in accordance with HM Treasury’s guidance set out in Managing Public Money.

This system statement describes the accountability system which is in place at the date of this statement, and which will continue to apply until a revised statement is published.

Role of Ministers

1.1 The Secretary of State for Justice and other Departmental ministers are accounatble to Parliament for the policies, decisions and actions of this Department and its agencies. Ministers look to the Department’s Accounting Officer to ensure that the Department implements ministerial decisions, and support them in the discharge of their function.

1.2 Further information regarding the roles of ministers can be found at: www.gov.uk/government/organisations/ministry-of-justice

1 The Estimate and Spending Review sets out the amount of government money allocated to the Department over the next five years, and the key priorities that the Department will deliver over this period. The 2015 Spending Review can be found on the MoJ Settlement website.

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2 A diagram showing all parts of the system

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3 Responsibilities within the core department

3.1 The MoJ Single Departmental Plan sets out the priorities, success measures and resource allocations to deliver the strategic objectives. It is in turn supported by action plans for each of the policy clusters, delivery bodies and business groups.

3.2 MoJ Group accountability is provided through a business planning process, supported by governance monitoring, audit and assurance and risk processes.

3.3 The Principal Accounting Officer is the individual accountable to HM Treasury and Parliament for the resources of the Department, its agencies and ALBs. In the Department, the Principal Accounting Officer is the Permanent Secretary. The Principal Accounting Officer usually delegates responsibility for resources within the main delivery bodies and business groups to Senior Budget Holders (the Director Generals and Agency Chief Executive Officers who are also members of Executive Committee). Senior Budget Holders may choose to delegate budgets further, for example to Directors or to the heads of the ALBs they sponsor. The Principal Accounting Officer may also designate the Chief Executives of Executive Agencies and executive NDPBs to be Accounting Officers.

3.4 Departmental Directors and Accounting Officers of Departmental delivery bodies and business groups have the delegated authority to commit resources within predefined limits, together with the responsibility for proper stewardship of these resources and compliance with the requirements of HM Treasury’s Managing Public Money. Their role involves:

• Making sure their area meets its Spending Review commitments• Making sure value for money is achieved• Being responsible for risk management (and balancing risk against opportunities)• Being responsible for their organisation’s financial reports (particularly the annual report), and• Cooperating with the Department in collecting performance and financial information.

3.5 An Accounting Officer’s organisation usually includes:

• An executive board (to advise), and• An audit committee (to make sure rules, principles and performance measures are followed).

3.6 The following table sets out the delegation across the Department’s Executive Agencies, and executive NDPBs, and the sources of assurance the Department has in place across these bodies:

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3.7 The Department’s governance framework is underpinned by five key principles:

• Collective responsibility for the successful delivery of Departmental strategic priorities• Clear accountability removing layers and duplication, with decision making devolved as far as

possible• Streamlined but proportionate assurance mechanisms• Swift decision making processes, and• Transparent approach to our governance.

3.8 By applying these principles, we have structured our top level boards to ensure we have the right framework to best manage the department.

Body Type of body Separate Accounting

Officer

Separate Audit and Risk

Committee

Formal assurance

provided by Audit and Risk

Committee

Assurance provided through

engagement with ALB Division

Ministry of Justice Department Y Y Y N/A

HM Courts & Tribunals Service

Executive Agency

Y Y Y N/A

HM Prison & Probation Service

Executive Agency

Y Y Y N/A

Legal Aid Agency Executive Agency

Y Y Y N/A

Officer of the Public Guardian

Executive Agency

Y Y Y N/A

Criminal Injuries Compensation Authority

Executive Agency

Y Y Y N/A

Criminal Cases Review Commission

Executive NDPB

Y Y N Y

Judicial Appointments Commission

Executive NDPB

Y Y N Y

Legal Services Board Executive NDPB

Y Y N Y

Parole Board for England and Wales

Executive NDPB

Y Y N Y

Youth Justice Board for England and Wales

Executive NDPB

Y Y N Y

Children and Family Court Advisory and Support Service

Executive NDPB

Y Y N Y

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Board & committee details2

Principal Accounting Officer

Permanent Secretary

Executive Committee

Chair: Permanent Secretary

Departmental Board

Chair: Secretary of State

Investment Committee

Chair: Chief Financial

Officer

Financial Management Committee

Chair: Chief Financial

Officer

Audit and Risk Committee

Chair: Non-Executive Board

Member

Nominations Committee

Chair: Lead Non-Executive

Board Member

2 The committee structure of the Depatment’s two largest agencies, HMPPS and HMCTS are shown in Annex 1.

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Board & committee details

Principal Accounting Officer

The individual accountable to HM Treasury and Parliament for the resources of the Department, its agencies and ALBs. In the Department, the Principal Accounting Officer is the Permanent Secretary. The Principal Accounting Officer usually delegates responsibility for resources within the main delivery bodies and business groups to Senior Budget Holders (the Director Generals and Agency Chief Executive Officers who are also members of Executive Committee). Senior Budget Holders may choose to delegate budgets further, for example to Directors or to the heads of the ALBs they sponsor. The Principal Accounting Officer may also designate the Chief Executives of Executive Agencies and executive NDPBs to be Accounting Officers.

