State of Central Government Accounts 2011

With the Netherlands in the grip of the international financial crisis and the credit crunch, information on the consequences of sweeping measures is very important. Citizens and businesses must know what impact spending cuts and tax increases will have on them. The government must therefore clearly explain what responsibilities the government does or no longer bears when it introduces spending cuts or reforms. In a report entitled State of Central Government Accounts 2011 published on 16 May 2012, the Court of Audit calls for responsible spending cuts and reforms.

State of Central Government Accounts 2011

Court of Audit approves central government accounts

The Dutch central government spent €236.7 billion in 2011. The Court of Audit approved the central government accounts presented in the Central Government Annual Financial Report 2011; the percentage or errors and uncertainties remained below the tolerable threshold applicable to central government as a whole. Although central government expenditure was on the whole regular, the ministers' annual reports still provide little insight into the success of their policies and whether they spent money effectively in 2011.

Progress of the spending cuts not sufficiently clear

The Rutte/Verhagen government announced spending cuts of €18 billion. It has since become clear that additional spending cuts and tax increases of €12 billion will be necessary in 2013 (in addition to the €18 billion the Rutte/Verhagen government announced for 2015) in order to comply with European requirements. These drastic cuts mean that services that have always been taken for granted may no longer be available. Every government has a responsibility to state precisely what consequences the measures it proposes to the House of Representatives will have for citizens and businesses. The biannual 18 Billion Monitor issued by the Ministry of Finance to inform the House of the progress made with the spending cuts could be made clearer on this point. In our opinion, the Monitor should be expanded to include the additional measures (€12 billion) and consider the progress of the reforms as well as that of the spending cuts. 

Public money in no-man's land after decentralisation

The decentralisation of tasks from central government to municipalities and provinces is blurring the distinction between general and specific-purpose grants. It is not always clear whether a minister or a municipal executive is responsible for policy results and how they should be accounted for. The Court of Audit found that it was uncertain whether municipalities and provinces had spent €1.4 billion in special-purpose grants (more than 10% of the total) regularly. The Minister of the Interior and Kingdom Relations (BZK) has overall responsibility for the municipalities and provinces' expenditure accounts. The Court of Audit has therefore lodged an objection with the Minister of BZK. The minister has announced measures to improve the situation.

Accountability for European support measures inadequately organised

In a European context, too, high priority has to be given to the good organisation of accounts. The treaty establishing the European Stability Mechanism (ESM) is currently before the House of Representatives for ratification. The ESM finances support programmes for EU member states in financial need. The Court of Audit notes that these measures, too, should be taken responsibly: it must be possible to determine in hindsight whether the measures were meaningful. The ESM treaty currently does not provide for adequate independent control of the effectiveness of the use of ESM funds. Particular attention should be paid to the audit mandate of the future board of auditors.

Mixed picture of accountability for policy effectiveness

Do citizens get value for money? The ministers' annual reports do not always answer this question clearly. The Court of Audit audited 20 budget articles (out of about 200 for central government as a whole) specifically for the information they provided on value for money. The Ministers of Education, Culture and Science (OCW) and Economic Affairs, Agriculture and Innovation (ELI) set a good example in parts of their budgets. Their annual reports paint an adequate picture of performance in such areas as the media and business incentives. On the other hand, several ministries give a poor example by not providing information on the expenditure of many billions of euros. The information is not known or is not made available in time for the annual reports. We also noted that policy goals formulated by the ministers were regularly wider than what was actually sought in reality.

Limited information on government security and accessibility priorities

The House of Representatives indicated during last year's Accountability Debate that it would like to pay extra attention to the information that the Rutte/Verhagen government provided to it on its achievement of the government's security, accessibility, sustainability and nature priorities. The Court of Audit considered this in its audit and found that the information could be improved. The Minister of Security and Justice (VJ), for example, disclosed in his annual report for 2011 what measures had been taken but referred to evaluations, monitors and third-party annual reports, some of which still had to be prepared or completed, for information on policy outcomes. Another example is provided by the Minister of Infrastructure and the Environment, who discloses all manner of information on road journey times and the reliability of train journeys in the Netherlands. Rijkswaterstaat, the Directorate General for Public Works and Water Management, however, estimates the gains in journey times on 130 km/h motorways far lower than the minister; this information is not disclosed in the annual report. 

Inadequate management of care expenditure owing to lack of information

One of the outgoing government's priorities is to keep care expenditure manageable. In an annexe to her annual report for 2011, the Minister of Health, Welfare and Sport (VWS) stated that she had not succeeded in restricting care expenditure to the amount agreed in the Care Budget Framework. More than €2 billion extra was spent in 2011. She does not inform the House of the specific causes of the overspend. According to the Court of Audit, an important cause was the poor information provided on care expenditure: the minister sometimes does not receive information on setbacks until several years after they have occurred. The minister had previously promised to improve the information provided to the House but the result of her efforts could not be seen in 2011.

Compact Civil Service

By means of the Compact Civil Service programme, the government is seeking to make the civil service smaller, more compact and more sober. According to the government, the programme should also lead a structural saving of €788 million. The Court of Audit found that there were no foundations for €437 million of this saving and there were uncertainties about the feasibility of part of the other €351 million. In a number of projects, the savings will not be achieved in full until after 2018.

The number of staff at all ministries, the military personnel of the Ministry of Defence, the police and the 32 largest autonomous administrative authorities declined by 9,249 in 2011 to 279,812 FTEs at the end of the year.

Information security inadequate at most ministries

Few ministries have sufficient insight into whether their IT systems can withstand hackers and misuse. The importance of information systems and IT security is continuing to increase: information can be processed and exchanged more quickly. At the same time, central government is increasingly dependent on IT systems and new opportunities for misuse are constantly emerging.

The Ministries of Defence and Foreign Affairs are performing relatively well but BZK, ELI, Infrastructure and the Environment (IM, including Rijkswaterstaat), Education (OCW, including student grant organisation DUO) and VWS (including the National Institute for Public Health and the Environment (RIVM)) are paying too little attention to security. The Ministries of IM, Finance, VJ and ELI have a relatively high number of staff in sensitive positions who have not been adequately screened. The Military Intelligence and Security Service has a large backlog of work. The Tax and Customs Administration, moreover, does not have an up-to-date overview of sensitive positions.