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Annual Report and Accounts 2017–18

Annual Report and Accounts 2017– 18

The HOUSE of COMMONS:

Administration

Annual Report and Accounts

2017–18(for the year ended 31 March 2018)

Presented to the House of Commons pursuant to Section 1(3) of the House of Commons (Administration) Act 1978 and

section 3 (as amended) of the House of Commons (Administration) Act 1978

Ordered by The House of Commons to be printed 23 July 2018

Published by Authority of the House of CommonsHC 1381

© Parliamentary Copyright House of Commons 2018

This publication may be reproduced under the terms of the Open Parliament Licence,

which is published at www.parliament.uk/site-information/copyright

Financial Statements p8803.

04. Annual Report of the Administration Estimate Audit and Risk Assurance Committee p120

01.

Accountability Report p44

Performance Report p6

02.

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01Overview 8

Performance Analysis 18

Performance Report

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Foreword by the Clerk of the House

The past 12 months have been particularly challenging for the House Service. During this time, several of the risks we had identified have materialised. We have addressed the consequences and sought to learn lessons from these events. This should help us to mitigate risks in future and to better prepare ourselves to deal with handling similar incidents. I am delighted but not surprised that staff responded so effectively, and that our overall level of performance has been maintained but there is still room for improvement in the way we deliver our services.

On 22 March 2017, Westminster was the target of a terrorist attack which resulted in the death of five members of the public, and of PC Keith Palmer within the Parliamentary Estate. On that day, and the days that followed, staff across the House Service showed their professionalism, calmness and courage. Following the attack, the Speakers of the two Houses commissioned an external independent review of how the perimeter of the Parliamentary Estate is secured and protected. The recommendations of the review are being implemented, with many being achieved through a Security Programme which has been prioritised. In addition, the operation during and after the attack of Parliament’s Incident Management Framework was externally reviewed and action has been taken to implement the recommendations.

The announcement of a snap General Election in April 2017 came as a surprise, and managing the impact of the election, with little preparation or planning time, was a substantial challenge. This challenge was met by all parts of the House Service, who responded to it with enthusiasm, working together to deliver a good start to the new Parliament for new and returning Members alike. In particular, the New Members’ Reception Area, which operated in the first week after the election, demonstrated what can be achieved by colleagues across the House working together to deliver the best possible service to our Members. All staff involved in delivering the post-election service, in whatever capacity, should be rightly proud of their achievements.

The new Parliament had just begun when there was an attempted cyber-attack on our computer network. On 23 June 2017, the Digital Service discovered unusual activity and closer investigation confirmed that hackers were carrying out a sustained and determined cyber-attack in an attempt to identify weak passwords and gain access to users emails. Significantly fewer than 1% of the 9,000 accounts on the parliamentary network were compromised as a result of weak passwords. This successful defence from a cyber-attack has been enabled by the actions taken in the past few years within the Cyber Security Programme. An independent review reported positively that Parliament’s cyber security capability had significantly improved compared with three years before. The review also identified some areas for improvement.

In the autumn, following a number of allegations of bullying and harassment, including sexual harassment, concerning Members and Members’ staff, the cross-party Working Group on an Independent Complaints and Grievance Policy was established to tackle these issues. In February the House endorsed the recommendations of the Working Group, since when work which includes the establishment of a Behaviour Code for Parliament, an independent complaints and grievance scheme to underpin the Code, and a system of training to support the Code, has been ongoing and is reporting regularly to a steering group of Members. The House of Commons Commission established an Independent Inquiry into the bullying of House staff, following the testimony on the BBC’s Newsnight programme of some of our own serving or retired staff. I am determined that we will learn from where things have gone wrong in the past to make the House a workplace that is free of bullying and harassment, and where all are treated with dignity and respect.

I am naturally disappointed that for the seventh successive year, the Head of Internal Audit has only been able to offer a limited opinion in relation to the level of assurance. This is due to the acknowledged continuing weaknesses in the governance, risk management, and control framework, which impairs

Performance ReportOverview

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The past 12 months have been particularly challenging for the House Service ... Thanks to the efforts of staff ... our overall level of performance has been maintained.our effectiveness and has understandably led to this opinion. I note that this year it was a marginal decision that resulted in a limited opinion, which recognises that there are signs of improvement. However, more progress has to be made, and all staff are striving to make the cultural changes we have asked of them. As these embed in the coming year, our aim is to achieve a moderate opinion next year.

The events I have described above have attracted a lot of attention over the past year, but it is important to reiterate that, thanks to the efforts of staff, often in challenging circumstances, business as usual activity has continued and the House’s decision-making processes have operated effectively. New and returning Members have been able to set up their offices and perform their duties, and throughout the year, Members have been ably supported in their role by the existing services of the House. The focus of House business this year has been the UK’s withdrawal from the European Union. The Research and Information Team have compiled research briefings and obtained up-to-date material to inform debate on the very broad range of topics that are affected by Brexit, while Select Committees have held numerous inquiries and published reports on the impact of Brexit in their subject areas. This authoritative information has also been made available to the public via the UK Parliament website. The EU (Withdrawal) Act has been appropriately dealt with by Parliament, which has required much expertise from our Chamber Team and other teams. This is not the end of the Brexit process; our main task for the year ahead is to provide ongoing support to the House and its Members as the process continues.

Sir David Natzler KCB, Clerk of the House, House of Commons

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The changes we have put in place this year ... will improve how we deliver services in years to come.

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Introduction by the Director General

Over the past year we as a House Service have faced many pressures in delivering our mission of supporting a thriving parliamentary democracy. As an organisation we have had to start recovering from the five terrorist attacks which hit the UK in 2017, including the Westminster attack in March, and rethink how we protect those on our Estate. This year our staff have also supported Parliament during the snap General Election, dealt with a sustained cyber-attack and subsequent reprioritisation, and begun enacting the decision by both Houses on the Restoration and Renewal of the Palace of Westminster. More recently the issues raised in relation to bullying and harassment have highlighted the importance of our commitment to providing a working environment that is fair to all and where everyone is treated with respect and dignity. Meanwhile, throughout the year, we have also been addressing the recognised weaknesses in our management and governance processes, which inhibit our effectiveness.

