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Policy paper: Cabinet Office Controls: Version 7

Cabinet Office

February 23
12:30 2024

Cabinet Office Spend Controls policy: Version 7

Central government organisations, including departments and the bodies they sponsor must obtain Cabinet Office approval when they want to spend money on specified activities.

Cabinet Office spend controls are part of the wider government financial delegations and approvals process and are an important part of the mandate of the government functions. The Cabinet Office operates the spend controls on behalf of HM Treasury.

Objectives and benefits

Cabinet Office Spend Controls provide enhanced assurance on significant and complex areas of spending.

  • enabling government to operate in a much more holistic and joined-up way - the Spend Controls promote the reuse of technology; interoperability; common terms and conditions; and efficient and collaborative asset utilisation.

  • highlighting patterns or duplicated spend within and between organisations - the Spend Controls build visibility of spending in particular categories, generating insight.

  • supporting the implementation of government policies and strategies such as the government estates, shared services strategies and functional standards.

  • targeting expertise and additional assurance at complex and risky areas of spend, thus improving the specification of spending proposals and ensuring alignment with government priorities.

  • identifying issues which, while outside the scope of functional assurance, could point to the need for HM Treasury approval such as proposals that are novel, contentious or repercussive.

  • Spend Controls benefit organisations and the government as a whole. They help to deliver savings and efficiencies, increase delivery confidence, reduce risk, support capability improvements and help ensure improved outcomes for citizens.

Scope of the Spending Controls

Organisations in scope of the Spend Controls

All central government organisations, including departments and the bodies they sponsor, must obtain approval from the Cabinet Office when they want to spend money on specified activities. New organisations are expected to comply with the Spend Controls unless specifically exempted when set up. Details of exemptions to spend controls are detailed in Annex A.

The Office of National Statistics (ONS) public sector classification guide is used to determine which organisations are categorised as central government. This includes: all central government departments, including non-ministerial departments; executive agencies; and other arms-length, non- commercial bodies that are majority controlled and/or financed by departments (Non-Departmental Public Bodies).

Organisations outside central government may, exceptionally, be subject to Spend Controls if this is specified in legislation, the memorandum and articles of association or in a contract or grant agreement.

Organisations out of scope of the Spend Controls

All organisations not classified as central government are outside the scope of spend controls (subject to the above exceptions). This includes private sector organisations, devolved administrations, public corporations (public sector market bodies) and local government bodies.

Expenditure covered by the Spend Controls

The Spend Controls apply to commercial contracts, general grants and individually specified types of transactions. Excluded are payroll and staff costs, budget transfers, recharge arrangements, Grant In Aid allocations and formula grants. The provision of data via the grants pipeline is included. These transactions may still be subject to wider spend controls operated by HM Treasury.

Exemptions from Spend Controls

There is a presumption that all central government organisations are subject to all of the Spend Controls (unless specifically excluded at formation, e.g. through the founding legislation). In exceptional circumstances, exemptions may be granted to specific organisations within scope in respect of some or all of the Spend Controls. Your organisation may request an exemption from the Spend Controls from the Cabinet Office. Such requests will be considered on a case-by-case basis and must be approved by Cabinet Office and Treasury ministers.

Agreements of any exemptions a body holds from the Spend Controls should be recorded in the departments delegation letter and in the Framework Document, or similar relationship-defining document, between the body and its sponsor department. Where the Framework Document is silent, it should be assumed that all of the Spend Controls apply.

Exemptions will be reviewed regularly, either: at a date specified in the letter granting the exemption; when the status of the body changes; when the framework document is reviewed and updated; as part of the departments review of ALBs; or where issues are identified that suggest shortcomings in internal controls.

Exceptional factors will be considered when granting exemptions and organisation may make requests to the Cabinet Office for consideration.

Triggers

The Spend Controls are triggered at defined thresholds and approval points.

Thresholds

For expenditure within the scope of Spend Controls, approval must be sought where the relevant financial threshold is reached.

The threshold level varies depending on the expenditure category, complexity and specific agreements with individual organisations. Additional details on threshold policy can be seen at Annex B.

Financial thresholds

The financial threshold relates to the relevant contract or transaction. It does not relate to total project or programme expenditure, which will include other costs and cost categories.

The threshold value may relate to aggregate spending where contracts are changed or extended.

Delegation Letters may include bespoke arrangements wherethe threshold is higher or lower than set out under types of spend in scope.

The organisation is responsible for ensuring that all spending within scope of the Spend Controls is submitted for approval.

Bespoke thresholds

The default position is that the financial thresholds set out under types of spend in scope apply to all central government organisations. Variations on thresholds may be agreed with individual organisations where appropriate.

Factors that will be considered include: assessments of capability and adherence to standards; the size and scale of spending activity; compliance of the organisation with Spend Controls; and any exceptional circumstances such as bodies set up to respond to specific events or emergencies. Consideration of different thresholds will be at the Cabinet Offices discretion, and usually given at the point an organisation becomes subject to controls or where there is clear evidence that current thresholds are no longer appropriate. These changes will need to be agreed with the Cabinet Office and HM Treasury.

Approval points

Approval point timing

The Cabinet Office does not direct but advises organisations on commitment to expenditure. Spend approval is required in real time, before contractual commitment is in place. First engagement is at the Outline Business Case stage though to the Full Business Case stage and continues where extensions to existing contracts are proposed.

Organisations or ALBs should engage with the Cabinet Office as early as possible. Early review and assurance means there is a greater opportunity for functional experts to add value, resolve issues, and form submissions ready for approval.

Early engagement should be undertaken through forward looking spending pipelines, and may be supported by a Strategic Outline Business Case or Programme Business Case. Where assurance is undertaken as part of the pipeline approach, the Cabinet Office will decide whether approval is required at the point that spend is committed.

Joint approvals

Where proposed spending would trigger more than one spend control, organisations should alert all the relevant Cabinet Office functional assurance teams. The functions should then liaise with each other and the central controls team to ensure that each control is considered. Approval to spend should not be granted until the case is approved explicitly under all relevant controls.

Expectations and principles

All central government organisations are expected to comply with the letter and the spirit of spending control policies and procedures. The following expectations and principles apply to organisations subject to the Spending Controls:

Expectations

  • Pipelines - Organisations must develop and maintain spending pipelines covering planned expenditure for the following 15 months (minimum). This is a requirement for commercial, digital and technology, grants, facilities management and property activities and good practice in other areas.

  • Internal assurance and approval - Organisations must ensure robust internal assurance and approval processes for spending activities.

  • Standards - Organisations must use functional standar

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