Executive Committee

Has overall management responsibility for the Department, including setting strategy for the Department and its work, performance, planning and prioritisation, delivery of Departmental priorities, in-year and longer-term financial stability and workforce planning.

Investment Committee

Considers and approves investment decisions on behalf of Executive Committee, including gated release of funds for change programmes, oversight of high value projects from inception to implementation, and scrutiny and approval of business cases with a whole life cost greater than £30m, using the key holder assurance process to inform decisions, and agreeing and monitoring tolerances.

Financial Management Committee

Oversees and advises Executive Committee on the budget allocation process, monitors in-year financial performance, expected multi-year financial performance required to deliver Spending Review settlements and also approves and oversees delivery of the Department’s financial plans.

Departmental Board

Has overall responsibility for the Departments strategic direction and operational leadership. The Board advises and challenges the Department on delivery against the Department’s business plan and regularly discusses the Departmental performance and risks, financial position and priorities.

Audit & Risk Committee

Supports the Departmental Board and Principal Accounting Officer by reviewing the reliability of assurances in governance, risk management, internal controls and the integrity of financial statements in the Department and its executive arm’s length bodies.

Nominations Committee

Provides the Departmental Board with assurance on senior appointments within the Department. This includes succession planning, talent management and pay strategy (including remuneration and process for Board-level appointments).

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Assurance

3.9 The Department’s assurance mechanism is built upon three lines of defence, to ensure that the Department undertakes the right initiatives and manages them in the right way to deliver against the Department’s objectives.

3.10 There is a separate assurance process in place for Business As Usual and Change Programmes. These are summarised in the table below:

Level Business As Usual Change Programme

One Managers, Executive Boards Senior Responsible Owners, Programme Responsible Owners, Programme Boards

Two Executive Committee, Investment Committee

Executive Committee, Investment Committee

Three Regulations, HM Treasury, Government Internal Audit Agency, National Audit Office

HM Treasury, Infrastructure and Projects Authority

3.11 The process ensures there is continual challenge and scrutiny of business operations across the Department, with reviews at critical points to ensure delivery of business priorities. In addition, it provides support to decision making and accountability throughout the Department.

3.12 Supporting this mechanism is the Audit and Risk Committee.

3.13 The Audit and Risk Committee has an important role in providing advice and assurance to the Departmental Board and Principal Accounting Officer, particularly with regard to reviewing the Department’s governance framework and its effectiveness in ensuring organisational accountability, performance and risk management.

3.14 The Committee has established relationships with other governance bodies across the MoJ Group to ensure a clear line of sight over Departmental governance. This includes receiving updates from the Audit and Risk Committees of the Department’s main agencies. The updates cover areas of risk, agency accounts and audit, and will highlight any areas which may require further escalation.

3.15 The Department’s Group Audit and Risk Committee is attended by the Head of the ALB Division who reports to the committee by exception.

3.16 The Audit and Risk Committee is supported in its role through the review and assurance provided by independent audit providers.

3.17 The Department’s internal audit coverage is provided by the Government Internal Audit Agency. Internal audit is an independent, objective assurance and consultancy activity designed to add value to and improve the Department’s arrangements for governance, control and risk management.

3.18 Internal audit’s scope of work covers all areas of the Department’s operations and is delivered by combination of risk-based audits, developing systems work, standards audit, fraud investigation work and the provision of advice and guidance on governance, risk management and control issues.

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3.19 The National Audit Office is the Department’s external auditor, and audit the Department’s annual report and accounts, along with its component bodies where reports are required. It undertakes testing of the accounting records in order to form an audit opinion.

3.20 The individual audits of the accounts for the Department’s headquarters, its executive agencies and non-departmental public bodies inform the opinion on the overall consolidated Departmental annual report and accounts.

3.21 The National Audit Office may also undertake other work, at the discretion of its head, the Comptroller and Auditor General, this might comprise value for money studies, local audits and investigations, and produce good practice guidance from cross government reviews.