The performance of our staff has had to meet these challenges as they arose over the year. The House Service has continued facilitating effective scrutiny and debate by exercising its functions with brilliant support for Members, as the process of leaving the European Union gathers pace. The legislative burden of this process in itself adds significant pressures to the workload of our staff, but has not detracted from their performance over 128 sitting days this year.

A particular highlight for me this year has been how we have been involving and inspiring the public. 2018 marks 100 years since Parliament passed a law which allowed the first women, and all men, to vote for the first time. We have been encouraging the public to celebrate this milestone by getting involved with Vote 100 events across the UK. We have continued to facilitate education tours, digital debates, and held the biggest-ever UK Parliament Week, with 4,569 activities reaching 350,400 people. Further to this, petitions continue to grow as a means to involve and inspire the public with 18 e-petitions being debated in Westminster Hall during 2017–18.

Our efforts in securing Parliament’s future have come to the forefront this year and will be a visible focus for many to come. Early in 2018 the Houses of Parliament took one of the most momentous decisions about the Palace itself in our history. Members of both Houses debated and subsequently agreed a way forward for the Palace of Westminster Restoration and Renewal Programme, and agreed to temporarily move out of the Palace while this takes place. Work is now ongoing

to set up a Sponsor Board and Delivery Authority, initially in shadow form, before the necessary legislation is enacted. This presents further challenges for our governance, making it essential that we increase the pace of improvement to our framework of governance, risk management and control.

In addition to Restoration and Renewal, our staff are undertaking several projects to maintain the Palace of Westminster before it is possible to decant. We have made much progress on the renovation of Elizabeth Tower, one of the UK’s most famous landmarks, and with the conservation of Westminster Hall, the oldest part of the Parliamentary Estate. There are many improvements that can be made to the Estate, but given both the limited capacity to deliver a large number of capital projects at one time, and a world in which Parliament has over a million visitors a year, it has been decided that only those projects which improve security, fire safety or health and safety should proceed.

During 2017–18 we placed a particular emphasis on our customers, our staff and the ways in which we work. We deliberately invested in three change programmes; accelerating our people change, investing in customer service and reviewing new ways of working. The three time-limited Director General programmes continued to help us make the transformational shifts, working together to deliver cultural change. The People Programme completed this year and its work to raise the profile and impact of people development across the service continues to be delivered.

The changes we have put in place this year, including introducing smart working pilots and also smaller innovations such as digital forms to reduce bureaucracy, will improve how we deliver services in years to come by giving our staff the tools to work in the ways which suit them best.

This year we have made progress towards improving our governance, risk management and control framework. This improvement puts us in a better position as an organisation to face the undoubted tests and demands that lie ahead in the coming years. We can see the initiatives of recent years beginning to bear fruit and where there has been improvement this needs to be embedded. However, in areas where the rate of progress has not been sufficient, action needs to be taken to address weaknesses, so that we can continue to be effective. We will not be complacent, and we will take the steps necessary to meet our challenges.

Ian Ailles, Director General, House of Commons

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Our strategy

The House Service mission is supporting a thriving parliamentary democracy. To help us achieve this mission our work focuses around three core objectives:

Facilitating effective scrutiny and debate – We will work as a team to support the business of the House. We will provide Members with outstanding professional expertise, advice, research, facilities and technology, based on a sound understanding of their needs and priorities. Whatever our role, we will be valued by Members for our expertise, empathy, innovation and customer service.

Involving and inspiring the public – We will open up the House of Commons to the public and show how it is essential to democracy, and changing for the better. Focusing particularly on the young and marginalised, we will create and promote opportunities to engage in the House’s work, make it relevant and accessible, and challenge misconceptions. We will facilitate representation and enhance the reputation of the House in the UK and internationally through our work.

Securing Parliament’s future – We will steer the House through the challenges it faces, balancing innovation with respect for cherished practices. We will work with the House of Lords to protect and enhance the physical fabric of the Estate, protect Parliament from threats and prepare for the future, while maintaining vibrant democratic processes. Whatever our role, we will respond flexibly to changing demands.

Vision for our people

The House Service and Parliamentary Digital Service together employ over 2,750 people. We have developed a powerful vision for people that underpins our goal of fostering a skilled, united and diverse workforce. We have also identified four core behaviours that all staff are expected to display in performing their roles. Creating specific behavioural guidance has many benefits. It provides a common framework for evaluating performance. It also supports our diversity and inclusion agenda, and helps us to challenge inappropriate behaviours.

Vision for people

We are proud to support Parliament and its Members. We are diverse, reflecting the public we serve, and work in an accessible and inclusive environment. We are impartial and put the customer at the centre of everything we do. We are collaborative and flexible, and all have a role in managing change and developing our services for the future.

We are engaged, have a healthy work-life balance and embody our values. Pay and benefits are fair and well-understood. We are all recognised and rewarded for what we do, understand each other’s contributions and treat each other with courtesy and respect.

We have diverse career experiences and want the best people to do the job. This means that we are a largely permanent workforce and have opportunities to develop at all levels, as well as welcoming people from outside and on short-term contracts.

We are empowered to challenge and take decisions based on role not rank, and are held accountable for what we do. We focus on people and outcomes. Our managers have the time, capability and support to manage well and drive performance. We have a coaching approach to people development and all take responsibility for our own development.

We have the skills and tools needed to help the House of Commons function effectively, are digital by default and spend money wisely. We invest in and support the variety of specialisms needed by the House and listen to and learn from others. We can work at pace, have a culture of innovation and take appropriate risks to deliver.

