Government services: Identifying costs and generating income

Public Accounts Committee Open Inquiry
Opened: 6 May 2025 Parliament page
The Committee (PAC) is holding an inquiry to look at government’s management of fees and charges to recover the costs of providing services and how government is identifying costs to sustainably improve productivity. Improved productivity is key to the government’s aims to improve the affordability of public services. Government’s roadmap … Read more
29 Recommendations
17 Conclusions
2 Reports
2 Oral sessions
9 Letters
2 Events
Activity timeline 17 events
27 Apr
2026
Correspondence
27 Apr
2026
Correspondence
27 Apr
2026
Correspondence
1 Apr
2026
Report published
1 Apr
2026
Report published
12 Mar
2026
Correspondence
12 Dec
2025
Report published
10 Dec
2025
Report published
1 Dec
2025
Correspondence
1 Dec
2025
Correspondence
13 Nov
2025
Correspondence
13 Nov
2025
Correspondence
Oral evidence sessions 2 sessions
20 Oct 2025
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Andrew Cartner · HM Treasury Bonnie Wang · DSIT Cat Little CB · Cabinet Office Conrad Smewing · HM Treasury
16 Oct 2025
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Farhad Chikhalia · Ministry of Justice James Bowler CB · HM Treasury Matthew Taylor · HM Treasury Nick Donlevy · HM Treasury Tim Moss CBE · Driver and Vehicle Licensing Agency
Recommendations & Conclusions
10 results
Clear
10 Conclusion Acknowledged
57th Report - Government services:…
Government services consistently fail to meet cost-recovery targets, leading to persistent financial imbalances.
Over the five-year period from 2019-20 to 2023-24, none of the seven government services reviewed consistently met their cost-recovery targets. Poor cost-recovery persisting over time results in a build-up of surplus and deficits in some services. Both passports and family … Read more
Government Response
The Treasury acknowledged the challenge of potential inequities for users when government bodies under or overcharge for services and hopes to address this through stronger incentives for departments to encourage lower costs through efficiencies.
HM Treasury
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11 Conclusion Acknowledged
57th Report - Government services:…
Significant fee-cost imbalances risk public service financial resilience and create unfair taxpayer burden.
Significant imbalances between fees and costs pose risks to the financial resilience of public services and create unfairness for the public. The NAO reported that the passport service has been underrecovering since 2017-18 without explicit approval from Home Office Ministers … Read more
Government Response
The Treasury acknowledged the challenge of potential inequities for users when government bodies under or overcharge for services and hopes to address this through stronger incentives for departments to encourage lower costs through efficiencies.
HM Treasury
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12 Conclusion Acknowledged
57th Report - Government services:…
Persistent fee imbalances create inequities, forcing future users to overpay or current users to subsidise.
The NAO report highlighted that persistent imbalances can also create potential inequities for users. When government bodies undercharge for services, cumulative losses are often recouped through higher fees for future users. Conversely, when services over-recover, current users end up overpaying.22 … Read more
Government Response
The Treasury acknowledged the challenge of potential inequities for users when government bodies under or overcharge for services and hopes to address this through stronger incentives for departments to encourage lower costs through efficiencies.
HM Treasury
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20 Conclusion Acknowledged
57th Report - Government services:…
Charged services lack transparency in disclosing full cost details and over-recovery funding.
The NAO reported the charged services it examined did not fully fulfil their disclosure requirements on areas such as unit costs, the cost-recovery targets, objectives, the extent and explanation for over or under-recovery.39 The lack of transparency affects public confidence … Read more
Government Response
The Treasury will update the Financial Reporting Manual (FReM) to align to 6.11 of Managing Public Money (MPM) by Spring 2026 to include clearer reporting guidance for fee-charging public bodies to ensure more effective Parliamentary scrutiny and will continue to keep this under review including considering as part of a wider review of Central Government financial reporting.
HM Treasury
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21 Conclusion Acknowledged
57th Report - Government services:…
Treasury recognises the need for proportionate financial reporting and improved fee transparency.
The NAO report highlighted the importance of proportionate financial reporting requirements, particularly for smaller bodies.43 We asked how the Treasury will make sure its disclosure requirements are proportionate. The Treasury told us that it is mindful of the administrative burden, … Read more
Government Response
The Treasury will update the Financial Reporting Manual (FReM) to align to 6.11 of Managing Public Money (MPM) by Spring 2026 to include clearer reporting guidance for fee-charging public bodies to ensure more effective Parliamentary scrutiny and will continue to keep this under review including considering as part of a wider review of Central Government financial reporting.
