STRENGTHENING PARLIAMENT'S ROLE ON PUBLIC SPENDING: ALIGNING BUDGETS ESTIMATES AND ACCOUNTS

  I wrote to you on 3 July, following publication of the "Governance of Britain" Green Paper (Cm 7170), with further details of the Prime Minister's announcement that the Government would simplify its financial reporting to Parliament by bringing planning Parliamentary approval and reporting of public spending on to a more consistent basis. I undertook to write to you again before the end of the year with a further report on progress in taking this project forward.

  I mentioned in my earlier letter that the Government's intention was to consult widely on the detailed changes needed to achieve this major reform, which is designed to make the system of Government finance easier to understand and operate and improve government's accountability to Parliament. The process of preliminary research and analysis is now well under way, and I very much welcome the involvement of representatives from Parliament, the National Audit Office and the Financial Report in Advisor Board, as well as from across government the Steering Committee overseeing the project. The contribution of all key stakeholders will be crucial to the success of the project as the work proceeds, and I am pleased to note that both the Steering Committee and Project Board have now held successful first meetings. I also welcome the fact that my officials will be meeting with you in the New Year to discuss the project in more detail.

  The inclusive approach we are adopting in taking forward the Alignment project is intended to ensure that the outcome is accepted by all parties, and is sustainable, rather than a "quick fix". This is crucial, since there is a major prize to be won. The version is to create a single, coherent financial regime, that is effective, efficient and transparent, enhances accountability to Parliament and the public, and supports delivery of the Government's fiscal framework, incentives good value for money and supports delivery of excellent public services. This will have significant benefits for Parliament and the public, as well as for Government, in terms of greater transparency, accountability and efficiency.

  Looking ahead, we shall be planning detailed changes to the various frameworks during the course of 2008-09, in discussion with all key stakeholders, including Parliament, with the aim of beginning implementation planning during 2009-10. Completion of the project will depend on a number of factors, including possible legal implications; but, subject to that, the intention remains to introduce changes from 2010-11 onwards.

  I am grateful for your Committee's support in taking forward this major reform, and I am confident that, together, we will be able to deliver a significant enhancement of the governance of Britain.

I am writing in similar terms to Edward Leigh, Public Accounts Committee and Alan Williams, Chairman of the Liaison Committee.

19 December 2007