Behaviours

Ambitious – we aim high

Collaborative – we work together

Helpful – we help our customers and each other

Proactive – we deliver

Performance Report

Supporting a thriving parliamentary democracy

Fostering our skilled, united and diverse

workforce

Maximising the potential

of digital

Putting the customer at the centre

Spending money wisely

Working impartially, inclusively and in

partnership

Demonstrating our values

Facilitating effective scrutiny and debate

We will work as a team to support the business of the House

Involving and inspiring the public

We will open up the House to the public and show how it is essential

to democracy

Securing Parliament’s future

We will steer the House through the challenges it faces, and

prepare for the future

Our objectives

Reputation of the House of

Commons

Satisfaction of our internal and external customers

Sustainability and the value for

money of our services

Impact of MPs’ work on

Government anad wider public debate

To achieve

Collaborative We work together

Ambitious We aim high

Helpful We help our customers

and each other

Proactive We deliver

Through our behaviours

HOUSE OF COMMONS STRATEGY 2016-2021Performance Report

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Valuing Others

The House of Commons Service is committed to providing a working environment that is fair to all and where everyone is treated with respect and dignity. Each of us is responsible for sustaining this environment through how we behave towards each other and what we do every day. The Valuing Others policy sets out the expectations for all staff working in the House Service.

The purpose of the Valuing Others policy is to set out the rights and responsibilities of employees and managers to ensure that we are able to work in a positive environment, free from unacceptable behaviours such as discrimination, harassment, bullying and victimisation, and feel valued for the work we do.

About the House of Commons Service

There are dozens of activities that need to be undertaken every day to ensure that the House of Commons can function effectively and efficiently. This section describes the work undertaken by the 2,750 people who work for the House of Commons Service and the Parliamentary Digital Service.

Ensuring that the Chamber and committees function effectively First and foremost, we need to ensure that the House of Commons Chamber, the debates in Westminster Hall and all committee meetings can function effectively. This means having the right people in place to provide expert and impartial procedural advice for Chairs and Members, and preparing and publishing all the business papers before and after each sitting. Live feeds of these proceedings are produced for TV and online broadcasting, and an authoritative official record is rapidly compiled in Hansard.

Providing the facilities we all need to work Behind the scenes, we need to ensure that Members, their staff and House Service employees have the right accommodation and equipment to do their jobs: clean, safe and secure offices and meeting rooms, a secure and resilient network infrastructure, and the technology and systems we all need to support our work. We provide catering services across several venues in different buildings from early in the morning until late at night. We work closely with the police to ensure the security of those on the Parliamentary Estate by managing perimeter controls, searching and screening visitors, delivering a range of internal security measures and providing security support for Members working away from the Estate. We manage the efficient delivery of items, ranging from

mail and newspapers to food and IT equipment, into and across the 16 different buildings that make up the Parliamentary Estate, and safely remove waste out of the Estate.

Providing information Information and communication are central to the work of the House of Commons. Committee Office staff ensure that select committee members are well briefed and supported in conducting evidence sessions and producing reports, while the House of Commons Library provides a wide range of research briefings for all Members in relation to legislation, debates and other topical issues, which are published on our website. The Library also responds to research enquiries from individual Members and their staff. The UK Parliament website is managed by the Parliamentary Digital Service. We also have a broad range of social media accounts that allow the House to communicate with the public about the many different activities taking place here. Our Communications Office manages corporate media engagement and also ensures that Members, their staff and House Service staff are kept well-informed at all times.

Engaging with the public Involving and inspiring the public is a key part of our strategy. We strive to provide a warm welcome to everyone who visits Parliament, whether for democratic access, official business, tours or educational visits. Beyond Westminster, we run outreach and engagement events across the country for children, for community groups and for university students, to explain how Parliament works and how they can get involved. We provide opportunities for the public to participate in parliamentary business, including through e-petitions, interaction on social media and submissions to select committees.

Managing resources We need to manage our resources wisely: our people, our money and our Estate. People are our greatest asset. We must train and develop our workforce so we have the capacity and capability to deliver our strategic objectives, recruiting where necessary. We also need to plan and monitor our expenditure, pay our employees and suppliers and handle our income efficiently. The Palace of Westminster is a Grade 1 listed building and a UNESCO World Heritage site. This, and the other buildings that make up the Parliamentary Estate, need to be maintained on a daily basis to ensure they remain a safe and functional place for all. At the same time, we are also planning and undertaking major refurbishments and upgrades of the fabric and infrastructure of the Estate.

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Annual Report and Accounts 2017–18©

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15 627Pages of Hansard published

1 08Visitors to Parliament

26 197Research enquiries answered by the Commons Library

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173Select committee reports published

2 752people employed by the House of Commons and Digital Service

96 857Education visitors to Parliament

245 8Gross resource expenditure

26 5Views on Parliamentlive.uk

17 5Total income

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15 627 17 712Passholders with access to the estate

76 463Parliamentary questions tabled

Snapshot - 2017-18 in numbersPerformance Report

86 389Cases dealt with by Digital Service Desk

194 2Capital investment

1 192Media enquiries answered

1 46Meals served

128Sitting days in the main chamber

37 389Maintenance cases fixed

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Performance Analysis

Performance summary

We are still developing our strategic performance framework (see page 36 for more details) but we now have new sources of information becoming available that are helping to inform us how we are doing and how we may need to adjust our efforts as a result.

Finance

The table below summarises our resource and capital expenditure for 2017–18. More information about this is contained in the in the Statement of Parliamentary Supply and the accompanying commentary on pages 77 to 83.

Estimate£million

Outturn£million

Variance£million

Gross resource

expenditure 273.9 248.2 25.7

Income (18.1) (17.5) (0.6)

Transfer of estimate

- (2.0) 2.0

Net resource expenditure

255.8 228.7 27.1

Capital expenditure

202.7 194.2 8.5

Strategic outcomes

We already measure the satisfaction of many of the services we provide, and are extending both the range and quality of this work in 2018–19. Satisfaction of those visiting Westminster on commercial tours (a composite measure of satisfaction with the tour itself, the booking process, the service provided by our Visitor Assistants, and TripAdvisor scores) was regularly above 95% during 2017–18. More information about education tours and outreach work is provided on pages 24 to 27. We also measure satisfaction with internally-provided services such as maintenance (94% for the year) and catering (86% in the November 2017 snapshot).

1 www.parliament.uk/documents/commons-commission/Commons-Management-Board/Corporate-Business-Plan-2017–18.pdf 2 Note 16 of the accounts on page 118 details the shared services between the Houses.