Risk

3.22 The Department’s Risk Management Policy articulates our cross Departmental risk management processes and protocols, supporting more structured engagement. Every member of the Department has a view of the risks they manage and the impact their decisions will have, and is empowered to operate within agreed boundaries.

3.23 During 2016-17, the Cabinet Office published guidance on Management of Risk in Government which we have incorporated into our Risk Management Policy and used as the basis to enhance our approach to risk identification by considering risk through four lenses:

• Internal Risks: Risks arising from within the organisation, over which the Department has some control; we seek to minimise these risks using internal controls as we get no strategic benefit from taking them on, indeed we are exposed to reputational damage when they materialise.

• External Risks: We recognise that some risks arise from events outside of our organisation that are beyond our direct influence or control, but we should be ready to respond when required.

• Strategic Risk: This concerns the Department’s enduring purpose and the objectives set out in our Single Departmental Plan. Identifying the principal risks to the achievement of our goals requires us to look forward and improve the ability of the Department to manage or contain risk events should they occur. We accept that to deliver the Department’s ambitious strategy we will need to take some risk. Strategic risks are not, in themselves, inherently undesirable.

• Major Project Risks: Successful delivery of major projects forms a critical part of our plans for the future, recognising this criticality highlights a requirement to report and manage major project risks as a category in their own right.

3.24 The Department annually refreshes its strategic risk register; this involves a collective top down approach to risk identification to accompany the bottom up identification and reporting of risks. The result is a living document that we actively incorporate into our decision making. This, alongside our strengthened channels of communication and escalation is a positive move away from a purely mechanical escalation of risks, towards a process that provides insight to risks that need to be managed at Executive Committee level, with other risks being actively managed within our day to day operations. Each strategic risk is assigned to a Director General plus a corresponding Risk Owner to drive clear accountability and ownership.

3.25 The Department reviews the strategic risk register alongside divisional and functional risk registers, lessons learned from incidents and issues arising in conjunction with performance scorecards and Portfolio reporting at Executive Committee, the Departmental Board and Executive Agency Boards on a regular basis. Much of Executive Committee’s agenda is devoted to managing the key risk areas of resources, people, contracts and reform.

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4 Relationships with Executive Agencies4.1 The Department’s Executive Agencies operate within a framework of direct accountability to

ministers who remain accountable for their overall performance. They are part of the Department; the Chief Executive Officer is appointed as the Accounting Officer for each agency.

4.2 The Department’s five Executive Agencies are:

• HM Courts and Tribunals Service (HMCTS) – HMCTS operates on the basis of a partnership between the Lord Chancellor, the Lord Chief Justice and the Senior President of Tribunals. It is responsible for the administration of criminal, civil and family courts and tribunals in England and Wales. It administers the work of magistrates’ courts and the County Court, Family Court, Crown Court and Royal Courts of Justice, and has responsibility for tribunals.

• HM Prison and Probation Service (HMPPS) – HMPPS was launch on 1 April 2017. It is responsible for delivering the orders of the courts by providing for England and Wales public sector prison, probation and youth custody services, managing the provision of private sector prison, probation and youth justice services, providing information to victims and for ensuring the whole system is lined-up and focused on reforming the men, women and young people the agency work with.

• Legal Aid Agency (LAA) – LAA provides civil and legal aid and advice in England and Wales. Each year LAA help more than two million people deal with their legal problems.

• Office of the Public Guardian (OPG) – The OPG protects people in England and Wales who may not have the mental capacity to make certain decisions for themselves, such as about their health and finance. The OPG supports the Public Guardian in carrying out the legal functions of the Mental Capacity Act 2005.

• Criminal Injuries Compensation Authority (CICA) – CICA deal with compensation claims from people who have been physically or mentally injured because they were the blameless victim of a violent crime in England, Scotland or Wales. CICA handle up to 33,000 applications for compensation each year, paying out up to £150 million to victims of violent crime.

4.3 Each agency has an established framework document which sets out the remit of the organisation in detail and includes information on how it is governed and funded. The detail covers:

• The agency aims and objectives• The Chief Executive and Board roles and responsibilities• The relationship with the Department and other bodies• Accountability to Parliament• Finance, resource allocation, performance and reports, and• Audit and inspections.

4.4 In addition to the framework document each agency has a management board, which may be chaired by either the agency Chief Executive Officer or lead Non-Executive Director and includes other Non-Executive Directors and the agency senior team.

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5 Relationships with ALBs5.1 The delivery of the Department’s policies is delegated to the Department’s delivery bodies,

business groups and other public bodies. Framework Documents agreed between the Department and it’s ALBs outline the purpose of the ALB, it’s relationship with the Department, and the responsibilities, powers and duties of the ALB.

