accepted from the contractor. The Director has stated that detailed requirements for testing and commissioning will be included in the General Specification for cold storage and air-conditioning installation which is now being ed, and that the site supervisory procedures have been streamlined.
134.
Heads 41, 104, 172 and 176 – Subventions.
135. Deferment of action in setting out the Government's policies and procedures for the control of subventions. In my previous report I referred to the several occasions during the past 16 years when I had raised the matter of the inadequacy of the guidelines on the administration of subventions and of clearly defined conditions attaching to each subvention or type of subvention, and of the slow progress to remedy the inadequacies in a number of areas. The areas still outstanding at the time of my previous report were:
--the need to produce general guidelines on the control of miscellaneous subventions;
-the need to revise and update the notes for guidance on subvented medical and social welfare organizations; and
—the need to prepare guidance notes for accountants and auditors of all subvented organizations.
The Deputy Financial Secretary gave evidence on the subject at a public hearing of the Public Accounts Committee held in November 1984. He explained that the main cause of the slow progress over the past 16 years was the size and the extent of the subject. He stated that, nevertheless, quite a lot had been done, and considering the amount of funds involved, expenditure on subventions was reasonably well controlled. He also stated that he would reconvene the working party on the administration of subventions and that the matter would be given priority.
136. In concluding their deliberations on the subject the Public Accounts Committee endorsed my remarks that the exceptionally slow progress on a matter of such importance was not one that would help to enhance the Government's reputation for speedy administration. The Committee stated that they were not persuaded by the explanations given for the lack of action on this matter although they noted the defence offered by the Deputy Financial Secretary that there was no evidence of a loss to revenue as a result. The Committee recommended that the working party should be reconvened at an early date to consider and to make recommendations on the outstanding areas, and to draw up a timetable for the completion of the various tasks.
137. The latest position is that the background and history of miscellaneous subventions policy has been researched and action is being taken to document the existing practice and to examine the policies and practices with a view to producing guidelines. The notes for guidance on subvented medical organizations have been updated in draft but I am informed that they will need to be examined further in the light of the recommendations in the report to be submitted by the consultants engaged to review the delivery of medical services. Action has still to be taken to revise and update the notes on subvented social welfare organizations but I am informed that action will be taken once the review of the standard cost subvention system introduced in 1982 has been completed. Action has also still to be taken to prepare guidance notes for accountants and auditors of all subvented organizations. The working party on the administration of subventions has not yet been reconvened.
138. Slow progress and delays in taking action on formulating a detailed policy on the subventing of insurance premiums and in devising a system by which the various risks can be covered at minimum cost. In my previous report I also noted that deferment of action was also a feature of a specific aspect of subventions policy which had caused unnecessary expenditure of public money. I had drawn attention in my report for the year ended 31 March 1980 to the substantial savings that could be achieved if the Government, instead of paying subventions to aided schools to cover their individual employees' compensation insurance premiums, either took out a consolidated policy to cover the risks or accepted liability itself. The Government's thinking at that time was to consider the suggestion in a broader context and in response to the Public Accounts Committee's recommendation that an early decision should be taken on the matters involved, the Government Minute of 20 March 1981 stated that the Government was actively considering the possibility of removing the payment of various insurance premiums from the list of items eligible for Government subsidy and for the Government either to carry the risk or to cover the liability with a consolidated policy. Consideration within the Government proved to be slow however, and in my report for the year ended 31 March 1984. I stated that I had reminded the Deputy Financial Secretary of the financial consequences of the failure to take more intensive action to deal with the matter.
139. The Public Accounts Committee again examined the subject at a public hearing in November 1984 at which the Deputy Financial Secretary gave evidence. The Deputy Financial Secretary explained that one of the reasons for the delay was the need to rethink the policy on the matter, which was complicated, and there were intricate legal questions to be resolved. The Committee emphasized that the Government was reimbursing in full the cost of the insurance premiums paid by the subvented organizations and it was important to ascertain whether the present arrangement was the most cost-effective. It seemed to the Committee that it was a simple matter to decide, yet little basic research had been done; even if it was found that a single consolidated policy was useless, at least it would have been found out why it was useless and what the disadvantage was against the advantage. The Committee expressed their concern that what appeared to be a relatively straightforward problem had taken more than four years of deliberation, without any achievements in terms of insurance premiums saved. The Committee noted the commitment given by the Deputy Financial Secretary to reconvene the Standing Committee on the Administration of Subventions and to put forward a proposition to it within six months.
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