Budget Forecasts

One of the most contentious and closely scrutinized areas of any public inquiry is its costs. Parliamentary questions are regularly tabled on many, indeed every, area of expense and proper lines of reporting must be established between the public inquiry’s secretariat team and its ‘customers’, both internal and external. It is normal practice for the inquiry to publish a summary of the public inquiry’s accounts in the final report.

Responsibility for costs

Although the Permanent Secretary of the sponsoring department, as Accounting Officer, is likely to have ultimate responsibility for the costs, in practice this is likely to be delegated to the Chairman, formally or informally, and through him/her to the Inquiry Secretary. Under the Inquiries Act 2005, public inquiry Chairmen must have regard to costs in conducting the inquiry and Cabinet Office guidance stipulates that Chairmen of inquiries not set up under the act should have similar regard. It is, perhaps, unlikely that the Chairman himself will be financially qualified and will thus rely heavily on the advice of the Inquiry Secretary and secretariat team. The importance of accurate forecasting and professional financial management may need to emphasised to the Chairman. The Chairman must recognise his role, not only taking the lead but also being seen to do so.

It is absolutely vital that a commitment is obtained at the outset from the sponsoring department to adequately fund the public inquiry. In its initial stages it may be extremely difficult to gauge the overall projected costs accurately because of unknown or variable factors. Indeed forecasts may be required even before an inquiry’s terms of reference have been definitively established. In such a case it may be necessary to undertake various scenario planning exercise and draft variant budget forecasts, which can inform the Chairman and the Secretary of State as appropriate. The sponsoring department is required to approve any preliminary budget. This is not to put constraints in the independence of the inquiry but to ensure the effective use of public funds.

It is conceivable that the sponsoring department may seek to set a budget for the public inquiry itself. In such cases the Chairman must take appropriate steps to satisfy himself that it is realistic and practically achievable given the agreed terms of reference and scope of the inquiry.

In order to be in a position to do so, it is absolutely vital that the secretariat team has the requisite accounting and project management experience from the outset. Whilst it is accepted that such skills can increasingly be found within the Civil Service following its continuous process of reform over recent years, it may be prudent or even necessary to look to recruitment from the private sector to compliment the administrative expertise of the Civil Service with commercial experience.

Legal fees

It is highly likely that biggest single area of expense for any public inquiry will relate to legal fees. Principally this comprises of two areas: the inquiry’s own expense for Counsel and Solicitor and awards of public funding to core participants, supplemented by support for individual witnesses (which will be determined by the public inquiry’s costs protocol). They are also an area that is likely to receive particular attention in Parliament and in the press. All legal fees therefore demand extremely close scrutiny from the outset. It should be the responsibility of the Solicitor to the Inquiry to assess and authorize all bills for legal work delivered, requiring detailed signed timesheets to ensure that all work done falls within the scope of that for which funding has been approved. Current departmental guidance suggests that VAT is not recoverable by public inquiries and therefore this needs to be factored into all appropriate areas of expense.

Budget forecasting challenges

By its very nature the budgetary forecasting for public inquiries is something of ‘black art’ as there are so many possible variable elements that may need to be taken into account, such as legal challenges which may not appear until an advanced stage in the public hearings; multiple anonymity requests or delays in the report writing process such as those faced by the Bloody Sunday Inquiry. To counter this, is necessary to devote considerable attention to currency of the assumptions underlying the forecasted projection and accept that these can potentially change on almost a daily basis at times. As the public inquiry’s budget forecast will form possibly a significant element of the sponsoring department’s funding allocated under HM Treasury’s spending and comprehensive spending reviews, it is vital that forecasts are as accurate as possible. A public inquiry may typically agree to report on its budget performance and forecast on a monthly basis. It can thus be seen that establishing close links with the sponsoring department is of great importance.