HM Treasury
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1 Conclusion Acknowledged
58th Report - Government services:…
Committee took evidence on improving government productivity via better service cost information.
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Cabinet Office, HM Treasury and the Department for Science, Innovation and Technology on improving government’s productivity through better information on the costs of … Read more
Government Response
The government acknowledges the committee's work and outlines plans to enhance government productivity by setting expectations for Accounting Officers to improve service-level cost information, issuing new guidance, monitoring compliance via finance assessments, and fostering best practices through cross-government forums.
HM Treasury
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10 Conclusion Acknowledged
58th Report - Government services:…
Limited practical guidance and systematic support exist for identifying departmental service costs.
We found that there is limited practical guidance and systematic support for people in departments who own the services and are responsible for identifying their costs.20 Forums such as the Finance Foundations Group aim to share best practice.21 While we … Read more
Government Response
Treasury will use cross‑government forums (including the Finance Foundations Group) to share best practice, address barriers, and support departments to embed cost ownership in service governance, aligned to the Government Finance Function Strategy.
HM Treasury
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11 Conclusion Acknowledged
58th Report - Government services:…
Government Finance Function recognises need for significant upskilling and data-driven improvements.
We were pleased to hear that the Government Finance Function (GFF) recognises the need for a significant shift.23 It told us that it has conducted an internal skills assessment and will recruit additional experts to help 13 Qq 147, 148 … Read more
Government Response
Capability will be strengthened through the Government Finance Academy and peer support via the Finance Foundations Group, with departments piloting the standard and sharing lessons learned.
HM Treasury
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14 Conclusion Acknowledged
58th Report - Government services:…
“Quick wins” often mask persistent issues like poor data quality and cultural barriers.
“Quick wins” can be valuable. However, we are concerned that they often mask deeper and more persistent issues like poor data quality and entrenched cultural barriers. As the Cabinet Office has itself identified, these will need ongoing tenacity and effort … Read more
Government Response
The government agrees with the Committee’s recommendation. They will implement practical costing guidance by July 2026, which will sit alongside Managing Public Money and Value for Money.
HM Treasury
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15 Conclusion Acknowledged
58th Report - Government services:…
Lack of common data standards complicates cost analysis, requiring cultural and process reforms.
The lack of common data standards across government further complicates benchmarking and granular cost analysis because it makes data more difficult to analyse and interpret.35 GFF told us that the introduction of new Enterprise Resource Planning systems and new data … Read more
Government Response
The government states that consistency will be supported by the NOVA reference model, rollout of common ERP solutions, and a common chart of accounts.
HM Treasury
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Government Response AI assessment · 46 of 29 classified
Accepted 19
Accepted in Part 8
Acknowledged 10
Deferred 1
Not Addressed 3
Rejected 5
Total 29 recs + 17 conclusions
Correspondence 9 letters
27 Apr 2026 From committee Letter to the Permanent Secretary to HM Treasury relating to Treasure Minute response - Government Services identifying costs, 27 April 2026
Parliament page
27 Apr 2026 To committee Letter from the Permanent Secretary to the Department of Science, Innovation and Technology relating to Treasury Minute response - Government Services: Identifying costs
Parliament page
27 Apr 2026 From committee Letter to the Permanent Secretary to HM Treasury relating to Treasury Minute response - Government Services: generating income, 27 April 2026
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12 Mar 2026 To committee Letter from the Permanent Secretary at the Department for Science, Innovation and Technology relating to recommendation 3a of the Committee’s Fifty-eighth Report on Government services: Identifying costs, 23 February 2026
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1 Dec 2025 To committee Letter from the Permanent Secretary at HM Treasury relating to the Committee’s evidence session on Identifying costs and generating income on 20 October 2025 along with the draft checklist for fees and charges, 24 November 2025
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1 Dec 2025 To committee Letter from the Chief Executive of the Driver and Vehicle Licensing Agency relating to the Committee’s evidence session on Government Services: Identifying Costs and Generating Income on 16 October, 24 November 2025
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13 Nov 2025 To committee Letter from the Permanent Secretary of the Cabinet Office to the Chair relating to the Committee’s inquiry into Identifying costs: Government Services, 04 November 2025
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13 Nov 2025 To committee Letter from the Director for Digital Strategy and Assurance of the Department for Science, Innovation and Technology relating to an Update on Chief Digital Information Posts 2025 following up from the Committee sessions on 16 and 20 October, 04 November 2025
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3 Nov 2025 From committee Letter to the Chair relating to Committee hearing: Identifying costs and generating income, 24 October 2025
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