5.2 The ALB Division sitting within Justice and Courts Policy Group is responsible for driving forward the Department’s strategic and operational relationship with its public bodies to ensure that they deliver efficient and effective services in line with the Secretary of State’s priorities.

5.3 In particular the ALB Division:

• Provides assurance to the Principal Accounting Officer that the department has high performing ALBs with effective governance and controls in place and that the bodies satisfy the relevant constitutional and statutory requirements

• Delivers a programme of reviews and change initiatives which ensure that ALBs contribute to the Department’s transformation vision, supporting delivery of a world class justice system that works for everyone, and

• Manages the Department’s public appointments process in line with the Governance Code on Public Appointments.

5.4 The partnership arrangements between the Department and its ALBs seek to comply with the Cabinet Office’s four principles as set out in the ‘Partnerships between departments and arm’s length bodies: Code of Good Practice’. The principles are:

PURPOSE

Partnerships work well when the purpose, objectives and roles of arm’s-length bodies are mutually understood; reviewed on a regular basis; and clearly set out in relevant documents. There is absolute clarity about lines of accountability between departments and arm’s-length bodies. In exercising statutory functions arm’s-length bodies have clarity about how their purpose and objectives align with those of departments.

ASSURANCE

Partnerships work well when departments adopt a proportionate approach to assurance, based on arm’s-length bodies’ purpose and a mutual understanding of risk. Arm’s-length bodies have robust governance arrangements in place; departments give arm’s-length bodies the autonomy to deliver effectively. Management information exists to enable departments and arm’s-length bodies to assess performance.

VALUE

Partnerships work well when departments and arm’s-length bodies share skills and experience in order to enhance their impact and deliver more effectively. Arm’s-length bodies are able to contribute to policy making and broader departmental priorities. There is a focus on innovation, and on how departments and arm’s-length bodies work together to deliver value for money.

ENGAGEMENT

Partnerships work well when relationships between departments and arm’s-length bodies are open, honest, constructive and based on trust. There is mutual understanding about each other’s objectives and clear expectations about the terms of engagement.

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Non-Departmental Public Bodies (NDPBs)

5.5 The Department has two types of NDPB – Executive and Advisory – and the governance for each one reflects the nature, responsibilities and risks of that body. The Department’s ALB Division provides assurance to the Principal Accounting Officer that the Department has high performing ALBs with effective governance and controls in place and that the bodies satisfy the relevant constitutional and statutory requirements.

5.6 The ALB Division has developed an Impact and Support Analysis process to provide assurance to the Principal Accounting Officer, Audit and Risk Committee and Executive Committee that an evidence based assessment has been made about: how the ALB’s business for the year ahead impacts and aligns with that of the Department; how best the Department can support ALBs to deliver; and optimum partnership and assurance arrangement for the year ahead. This process is designed to embed a positive, supportive and dynamic risk relationship culture between the Department and its ALBs.

Executive NDPBs

5.7 The Department’s Executive NDPBs are: Children and Family Court Advisory and Support Service; Criminal Cases Review Commission; Judicial Appointments Commission; Legal Services Board, Parole Board for England and Wales, and Youth Justice Board.

5.8 Executive NDPBs are created through legislation, which specifies their purpose and functions, what powers are invested in them, and how they should be financed. NDPB Accounting Officers’ responsibilities include providing a signed governance statement in the entity’s Annual Report and Accounts, reporting on the operation and effectiveness of its governance arrangements throughout the financial year.

5.9 Each Executive NDPB has a framework document – agreed with the Department – which sets out the remit of the organisation in detail and includes information on how it is governed and funded. The framework document covers:

• The purpose of the NDPB, its powers and duties• The Chief Executive and Board roles and responsibilities• The accountabilities and responsibilities of ministers and the Department Accounting Officer• The relationship with the Department and other bodies• Governance and risk management• Budgeting procedures, performance and reports, and• Audit and inspections.

5.10 In addition to the framework document, each Executive NDPB has its own independent Board, Chairman and Executive Management Team, with the Chief Executive Officer designated as the Accounting Officer for that organisation.

Advisory NDPBs

5.11 The Department’s Advisory NDPBs are Advisory Committees on Justices of the Peace, Civil Justice Council, Civil Procedure Rule Committee, Criminal Procedure Rule Committee, Family Justice Council, Family Procedure Rule Committee, Independent Advisory Panel on Deaths in Custody, Law Commission, Prison Service Pay Review Body, Sentencing Council for England and Wales, and Tribunal Procedure Committee.