We measure impact through quarterly case studies. Two of these are included in this report – the Work and Pensions Committee’s inquiry into Universal Credit (page 20) and UK Parliament Week (page 26). We also measure the impact of our outreach and engagement work and this is described in more detail on page 36.

We did some pilot work to help us understand how to measure reputation late in the financial year, and we will build on this in 2018–19.

The focus of our sustainability measures is on our people, our finances and our environmental performance. Our people measures include sickness absence (an average of 6.6 days per person per year) and staff turnover (within the range of 11-12% for most of the year). We measure our financial sustainability by monitoring our spending and compliance with internal policies. Financial forecasting was particularly difficult in 2017–18 due to uncertainty around accommodation and delays with major estates projects and programmes. More narrative on outturn and variances is provided in the Statement of Parliamentary Supply Commentary on pages 82–83.

Our four long-term environmental targets are carbon reduction, a reduction in water usage, reduction in waste and increase in recycling. At present we are on target with reducing carbon and water but are under-performing on waste and recycling. More information about our environmental performance is available on pages 39 to 42.

Business plan achievements

This section explains the work that has been undertaken to meet our strategic objectives outlined on page 12, focused around delivering the commitments contained in the House of Commons Corporate Business Plan for 2017–181.

Certain services based within the House of Commons Service are undertaken on behalf of both Houses2.

The two Houses have joint stewardship of the Palace of Westminster and joint responsibility for many parliamentary services including the Digital Service and Security Department. Each House also incurs administration costs on the other’s behalf and these are recharged. While costs are strictly apportioned

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between the two Houses (the Accountability Report and the Financial Statements starting at page 46 reflect the House of Commons share only unless stated otherwise) the performance analysis relates to the services and activities as a whole.

Facilitating effective scrutiny and debate

General ElectionOn 18 April 2017 the Prime Minister announced that a General Election would be held on Thursday 8 June. In contrast to the 2015 election, where there had been many months of planning, this time the House Service had just over seven weeks to prepare and deliver a range of election-related services. Given the short timescale, provision was modelled closely on that offered in 2015. While support for new and returning Members was a priority we also needed to address the needs of standing-down and defeated Members.

Once again we used a network of ‘buddies’ – staff trained in customer service and in the workings of different parts of the House – to support 99 new Members3 in the days and weeks after the election. They were supported in this work by an updated ‘iBuddy’ app (developed by the Digital Service) to provide key information about parliamentary rules, groups and events. A key part of the preparations was the New Members Reception Area set up in Portcullis House. This provided a wide range of services, allowing new Members to meet their buddy, receive their pass, sign up for pay and expenses with the Independent Parliamentary Standards Authority (IPSA), receive their IT equipment and register with the Travel Office. Nearly 300 volunteers from the Civil Service attended a ‘dress rehearsal’ to listen to a practice Chamber briefing, test the swearing in process, and act as new Members to see how the New Members’ Reception Area handled them. At the same time we provided a range of services for the 31 Members who stood down at the election and the 67 who were not returned4.This included providing advice about winding up their offices at Westminster and in their constituencies, how to advise their staff, returning IT equipment and pension matters.

3 87 Members were newly-elected and a further 12 former Members returned to the House after not serving immediately prior to the election.

4 One seat was already vacant; a by-election had been scheduled in Manchester Gorton but his was cancelled when the General Election was called.

Sarah Principal Clerk of Select Committes

None of us expected a snap election to be called in 2017, and many of us found our work schedule and responsibilities change overnight. As the Senior Responsible Owner for House of Commons General Election planning, I relied on people dropping everything they were doing and making sure that all tasks were completed on time – such as producing dissolution guidance, training our buddies for new Members, and setting up all the services delivered through the New Members’ Reception Area. The need to respond to this challenge created opportunities for many of our employees to gain experience working in other teams, in a truly collaborative way. It was a brilliant team effort, which was greatly appreciated by new Members. The story of the 2017 General Election is one that demonstrates what we can achieve together as a House Service, working closely with our colleagues in the Parliamentary Digital Service.

2017 General Election: A truly collaborative effort

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Support effective committeesDuring 2017–18 we have supported select committees in their work to scrutinise the Government: by planning and facilitating evidence sessions, preparing briefing material, organising opportunities for the public to engage with inquiries and in promoting their work through the media, website content and social media. Some 936 select committee meetings took place in 2017–18, and 173 reports were published. (These figures are lower than a typical year because of the break in activity caused by the General Election.)

Several committees have examined aspects of preparations for and implications of Brexit in addition to the work of the Exiting the European Union Committee (which has focused mainly on the process of leaving). These include: the Environment, Food and Rural Affairs Committee looking at prospects for the UK fishing industry; the Health Committee looking at the impact on the supply of medicines after Brexit; and the Home Affairs Committee looking at immigration and at policing. In addition to scrutinising the work of government departments, some inquiries are prompted by current events, such as the Government’s response to the hurricanes in its Overseas Territories (Foreign Affairs Committee), or the collapse of Carillion (a joint inquiry by the Work and Pensions Committee and the Business, Energy and Industrial Strategy Committee).

It is difficult to measure the impact the work of select committees has had on public policy – not least because changing policy can be a long and complicated process. However, there are many examples where select committee reports have caused the Government to change its approach. One such example is that of the inquiry into Universal Credit undertaken by the Work and Pensions Committee. The Committee had not been satisfied by changes announced by the Government, and decided to focus on pushing for change in the upcoming Budget. In October 2017 they agreed a unanimous report5 with one strong recommendation: that the Department for Work and Pensions (DWP) should cut the standard initial wait for first payment from six weeks to a month. A debate on the report was held in backbench time a week before the Budget, and the House unanimously backed the Committee’s Motion. In the Budget the Government announced a set of measures that exceeded the Committee’s recommendation. Not only was the initial wait reduced but more financial support was made available to new claimants.

5 https://publications.parliament.uk/pa/cm201719/cmselect/cmworpen/336/336.pdf6 www.commonslibrary.parliament.uk/brexit7 www.legislation.gov.uk

We have worked to strengthen the relevancy of select committees by monitoring and benchmarking media coverage, website content and social media activity.

