Committee publication · Correspondence · 1 December 2025
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
From: Public Accounts Committee
Inquiry: Government services: Identifying costs and generating income
Summary
Treasury Permanent Secretary James Bowler responds to the PAC's October 2025 evidence session on government fees and charges. He transmits a draft checklist template for approving new fees and charges proposals, and outlines Treasury changes to the Government Efficiency Framework to better align incentives for cost savings between taxpayers and fee-payers, allowing departments to count evidenced efficiency gains as reportable savings.
Key findings
- Treasury will distribute a formal template for fees and charges approval via Dear Accounting Officer letter, addressing PAC recommendations
- Updated Government Efficiency Framework (end November 2025) now permits departments to count technical efficiency savings in fee-funded services as monetisable non-cashable efficiencies, provided fees are reduced and savings evidenced
- New framework addresses gap in incentive structure: previously, legal requirements to pass all cost reductions to fee-payers weakened efficiency incentives compared to tax-funded services
- Draft checklist requires departments to confirm full cost recovery methodology, legal powers for charging, distributional impacts, and forecast costs before submission to HM Treasury
- Changes enable Parliament and public to track and audit how public bodies achieve efficiency savings benefiting both taxpayers and fee-payers toward official efficiency targets
Tone
ProceduralTopics
Key actors
James Bowler, Sir Geoffrey Clifton Brown, HM Treasury, Public Accounts Committee, Comptroller and Auditor General, Treasury Officer of Accounts, Treasury Select Committee
Notable line
“Efficiencies may allow reductions in subsidies to the service to benefit of the taxpayer or reduction in charges to the benefit of the service user.”
Key Quotes
“… there remained a gap in incentives due to the requirement in law that any efficiency in service delivery that resulted in reduced costs must be passed on to a fee payer thus weakening the incentive on Departments to achieve efficiencies in respect of fees funded services compared to those funded form general taxation.”
“This should mean that, in line with PAC recommendations, HM Treasury, Parliament and the public will be able to both track and hold public bodies to account on how they are achieving efficiency savings to both the taxpayer and the fee payer”
“Where the costs of delivering a fee or charge service have been reduced through a technical efficiency and the fees/charges have been reduced (in line with 6.2.2. of MPM) and this can be clearly evidenced; this can be included as a monetisable non cashable efficiency.”
Source · parliament.uk record ↗