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5.12 Many Advisory NDPBs receive minimal or no funds from the Department, usually limited to the fees and expenses of members. Governance arrangements are proportionate and are delivered through the Impact and Support Analysis process which is reviewed annually.

5.13 Each Advisory NDPB has a framework document agreed with the Department. To reflect the risk assessment and designated functions of Advisory NDPBs these documents are reduced scope compared to Executive Agencies and Executive NDPBs, and outline the functions of the organisation, the governance and accountability arrangements, relationship with ministers and the Department, and finance and reporting.

Office Holders

5.14 The Department partners eight office holders. These are:

• HM Chief Inspector of Prisons• HM Chief Inspector of Probation• Judicial Appointments and Conduct Ombudsman• Office for Legal Complaints• Official Solicitor and Public Trustee• Prisons and Probation Ombudsman, and• Victims’ Commissioner.

5.15 Each Office Holder should have a framework document agreed with the Department. To reflect the risk assessment and designated functions of Office Holders these documents are reduced in scope compared to Executive Agencies and Executive NDPBs, and outline the functions of the organisation, the governance and accountability arrangements, relationship with ministers and the Department, and finance and reporting.

Other

5.16 The Department also works with the Judicial Office, Independent Monitoring Boards and Lay Observers. The Permanent Secretary, is the Accounting Office for the Judicial Pension Scheme which includes a number of judicial pension schemes that were contracted out of the State Second Pension.

5.17 The Lord Chancellor has delegated responsibility for the administration of the Judicial Pension Scheme to the Group Finance Director. The Group Finance Director is supported in this role by the Judicial Pay and Pension team which is part of MoJ Group Finance.

Functional Leadership

5.18 From 1 April 2017, the Department moved to a more formal structure around Functional Leadership. This has meant that corporate and professional functions have become more joined up, bringing together specialists and professions into single unified teams.

5.19 The Functional Leadership model will be used to provide professional services to all of the Departmental business groups (with the exception of HMCTS), HMPPS, LAA, CICA, OPG and some of our ALBs.

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5.20 The corporate and professional services in the scope of Functional Leadership are:

• Analytical services• Commercial• Communications• Digital and technology• Estates• Finance• HR, and• Project delivery.

5.21 A key aim of Functional Leadership work will be building the relationships which foster an understanding of each other’s positions and priorities, and working closely together to deliver for the good of the Department and all its agencies.

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6 Third party delivery partnerships6.1 The Department works in partnership with a number of private sector bodies in delivery of services

within the justice system. These most commonly occur within HMPPS.

6.2 The Department is focused on harnessing the efficiencies and innovation of competition across public, private and third sector organisations, and recognises the importance of review and accountability for private sector delivery. There are three key third party delivery bodies which deliver services on behalf of the Department:

• Privately Managed Prisons • Community Rehabilitation Companies, and• Prisoner Escort and Custody Services.

Privately Managed Prisons and Secure Training Centres

6.3 We regard well-run prisons as fundamental to the proper functioning of our justice system, and a vital part of our reform plans. Private providers continue to play an important role in the prison estate and their performance is closely monitored and we will not hesitate to take action where standards fall short. Privately managed prison contracts set out a strict performance framework, consisting of prescriptive performance targets. Failure by the provider to meet performance targets results in performance points and, potentially, financial remedies being applied against the provider. It is important to recognise, however, that privately managed prison providers achieve the majority of their contractual targets.

6.4 The HMPPS Deputy Director Head of Operational Contracts is the Senior Business Owner for existing privately managed prison contracts in England. HMPPS in Wales is responsible for the contract management of HM Prison and Young Offenders Institute Parc. Each privately managed prison has a full-time on-site Controller (reporting to the Deputy Director), Deputy Controller and Assistant Controller, all employed by HMPPS. The Controller is accountable to HMPPS for providing assurance that the contract is delivered in accordance with agreed contractual delivery indicators, and that the prison provides safe, decent and secure services, in line with HMPPS performance standards. Senior Contract Managers are also being introduced to provide an additional level of operational assurance and support for the Controllers.

6.5 A Quarterly Contract Review Meeting for each prison is chaired by the Senior Contract Manager or Deputy Director and attended by all relevant stakeholders, including the Managing Director for the Contractor and officials from MoJ Commercial and Contract Management Directorate. This meeting examines performance and delivery against contractual obligations. Progress on external inspection reports including HMIP reports, offender surveys, and audit reports is also reviewed, identifying trends and enquiring when expected progress has not been made.