We have also responded to research undertaken by the Institute for Government that looked at how committees could measure their effectiveness. We capture feedback from Committee members and witnesses and use this to refine our services.

Support the legislative processThe UK’s withdrawal from the EU continues to take centre stage in the work of both Houses of Parliament. There have been (and will continue to be) complex legislative processes to oversee in the Chamber and in committees, and Members require expert advice at all stages. At the same time we also need to report and broadcast some of the most high-profile debates seen in Westminster for some time.

The Commons Library’s main Brexit site6 contains a wealth of information for Members, their staff and the public at large about the legislative process for withdrawing from the European Union, the negotiations themselves, and the likely impact on different parts of the economy. The Commons Library has also created reading lists for those wanting to see what others have written on the topic. Our ‘Procedural Hub’ in Portcullis House provides a new one-stop shop for Members to obtain advice. We are also investing in the skills and expertise of the staff who work in Chamber and committee roles. The work of our Customer Programme (see page 33) is enabling us to respond to new requirements of the House and changing expectations of Members.

We have been developing plans to introduce new Bill drafting, amending and publishing software. Currently, a range of different tools are currently used to prepare and draft legislation, amend it during its passage through Parliament, publish it on the main UK legislation website7, and finally to archive it. Back in 2013, a programme was established to test the feasibility of a browser-based drafting tool for UK and Scottish legislation that could support the end-to-end process. The programme involves both Houses of Parliament, the Scottish Parliament, the Office of the Parliamentary Counsel, the Scottish Government’s Parliamentary Counsel Office, and The National Archives. Following a procurement process, a preferred bidder has been identified to further develop the service and on-going support. This will now move forward to business case approval in early 2018–19.

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Lucy Select Committees Media & Communications Officer

I travelled to Washington DC to facilitate media coverage of the public evidence session held there on 8 February 2018 by the Digital, Culture, Media and Sport Committee as part of its high-profile inquiry into fake news and misinformation. Working closely with a range of other teams and colleagues at Parliament, I helped to coordinate the live broadcasting of this session, during which the committee took evidence from major news organisations, data experts, social media companies and technology firms.

In a fascinating session, Facebook, Google, Twitter and YouTube were questioned on their handling of personal data and their plans to tackle fake news. The session was a great success, attracting global media attention. Representatives from Facebook were also asked about data company Cambridge Analytica weeks before the Observer/New York Times story broke in mid-March, propelling questions over their use of personal information onto the global stage.

Supporting a select committee session overseas

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There’s a lot of uncertainty and complexity with Brexit, so independent analysis has become increasingly important in explaining what’s happening. Working as a researcher in this environment is fascinating but it also adds pressure. We have to react to events quickly and produce things at short notice. And that’s not so easy when you have small children! Over the summer we had to produce a large research briefing on the European Union (Withdrawal) Bill just before the Members came back but, of course, it was the school holidays. I think that was the busiest August I’ve ever had and the hardest that I’ve ever worked.

Jack Commons Library Researcher

Research for the EU Withdrawal Bill


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Deliver authoritative and engaging information and adviceIn March 2017 we set up a programme to establish a Procedural Practice Centre of Excellence. The aim of this was to bring together a range of different initiatives intended to develop the expertise of our own staff and also that of Members and their staff in procedural matters. We want to ensure that Members can have confidence in the advice we provide and are equipped to undertake their roles of legislating and scrutinising the Government. We have now put the Procedural Practice Centre of Excellence onto a permanent footing, creating a role as the Centre’s Director, co-ordinating activities, developing new services, and ensuring quality.

One of the workstreams of the Centre of Excellence has been to develop a ‘plain English’ guide to House of Commons practice and procedure. Although Members can find out about procedure from Erskine May and Standing Orders, these are not always the quickest or most practical sources of information. It is not just Members who need access to this information but often their staff too. The guide will also be of interest to people whose work relates to Parliament, such as political journalists and civil servants. The online guide is written in plain English and is intended to be practical, comprehensive, up-to-date and accessible. At present the guide covers five areas:

• Bills and delegated legislation

• Early Day Motions

• Questions

• Petitions

• Statements

More sections are due to be added in 2018–19.

The demand for our research service expertise has continued to grow. In the nine months from July 2017 to March 2018 (i.e. discounting the election period), the Library answered 22,269 research enquiries - 5% higher than the same period in the previous year, and the busiest- ever nine-month period recorded by the Library. Part of the growth in demand has been due to Brexit, but this has been very much in addition to requests on other subjects.

During 2017–18 we have continued with our ‘constituency roadshows’ hosted in different parts of the country. These provide an opportunity for Members’ staff who are based in constituency offices, and who rarely visit Westminster, to learn about the services available to them. Over the course of the year we visited 15 towns

and cities across the UK, including Glasgow, Cardiff, Sunderland and Lisburn, as well as holding several events at Westminster. We met over 440 of Members’ staff to advise on a range of topics including research and information, digital services and security.

Towards the end of the financial year we piloted an induction event for Members’ staff based at Westminster. While these staff are employed by individual Members and not by the House Service we want to do all we can to help them familiarise themselves with the way the House of Commons works and ensure that they are aware of the services available to help them support their Member. Feedback from these events has been very positive and the pilot will become a mainstream activity in 2018–19.

Members and their staff increasingly consume our research outputs by digital channels rather than in hard copy. To support transition we have enabled briefings from both the House of Commons Library and the Parliamentary Office of Science and Technology (POST) to be mobile-friendly.

Provide essential technologyThe Parliamentary Digital Service provides hardware, software, digital services and support for approximately 9,000 network users: Members of both Houses and their staff, staff of both administrations and the Digital Service itself. In total, they use approximately 150 separate technology applications as a core part of their work at Parliament. These users require a diverse range of support services, which are provided 24 hours a day, 363 days a year.

On Friday 23 June 2017 there was a sustained cyber-attack on the Parliamentary Network. The whole of the Digital Service was diverted to customer support in the immediate aftermath of the attack while all non-essential project activity was suspended. There was a substantial amount of emergency activity, not all of which was negative. Some technical rollouts were accelerated and deployed more quickly than originally planned, such as multi-factor authentication (MFA). Other systems were taken offline temporarily. We detected the attack early, limited its impact and put huge effort into recovery, meaning that Parliament was able to sit as planned on Monday 26 June and only a very small number of accounts suffered data loss. More information about the cyber-attack is available in the governance statement on [page 62].

