Serious problems implementing government policy at 3 ministries

News item | 21-05-2025 | 11:00

These are just a few of the conclusions from the Court of Audit’s annual Accountability Audit, which it presented to the House of Representatives on 21 May 2025 (the third Wednesday in May). The Netherlands Court of Audit is the independent public spending and policy watchdog. It writes that ministers informed parliament of few results in 2024. Members of parliament do not know whether the results that are reported are an outcome of government policy. It is also uncertain whether the reported results contribute to the agreed government goals. This is because many of the Schoof government’s goals are not described unequivocally or because ministers are not informed whether a goal has been met. Where they are reported transparently, results often fall short. The Court of Audit therefore urges politicians to do what they promise.

President Pieter Duisenberg said, ‘ Citizens and businesses in the Netherlands want public money must be spent on results. The major challenges in these turbulent times call for clear choices and goals for the long and the short term. They want a government that does what it promises, a government that keeps a steady course but is flexible and resilient. It is therefore essential that scarce public money, people and other resources are applied effectively, efficiently and in accordance with the regulations.’

The Court of Audit qualified 2 of the 10 government goals it audited as ‘adequate’. One concerned business satisfaction with economic diplomacy for small and medium-sized enterprises abroad. The diplomatic results, however, are uncertain. Progress to reduce the shortage of medicines, the pace of damage repair in Groningen, the exercise of victims’ rights and reducing the housing shortage for the elderly are qualified as ‘poor’ or ‘worrying’. In these areas, the government is not doing what it promised.

More problems in operational management

The number of shortcomings in operational management at ministries and implementing organisations was slightly higher at 40. 11 related to errors and uncertainties in central government procurement (at least €1.6 billion out of a total of €18 billion). This is a recurrent problem. The Court of Audit recommends simplification of procurement processes.

Problems have been resolved at the Ministries of Health, Welfare and Sport (especially regarding IT) and the Interior and Kingdom Relations, but the Ministries of Justice and Security, Finance and Defence still have the most operational management problems. The Court calls on ministers to put their basics in order and to make promises only when they can perform the necessary work. In the Court’s opinion, there are serious shortcomings at the Ministries of Justice and Security, Defence and Foreign Affairs.

Ministry of Justice failing citizens

The names of suspects and convicted persons have been incorrectly recorded in at least 867 criminal cases. Perpetrators might therefore avoid punishment and innocent citizens might be convicted. 141 of these cases concerned serious public decency or violent crimes. The Ministry of Justice and Security has known about this problem for more than 10 years yet has not been able to resolve it. The Court’s audit prompted the minister to prepare an action plan.

The audit also revealed that the Public Prosecution Service (OM) did not correctly inform nearly 1 in 5 victims of crime. Victims have a legal right to information on the progress of their cases. They depend on the OM for the information but in 19.4% of cases they were not informed appropriately. There are also other stubborn problems in the criminal justice system. Citizens often have to wait a long time before their cases are settled. The target is to settle 80% of young offenders’ cases within 6 months – from the first hearing by the police to a judgment by a court. In practice, the result is 40%. Victims and suspects of public decency crimes also often have to wait a long time before their cases are settled.

Financial accounting at Foreign Affairs not in order

The Court of Audit has also lodged an objection regarding a serious shortcoming at the Ministry of Foreign Affairs. Since its migration to a new IT system in 2024, management of €14.9 billion in commitments at Foreign Affairs and Foreign Trade and Development Cooperation, including €1 billion in prepayments, has not been in order. As a result, the ministry was unable to present the financial section of its annual report on time. The minister did not intervene in a timely manner when many error-prone corrections were being made manually. The objection procedure lodged by the Court has already prompted the mister to prepare an improvement plan. 

This serious shortcoming means there is insufficient insight into budgetary scope and multiannual commitments. It is also more difficult to verify observance of agreements with all manner of ministry relations. Payments might be delayed. One aspect at play here is that Foreign Affairs has decided to develop its own financial system that records commitments and prepayments differently from other ministries’ systems. This is contrary to the criteria laid down in accounting laws and regulations.