6.6 Additionally, privately-managed prisons and secure training centres are subject to the same external inspection procedures as those in the public sector. Prisons are inspected at least once every five years by HM Inspectorate of Prisons, and usually more frequently. In common with public-sector prisons, privately managed prisons face regular scrutiny by their local Independent Monitoring Board, as well as by the Government Internal Audit Agency, and by the HMPPS Operational and System Assurance Group to ensure that the prison is meeting its responsibility to deliver a safe and secure prison.

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6.7 Privately managed Secure Training Centres form part of a varied landscape of provision in Youth Custody alongside a publicly managed Secure Training Centre, Secure Children’s Homes run by Local Authorities, publicly-run Young Offender Institutions accommodating under-18 year olds and a private Youth Offender Institution in Wales. Each sector and model of provision plays a part in a diverse range of accommodation to meet the wide range of needs of children and young people in custody.

6.8 The HMPPS Director of Youth Custody is the Senior Business Owner for privately managed Secure Training Centre contracts. Each privately managed Secure Training Centre prison has a full-time on-site Monitor and an Assistant Monitor, as well as a regular presence from senior monitoring managers. These staff are all employed by HMPPS. The Monitor is accountable to HMPPS for providing assurance that the contract is delivered in accordance with agreed contractual requirements, and to keep under review the good running of the centre. The Monitor has a number of statutory functions by which the provider must involve them in certain elements of decision making and report to them if certain events or incidents occur.

6.9 A Quarterly Contract Review Meeting for each Secure Training Centre is chaired by the Youth Custody Service Head of Performance and is attended by all relevant stakeholders, including officials from the Commercial and Contract Management Directorate. This meeting examines performance and delivery against contractual obligations. Additionally, privately-managed Secure Training Centres are subject to external inspection procedures. They are inspected annually by Ofsted who are accompanied on those inspections by HM Inspectorate of Prisons and the Care Quality Commission. Secure Training Centres are also subject to oversight from local child protection structures as overseen by the relevant Local Safeguarding Children’s Board. They are also subject to visits from the children’s charity Barnardo’s who independently meet with children and advocate on their behalf.

Community Rehabilitation Companies

6.10 Community Rehabilitation Companies were created under public ownership in June 2014 and subsequently transferred to private ownership via share sale in February 2015. They provide a full range of sentence and licence supervision and resettlement services for low and medium risk offenders both prior to release from prison and in the community.

6.11 There are 21 Community Rehabilitation Centres in total, owned by eight different Parent Organisations. The maximum number of contracts held by a single supplier is six (Sodexo). Each Community Rehabilitation Centre has a separate contract in place, all of which have been classified as Gold contracts (see page 19) based on a contract value of £10m+ and a high level of risk. These contracts are designed to make sure providers deliver services which reduce reoffending, protect the public and provide value for money to the taxpayer. Community Rehabilitation Centres are required to deliver the order of the court and support the transition from custody to the community of offenders leaving prison.

6.12 The Chief Executive of HMPPS is responsible for the overall management of the agreements and this is discharged on his behalf for England by the HMPPS Executive Director of Community Interventions, and, for Wales, by the Executive Director of HMPPS in Wales, acting as the accountable Directors. The Executive Director of Community Interventions is supported by a multi-functional team that provide tiers of assurance based on a ‘three lines of defence’ model. The first line of defence is provided by

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the multi-functional Contract Management team consisting of operational contract management staff supported by colleagues from Finance, Commercial, Legal, ICT and Estates. The second line of defence is provided by HMPPS Operational and System Assurance Group based within the Directorate of Rehabilitation and Assurance. The Operational and System assurance Group reports directly to the HMPPS Chief Executive Operating Officer and delivers robust and consistent assessments of services throughout England and Wales and across the interfaces between providers. The third line of defence is provided by independent audit. This includes but is not limited to the Government Internal Audit Agency, the National Audit Office, and HM Inspectorate of Probation.

Prisoner Escort and Custody Services

6.13 The Prisoner Escort and Custody Services for England and Wales is delivered through four geographically based contracts. The contracts cover the transfer of prisoners in custody between prisons, police stations and courts and the transfer of prisoners between prisons. The contracts do not include the transfer of Category A prisoners. The four contracts were awarded in March 2011, for an initial term of seven years and further extension options of up to three years with three going to GEOAmey PECS Limited and the fourth to Serco Limited.

6.14 There is a dedicated contract management team in HMPPS and a dedicated commercial management team in the Commercial and Contract Management Directorate in the Department who monitor the contractors’ delivery of the Prisoner Escort and Custody Services and coordinate the engagement with stakeholders. There are a range of financial and non-financial remedies available within the contracts should the contractors not achieve agreed performance levels. Contract management is in place to ensure the safe, secure, and decent delivery of escort and custody services and that contractors are compliant with their contractual and legislative responsibilities. There are established governance escalation routes within both HMPPS and the Commercial and Contract Management Directorate to support and oversee the management of these contracts.