The cyber-attack, combined with the impact of the General Election, meant that the Digital Service needed to review its priorities for the remainder of the financial year.

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Behind-the-scenes network technology has been improved during 2017–18 with an upgraded infrastructure on the Parliamentary Estate. This has provided users with a faster, more secure and more reliable cabled network. Relocation of some digital services to a new data centre has provided additional resilience at a reduced cost. Space and power in the new data centre are charged on a pay-as-you-use basis so the facility can be scaled up or down according to demand. Overall the new data centre will provide a saving of £1.8 million over five years compared to the former service. We have continued to migrate services to Microsoft’s Azure cloud platform as Parliament’s primary data centre. This provides resilient, secure storage without having to buy and manage our own servers.

During 2017–18 the Digital Service started the technical work to enable the roll-out of Skype for Business, which provides instant messaging, voice and video calls and online meeting facilities. The Boards of both Houses determined that administration staff should use headsets in order to fully exploit the capabilities of Skype. By the end of March 2018, almost 2,000 administration staff were using Skype, along with a small number of Members from both Houses who are trialling the service in order to plan their roll-out in 2018–19.

We had intended that the roll-out of Microsoft Office 365 would be completed during 2017–18, but this work was affected by both the General Election and the cyber-attack. As part of the reprioritisation work, a revised success measure of 1,000 administration users was agreed, but in the event only 546 migrations had taken place. It is now expected that roll-out to administration staff will be complete by the end of December 2018, with Commons Members by March 2019 and Lords Members by June 2019.

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Involving and inspiring the public

Communicate proactivelyOur aim is to communicate proactively with the public in an open and transparent way to increase understanding of the role, work, value and impact of the House of Commons and its Members. Internally we are developing our approach to communicating effectively with Members, their staff and with colleagues across the House Service. The Communications Centre of Excellence is now providing a common framework to encourage collaboration, reduce duplication and improve impact in our communications work.

To further develop our approach to building public knowledge of and participation with the House, we have recognised the importance of understanding public perception of the House and its work. We are currently developing a framework for measuring public understanding of and attitudes towards the House led by our internal evaluation and insight specialists and partnering with external experts such as the Reputation Institute. The outcomes of this work will help shape the priorities and direction of our communications and participation activity in 2018–19.

In November 2017 the first of three television documentaries was broadcast, providing a behind-the-scenes view of the Elizabeth Tower (commonly known as ‘Big Ben’). ‘Big Ben: Saving the World’s Most Famous Clock’ featured the clock mechanics, engineers, scaffolders and historians involved in the running of the clock along with preparations for the major refurbishment programme (see page 28).

2018 marks the anniversary of landmark moments in the journey towards universal suffrage and the representation of all citizens in Parliament. Throughout the year the UK Parliament Vote 100 programme is celebrating these major milestones, and the contribution of women to politics in the UK, with a series of events, exhibitions and educational activities. More information about events throughout the year are available on our website8.

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The Representation of the People Act passed by Parliament in 1918 enabled women over 30 who met a property qualification to vote for the first time, and also extended the vote to all men over the age of 21. This paved the way for universal suffrage ten years later, through the Equal Franchise Act 1928. The

UK Parliament is marking these and other significant democratic milestones through Vote 100, a year-long public engagement programme featuring a range of exciting events and activities. The Vote 100 celebrations began on Tuesday 6 February 2018, the centenary of the Representation of the People

Act, with the BBC broadcasting live throughout the day from the Palace of Westminster and a special evening reception being held in Westminster Hall, which included addresses by the Prime Minister, the Speakers of both Houses and Jordhi Nullatamby, Member of the Youth Parliament for Thurrock.

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Michelle Campaigns Team

I am really proud to have been part of the team that delivered the biggest ever UK Parliament Week – our annual festival that enables people across the UK to engage with Parliament through local events and activities. We went from 311 events in 2016 to over 4,500 in 2017, reaching 350,000 people, and covering every one of the UK’s 650 constituencies. We developed 13 official partnerships with organisations including Girl Guiding and the Church of England, and we also created our first ever corporate partnership, with Lego. We created an innovative resource pack to encourage people to take part. These proved so popular that we had to reprint the packs not once but twice, to keep up with demand! Each pack was personalised and sent out by hand. The effort involved in creating and managing partnerships, and keeping our participants informed and engaged was massive, but it’s amazing what we can achieve when we get a campaign right. This year we’re aiming to engage half a million people in UK Parliament Week, so stay tuned!

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House of Commons Annual Report 2017

Publish open and accessible contentWe have continued to build and populate the new data service that provides data to the new parliamentary website currently in development (beta.parliament.uk). This is the infrastructure that underpins the user experience, focusing on the tagging and organisation of data. The first datasets were released to the new site during 2017–18:

• Members’ pages – the initial release of Members’ pages opened at the end of March 2017, and has been supplemented with new features including role history, a postcode search, contact information and constituency maps.

• Photographs of Members – the General Election and new Parliament provided an opportunity to take professional photos of Members immediately after taking the Oath of Allegiance. Out of 650 Members, the Digital Service photographed around 90% of Members in just two days. Members of the House of Lords were photographed later and again the turnout was high.

In September 2017 we launched our new website search service, providing a more up-to-date look along with new search technology behind the scenes. The old search function has now been turned off and the decommissioning of this service is the latest step in moving Parliament’s website services to new platforms. Aside from providing a better user experience the move to a cloud-based platform has reduced costs by around 75-80% compared to the previous non-cloud hosting contract.

Go to where the people areWhile continuing to provide a range of visitor services at Westminster, we also engage with people and communities across the UK. We work in partnership with a range of organisations, including tenants and residents groups, voluntary organisations, faith groups, youth groups, sports groups and many more. We provide a range of different workshops, covering the basics of how Parliament works, how to get involved in the political process, along with sessions tailored specifically to women’s groups and adults with learning difficulties. In order to extend our reach further we are now training others to deliver these workshops and other approved training to their own communities.