The patchwork of financial IT systems throughout central government makes it difficult to share information when ministries work together on major procurement projects. Central government’s IT system for personnel expenditure is centrally managed. The Court welcomes the Minister of Finance’s announcement in October 2024 to seek greater uniformity in financial accounting systems.

Security of military assets seriously below standard

Geopolitical developments are exerting strong pressure on the Ministry of Defence. Deployability of the armed forces is hindered by weak operational management. Priority has been given to problems of operational readiness. As in previous years, however, problems concerning the security of military assets have not been successfully resolved. Security awareness among Defence personnel is inadequate. Practical tests conducted for the Court of Audit again found that assets in the highest protection categories are inadequately protected. This serious and urgent problem – particularly in the current geopolitical circumstances – has been a recurrent problem. The Court has therefore lodged a formal objection. It urged the ministry to prepare an improvement plan that also mitigates short-term risks. The minister has prepared such a plan. The House of Representatives can therefore question the minister on whether problems have actually been resolved.

Defence did not meet 2% NATO target in 2024

Defence spending below NATO standard

In financial terms, the Ministry of Defence has significantly increased its expenditure, but not yet to the required level. Defence spent €20.1 billion in 2024, 31% more than in 2023. Expenditure was €4.9 billion higher than in the previous year, partly for the modernisation of air defences. However, €3.3 billion of budgeted expenditure was not applied in 2024, mainly because of personnel shortages, long-term procurement processes and difficulty obtaining defence equipment. The Ministry of Defence spent 1.79% of gross domestic product (GDP) in 2024. At 26.7% of all defence expenditure, Dutch defence investments were comfortably higher than the NATO 20% guideline for investments.

Assessment of applications to restore benefits on schedule, additional restoration is not

As in previous years, the Court of Audit qualifies financial restoration for victims of the child benefit scandal as worrying, mainly because disadvantaged parents have had to wait longer for their claims to be settled and the Benefit Restoration Agency (UHT) is exceeding applicable statutory terms. The UHT falls under the responsibility of the Minister of Finance. There was nevertheless an acceleration in 2024: initial assessment and integrated assessment goals were met. More than 40,000 parents were recognised as affected by the child benefit scandal. To the end of 2024, 8,370 affected parents had submitted an additional claim. By year-end, 1,276 had been settled. The pace is too slow to settle all additional claims by 2027 at the latest. The minister estimates the total cost of the restoration operation at €11.5 billion, of which €2.2 billion will be for implementation.

Central government expenditure higher in 2024, but still an underspend

Central government spent €414.1 billion in 2024, €23.8 billion more than in 2023. Care and social security remain the highest expenditure items. The cost of state pensions, for instance, was higher. Revenues, chiefly taxes and contributions, increased by €21.7 billion to €407.2 billion. Box 2 tax revenue was €6 billion higher. In the year before, it had been €5 billion higher than projected. The Minister of Finance had significantly underestimated the effect on entrepreneurs’ behaviour of an announced change in the box 2 tax rate. The Court’s audit revealed more budgetary errors and risks that were inadequately explained and therefore could not be taken into account in decision-making.

Less public money was spent in 2024 than the government had previously projected. The underspend was also higher than in previous years  . Aggregated across all ministries, €15.2 billion was carried forward to future years and €6 billion went unspent. If this had been known earlier, parliament might have made different budgetary decisions. The government was unable to keep several undertakings because of that €21 billion underspend. Less than planned was spent, for instance, on projects funded from the Climate Fund and the National Growth Fund (Economic Affairs and Climate Policy). In the Court of Audit’s opinion, the minister’s estimates for the Growth Fund last year were based on wishful thinking.

Reasons for the approval of central government accounts, with comment

The Court of Audit concludes that central government revenues and expenditures were collected and spent in accordance with the regulations in 2024 and were comfortably below the tolerable error of 1%. Of the €384.7 billion audited, it is not certain whether €1.3 billion was spent regularly or that all amounts were correct. The financial amount of the errors and uncertainties was considerably lower than during the corona years.
Commitments assumed, such as contracts for future expenditure, are slightly higher than the tolerable limit at 1.06 % (€4.7 billion of €442.7 billion in commitments). This is why the statement of approval includes a comment on the central government accounts and the central government trial balance.