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7 Grants to private and voluntary sector bodies

7.1 There are fourteen business areas / policy teams within the Department with responsibility for managing and administering grants. These teams have a responsibility to assess, evaluate, process and monitor grants, and are directly in touch with the grant recipients and have knowledge of the policy / grant objectives.

7.2 All grants are required to have formal grant agreements in place, and governance arrangements which are set by the responsible business area. Grants can take four forms, either Competed, Un-competed, Criteria based or Formula based.

7.3 Competed funds are ones which the Department asks service providers to bid for in order to provide services to the public (such as Rape Centres). The bid needs to meet the criteria set out by the Department and meet Cabinet Office Standards.

7.4 Un-competed bids are ones which statutory bodies provide on behalf of the Department (such as victims’ services provided by Police and Crime Commissioners). These also apply where there is only one service provider and a bid would be unnecessary (such as the Restorative Justice Council).

7.5 Criteria based grants are where there is qualifying criteria in order to receive money, but as long as they qualify, the recipient gets the money, as there is no competition (such as Homicide & Peer Support Funding given by the Victims & Witnesses team).

7.6 Formula based grants are where recipients receive an amount calculated by formula, for example, funding determined by factors such as population. (such as Grants to Police & Crime Commissioners given by the Victims and Witnesses team and to the Youth Offending Teams given by the Youth Justice Board).

7.7 Significant grant funding streams/organisations that give grants include:

• Victims and Witnesses• Youth Justice Board• HM Prisons and Probation Service• Access to Justice• National Association of Child Contact Centres (via CAFCASS), and• Offender Reform and Commissioning – Whole System Approach to Women Offenders.

7.8 Grants are monitored in line with Cabinet Office guidelines; however, the Department is continually looking to develop and improve the monitoring of grant arrangements and ensure consistency in the assessment, allocation and management of grant.

7.9 Following the Public Accounts Committee’s recommendation and its acceptance by the government, a register that would enable the government to easily identify charities receiving large amounts of government funding from single or multiple sources was set up, called the Government Grants Information System.

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7.10 The Government Grants Information System aims are to enable grant information to be recorded and reported across government in a simple, standardised and scalable way, to improve transparency and provide insight into government spend and help departments manage grants more efficiently and effectively. It also provides data to help reduce the risk of fraud by improving the government’s ability to see the whole picture, so helping it to pay once only for each outcome. The Government Grants Information System is also expected to develop over time into a cross-government register, linked to an analytical system.

7.11 The Department is looking to develop a grant management Centre of Excellence, building on the small expert grant administration function which already exists within the Department. The potential scope of the Centre of Excellence is likely to include a strong focus on:

• Establishing clear and consistent end to end processes within and across the Department which were aligned with best practice, and

• A strengthened and proactive assurance, compliance and performance management and monitoring capability, which would be independent of grant makers. This would include management of risk and appropriate due diligence.

7.12 The Centre of Excellence would also be a source of expert advice – for example, on whether or not grant funding was the most appropriate option and advising on compliance with Cabinet Office standards. In addition, it would take responsibility for periodic grant reviews, reviewing the entire grant landscape within the Department, to determine whether current grants were fit for purpose, delivering the required outcomes and performance and continued to be the most appropriate way of delivering the Department’s objectives.

7.13 As now, the Centre of Excellence would be responsible for the interface with Cabinet Office, including membership of the Grants Programme Board, managing and monitoring the upload of data onto the central Government Grants Information System and working with/influencing Cabinet Office on the development of grant standards.

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8 Major contracts and outsourced services

8.1 The Department secures value for money through its contracts by applying a proportionate, risk based approach to contract management. This is ensured through establishing clearly defined roles and responsibilities throughout the contract management process, and designing tools that allow users to identify savings opportunities, understand the spending profile of agreed contracts, and manage relationships with providers.

8.2 The key function that supports contract management within the Department is the Commercial and Contract Management Directorate.

8.3 The Commercial and Contract Management Directorate is responsible for setting the guidance on the processes and structure of controls for contracting across the Department. The Commercial and Contract Management Directorate interacts with the wider Departmental structures to ensure there is a clear framework for the governance of procurement and tracking of contract delivery.