We ask people participating in our outreach events for feedback on what they had learned during the session. Over the course of 2017–18 as a whole, over 5,000 participants responded, with some 85% saying that

their knowledge of Parliament has increased ‘a great deal’ or ‘a fair amount’ as a result of the event.

In November 2017 we held UK Parliament Week, our annual flagship event for promoting awareness of, and engagement with, the UK Parliament. Since the first Parliament Week in 2011 we have changed the model of delivery, moving away from the hosting events primarily at Westminster and focusing instead on helping organisations to run their own events and activities across the UK. Our follow-up research indicated that organisations believed their participants had benefited from taking part in terms of enjoyment, awareness, knowledge and skills. The most cited benefit was an increase in knowledge about UK Parliament, democracy and politics, mentioned by 84% of partners who responded. This was followed by enjoyment (72%) and an increase in awareness of the work of Members and the UK Parliament (71%).

Focus on the young and marginalisedWe support teachers in their teaching of politics and the role of Parliament, and we encourage and help young people to get involved in the democratic process through the Education Service’s ‘Visit Parliament’ and regional outreach programmes. We also support Members from both Houses in their work with the public, especially young people. This work uses a variety of different channels including online interactive games and video packs for school age children and a range of teaching resources to be used in schools. We have also developed and implemented an MP/Peer engagement strategy, to increase their awareness of and involvement in our education and outreach work. One of the successes of 2017–18 has been the #LordsLive Skype sessions, where groups of children aged 10–18 can put their questions direct to a Member of the House of Lords live from their school hall. We have also produced a range of new teaching resources to support the Vote 100 anniversary commemorating the journey towards universal suffrage.

Feedback from teachers who bring students to Westminster on education visits is consistently high, with over 95% rating their visit as ‘excellent’ or ‘good’ overall.

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Create innovative ways to participateHouse of Commons e-petitions are now a firmly-established way in which the public can engage with Parliament. The Petitions Committee has the power to schedule debates on e-petitions in the House of Commons’ Second Chamber, Westminster Hall. It considers all petitions which receive over 100,000 signatures for debate. In deciding which petitions should be debated, it takes into account how many people have signed the petition, the topicality of the issue raised, whether the issue has recently been debated in Parliament, and the breadth of interest among Members. 18 e-petitions on a wide range of topics were discussed in Westminster Hall during 2017–18, including:

• Whether the UK should leave or remain in the EU, and whether there should be a second referendum.

• Abolition of the TV licence.

• Export of live animals.

• Sale of fireworks.

• Teaching of British Sign Language in schools.

For the last debate listed above the House of Commons provided simultaneous interpretation in British Sign Language for the first time ever.

The Digital Outreach team has continued to support Members to engage directly with the public by scheduling one-hour live digital debates on the House of Commons social media accounts. This enables members of the public to get involved and share their experiences and opinions on a topic scheduled for Parliamentary debate. Six digital debates took place in 2017–18: four for debates in Westminster Hall and two (for the first time) for Private Member’s Bills.

Securing Parliament’s future

Carry out and prepare for major renovation of the Palace of WestminsterThe Palace of Westminster Restoration and Renewal Programme was established to tackle the significant work that needs to be done to protect and preserve the heritage of the Palace of Westminster and ensure it can continue to serve as home to the UK Parliament in the 21st century and beyond. A Joint Committee on

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the Palace of Westminster was appointed in July 2015 to consider an independent options appraisal and make recommendations on a preferred way forward. The Joint Committee published its report on 8 September 2016. It concluded that the lowest risk, most cost-effective and quickest option to undertake these essential works would be for all Members, Peers and staff to move out of the Palace temporarily in one single phase. It also recommended that a clear decision on the next steps was needed without delay. The report contained a draft Motion recommending that a Sponsor Board and Delivery Authority be established as soon as possible.

In the event, it wasn’t until 31 January 2018 that the House of Commons debated the Committee report and agreed a Decision in Principle. (The parallel debate and agreement in the House of Lords took place on 6 February 2018). This inevitably limited the nature of work that could be undertaken in the meantime, focusing on preparatory work that was option-neutral.

In February 2018, the House of Commons Commission published a written statement9 outlining the next steps for the Restoration and Renewal Programme. This noted that a Sponsor Board and Delivery Authority would be established in shadow form. Until the shadow Sponsor Board is established the Programme will continue to be delivered under current governance arrangements. In the meantime, the Programme Team, supported by its client advisory services consultants, will continue work in the following areas:

• Further investigation and documentation of the current physical condition of the Palace of Westminster and its building services.

• Further studies on the feasibility of the Queen Elizabeth II Conference Centre as temporary accommodation for the House of Lords.

• Design of Richmond House as temporary accommodation for the House of Commons, which is being taken forward as part of the Commons’ Northern Estate Programme.

• Development of a client brief for the design of the works to the Palace of Westminster.

• The development of the required Outline Business Cases (OBCs), compliant with HM Treasury’s Green Book.

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• A further round of medium-term mechanical and electrical, public health and conservation work to mitigate the operational risks to Parliament presented by the condition of the building between now and the commencement of the construction phase of the Restoration and Renewal Programme.

A number of buildings on Parliament’s Northern Estate are in need of repair and refurbishment to ensure they can continue to support the conduct of parliamentary business. The building fabric of Norman Shaw North, Norman Shaw South, 1 Derby Gate and 1 Parliament Street are in need of refurbishment and the services are in need of a major overhaul. The Northern Estate Programme (NEP) will refurbish these buildings. NEP will also develop the additional space and facilities required for the House of Commons to decant from the Palace, including an operational Chamber, committee rooms and House support services. NEP is currently in the design planning stages for the individual Northern Estate buildings.

During 2017–18, negotiations with the Government Property Unit over possible decant accommodation in the Westminster area continued. Earlier plans to acquire space in 100 Parliament Street did not come to fruition. Instead, it was decided to use Richmond House (recently occupied by the Department of Health) as decant accommodation prior to being redeveloped for Restoration and Renewal. The Department of Health has, in turn, acquired 39 Victoria Street from Parliament.

