Regularity of expenditure under more pressure

Corona crisis key factor

The regularity of nearly 5% of all commitments for future expenditure made by the Dutch government in 2021 is uncertain. That 5% involves a lot of money: €15.5 billion. The Netherlands Court of Audit has concluded for the third year in succession that the tolerable threshold of 1% has been exceeded, a worrying development. 

As in 2020, the corona crisis was an important cause of problems in the government’s accountability for public money. The government spent €33 billion in 2021 to combat the corona crisis, more than the €29 billion it had spent in 2020. The Court of Audit concludes in its Accountability Audit for 2021 that the crisis has exposed structural weaknesses in the government’s operational management. In part they are due to inadequate staffing of financial and support positions, for instance at the Ministries of Health, Welfare and Sport and of Defence and at the Tax and Customs Administration. The Court urges the government to resolve these problems in order to prevent reoccurrence. At moments when it really matters, specific know-how and expertise must be present among the staff. But the ice is thin, sometimes too thin. And it is not always possible to skate over the cracks.

Accountability for the TVL corona support measure

The Court’s Accountability Audit for 2021 found that the Minister of Economic Affairs and Climate Policy could not demonstrate the regularity of €5.4 billion in expenditure and €7.9 billion in commitments to enterprises. These sums related to the TVL corona support measure to award grants to cover business overheads. The Court therefore lodged an objection against the ministry’s annual report on 7 April and asked the minister to demonstrate the regularity of the applications dealt with, the advance payments made and the grants awarded and to prepare an improvement plan. Thanks to ministry’s hard work and additional checks by the Court, these improvements were made and the Court withdrew its objection on 11 May.

Regularity of expenditure and commitments under more pressure

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Tolerable threshold

The standard applied to audit the government’s financial performance is that ministers must receive and spend all their money in accordance with the law and regulations. But errors can be made wherever people are involved. The Court of Audit therefore applies a tolerable threshold. It expects the regularity of 99% of revenue, expenditure and commitments to be beyond question. This cannot reasonably be expected from the remaining 1%. This tolerable threshold was convincingly exceeded in 2021. Expenditure was not as irregular as in 2020 but the 1% threshold was nevertheless exceeded. Government expenditure is so high that 1% represents more than €3 billion.

Financial management at the Ministry of Health, Welfare and Sport

The pandemic measures also had serious consequences at the Ministry of Health, Welfare and Sport (VWS). A quarter of its expenditure, €8.2 billion, related to the corona crisis. This was more than in 2020, when it had spent €5.1 billion on corona measures. The expenditure related, among other things, to money for municipal health services, testing capacity and the development and procurement of vaccines.

There were such serious weaknesses in financial management in 2021 that the Court qualified them as a serious shortcoming, lodged an objection and called for an improvement plan. The minister began to improve financial management in 2021. There are still shortcomings but they are not as serious, in both absolute and relative terms. The regularity of a great deal of the ministry’s expenditure and the commitments it entered into, however, is still uncertain. The Court of Audit found errors and uncertainties in €4.1 billion of the ministry’s overall commitments and in €2 billion of its total expenditure.

Defence procurement

Other causes of irregularities in commitments included procurement management at the Ministry of Defence, which had made errors in public contracting (€1.4 billion). The minister, moreover, had not informed parliament in a timely manner of €1.1 billion of expenditure arising from a change in policy.

Long-standing issues

For its 2021 Accountability Audit, the Court looked at policy results in 9 areas. Many of the issues audited had  a long history. They covered a wide range of topics, from compensation for victims of the child benefit scandal and the repair of earth tremor damage and strengthening buildings in the province of Groningen to the return of local democracy in St Eustatius with its own executive  council and increasing the capacity of the electricity grid. The key to solving such social problems and long-standing issues lies in good organisation. The Court therefore notes: good management is half the work.