8.4 The Department has adopted a rating for identifying the most significant contracts, with a gold, silver and bronze approach to contact management:

Gold High value (£10m and over)

High value (£10m and over), ability to switch contracts would take three months or longer, complex and high risk (or a combination of any of the above factors)

Silver Medium value (£5m to £9.99M)

Medium value (£5m to £9.99M), ability to switch contracts in one-three months, medium complexity and medium risk

Bronze Low value (£1m to £4.99M)

Low value (£1m to £4.99M), ability to switch contracts in less than a month, low complexity and low risk

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9 The distribution of funding9.1 The Department’s annual funding is agreed by Parliament. The Permanent Secretary is accountable

for ensuring the established control totals are not breached. In addition, the Department administers fees and charges for some services, established and limited by legislation.

9.2 There are separate control totals for Resource and Capital Departmental Expenditure limits (RDEL and CDEL). Additional controls exist on some budgets that are ring-fenced for specific purposes, on Administration Budgets, Annually Managed Expenditure, and on the Net Cash Requirement. On an annual basis, Parliament agrees the Main Estimate, providing the annual breakdown of the Department’s overall funding settlement. There is an opportunity to redistribute funds between control totals once a year through the Supplementary Estimate process, if agreed by Parliament. Beyond this, it is the Permanent Secretary’s responsibility as Principal Accounting Officer for the Department to delegate the authority to commit these resources, together with the responsibility for proper stewardship of these resources and compliance with the requirements of Managing Public Money.

9.3 The Principal Accounting Officer determines the allocation in accordance with the Department’s funding settlement from Parliament and to reflect government priorities.

The delegation chain9.4 The Permanent Secretary delegates funding to the Accounting Officers of delivery bodies and

business groups for the financial year. This sets out the budget delegated by categories of expenditure, service area, business as usual or change budget, and budgetary control totals. The delegation chain is demonstrated below:

9.5 Individuals responsible for delegated budgets are required to ensure they understand the budget holder responsibilities, accountabilities and expectations. This is evidenced through the confirmation of acceptance of the delegated budget, and acknowledgement of understanding of the budget holder accountability.

9.6 To support budget holders in discharging their responsibilities, and to ensure there is clear accountability and informed decision making, the Department undertakes mandatory finance training for all budget holders. Once attended, budget holders are issued with a Licence to Operate.

9.7 The Licence is a pre-requisite for all budget holders before they receive a formal delegation of financial responsibility and accountability from the senior budget holder.

9.8 It sets the levels of knowledge, skills and behaviours budget holders need to exercise their delegated financial authority.

ParliamentPrincipal

Accounting Officer

Account Officers /

Senior Budget Holder

Budget Holder

Authorised Individuals

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9.9 To gain a Licence, budget holders are required to attend a workshop aimed at clearly setting out their responsibilities and expectations on them as budget holders and the considerations they must apply.

Financial Control Framework

9.10 The Department operates within financial control frameworks set at both a cross-government level (HM Treasury, Cabinet Office and Managing Public Money controls), and Departmental level. This is to ensure that the financial decisions of the Department apply with regularity, propriety, Value for Money and feasibility considerations.

9.11 Certain categories of spending proposals override any delegated authority and must always be submitted to HM Treasury for approval, through the MoJ Group Finance function. A summary of HM Treasury and Cabinet Office approval requirements are detailed below:

Always require MoJ / HM Treasury approval Always require MoJ / Cabinet Office approval

Innovative funding models or incentive schemes

All expenditure on identity assurance, digital services including the commissioning of all government digital activity

Arrangements for netting off expenditure against income

All expenditure on consultancy above £20k where contract is expected to exceed nine months, where existing contracts are to be extended beyond nine months, or expenditure that is procurement related

New revenue grants paid to local government

Major projects / programmes need HM Treasury and Cabinet Office approval but must first go through Group Finance and the Investment Committee

Public Private Partnerships All redundancy schemes

Special payments > £30k

Write offs and losses > £5m

All expenditure which is novel, contentious or repercussive, irrespective of size, even if it appears to offer value for money taken in isolation

Gifts

Accountability

9.12 The Financial Management Committee is responsible for the oversight of financial performance across the Department. The committee meets monthly to assess the in-year financial performance and track progress of the business in delivery of its aims and objectives.

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Annex 1 Board and committee structures

HMCTS Board Chief Executive and Accounting Officer

Audit and Risk Assurance

Committee

Change Portfolio Board

Finance and Performance Committee

Senior Executive and Team Committee

HMCTS

Finance and Performance Committee

Finance and Performance Committee

HMPPS

HMPPS Board Audit and Risk Assurance Committee

Prison Safety and Reform Operational

Readiness and Assurance Board

Executive Management Committee

Relevant Sub-Committee and

Programme/Project Boards