In addition to these major strategic programmes, we have around 100 other projects running at any one time which are critical to maintaining the entire Parliamentary Estate in working order, including:

• Undertaking essential refurbishment of the fabric of the Palace of Westminster, including cast iron roofs and various stonework conservation projects in the courtyards.

• Urgent fire safety work, focusing on achieving a defined level of life safety before Restoration and Renewal.

• Renovating the Elizabeth Tower and the Canon Row building.

• Enhancing security around the Parliamentary Estate.

For information about the expenditure on the Restoration and Renewal Programme and on the Northern Estate Programme, see page 83.

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One of the most celebrated features in St Stephen’s Hall is a marble statue of ‘Lucius Cary, 2nd Viscount Falkland’ (1610–43), which was sculpted in 1847 by John Bell (1811–95). Many people over the years have shared the story that a suffragette protester chained herself to the statue and broke the sword. It was, in fact, the statue’s spur that was unintentionally broken off by the weight of the chain. However, the myth surrounding the broken sword grew over time, and the statue became a popular spot for people to stop for photographs, and even touch the sword. Perhaps unsurprisingly, the blade has been broken by accident on various occasions, most recently in 2017. The Curator’s Office has worked with specialist sculpture conservators to create a replica blade for the statute, which has now been installed. Repairs have also been made to the original marble blade, which will be kept safely in storage in a custom-built case, ensuring that this important piece of national heritage is preserved.

Conserving our heritage for future generations

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Maximising the potential of digital‘MemberHub’ is a new digital service for Members and their staff, supported by eQuestions and Motions (the application used by staff in the Table Office). Both are designed to help Members and House staff manage questions simply and more efficiently. The Digital Service worked with the Procedure Committee, the Table Office and the Procedural Publishing Unit to produce a new service that is optimised for tablet and mobile. This means that Members can:

• Submit oral or written Parliamentary Questions using their own secure logins.

• Search questions and track their progress.

• Receive automatic alerts that keep them informed of the status of a question (for example, if it wins a place in the shuffle - the daily randomised allocation of oral questions).

• Draft questions and ask colleagues to review before submitting for accuracy.

• Change staff access levels and tailor them as they wish. This means the account is both secure and effective as the right people can start submitting questions immediately.

The new system provides benefits for staff working behind the scenes in the Table Office too, by removing the need to transfer data between two systems, and making the workflow for reviewing and publishing questions easier to manage.

Information about papers laid before Parliament by Government Departments is available to Members, staff and the public via different business papers: Votes and Proceedings, Lords Business, Order Paper and the Statutory Instrument (SI) list. The ‘Papers Laid’ system is a new bicameral system which allows laid papers to be logged digitally. This has resulted in a reduction in duplication of effort between the two Houses.

Audio and video clips of parliamentary proceedings from the Chamber can now be downloaded from the parliamentlive.tv website. Clips can be downloaded from the live stream, as proceedings happen, and from the archive stretching back to December 2007.

The Digital Forms & Workflow Project was a small innovation project (below £50,000 cost). The first objective was to review existing paper forms and triage them against criteria including requirement to exist, option to merge and complexity to digitise. The second was to undertake proof of concept activities to confirm

that Microsoft PowerApps – an already-licensed tool operating on the MS Office365 platform – was a viable technology solution for larger-scale implementation.

The project to date has identified 26 paper forms to be withdrawn, 78 that are candidates for digitising and 157 that have been deemed out of scope against the criteria. MS PowerApps has been shown to be a good tool with which to digitise paper forms. A pilot was started in late March 2018, and a business case is being created for the fully scoped and funded project to continue during 2018–19.

Introduce new security and resilience capabilitiesThere is a delicate balance to be struck between the needs of democracy and security. During 2017–18 we started to implement the outcomes of the reviews from the terrorist attack on 22 March 2017. A new Security Programme and Board have been established to deliver and oversee Parliament’s response to the physical security recommendations arising from the Murphy review of perimeter security.

Work to enhance Members’ personal safety away from the Parliamentary Estate (originally called Project SAFE) has now been absorbed by the new Members’ Security Support Service. This brings together work to enhance physical security in Members’ constituencies (funded by IPSA) with guidance on personal security, online security and safety, and is provided in partnership with the Metropolitan Police.

We are pursuing Parliament’s interest in the increased pedestrianisation of highways around the Palace of Westminster, including through participation in Streetscape projects led by the Metropolitan Police and Westminster City Council / Greater London Authority.

To improve the security awareness, culture and behaviour of both Members and staff we have developed an online training module (‘Security Awareness on the Parliamentary Estate’) which was launched in October 2017. For House of Commons staff, this forms part of the ‘Essentials’ package that all staff must undertake each year. This is supported by a rolling campaign of briefings, publications and events as required.

Ensure our long-term financial sustainabilityWe are committed to spending money wisely and to the core principle that there should be an ongoing challenge to deliver efficiencies through a process of continuous improvement. The Finance Committee has agreed that we should continue to look for opportunities to make further efficiencies and ensure value for money in the delivery of services. To this end

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Parliamentary Digital Service

In June 2017, Parliament came under a sustained attack from a determined adversary. We know Parliament is a high-profile target for cyber-attacks, and a significant amount of work had already taken place to secure our services and users following the establishment of our comprehensive security strategy. The attackers tried to gain access to Parliamentary accounts by using thousands of

different passwords. This type of attack is known as “password spray”, with those most at risk being users with weak passwords. As technology evolves, Parliament will be able to move away from passwords, but while we continue to rely on them, we are only as strong as the weakest password set – and rules and standards can’t mitigate all risk. The Parliamentary Digital Service

worked around the clock throughout the weekend of the attack to secure parliamentary systems. Our efforts ensured that critical services were available and both Houses of Parliament were able to sit as normal the following Monday. It was a great example of how the work we do protects Parliament and supports our customers across both Houses.

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the bicameral Efficiencies Programme was launched in April 2016. The House of Commons was set a target of identifying savings of £15.5. million or 10% of the controllable budget. We are identifying opportunities to provide the same or better service for less. Where services are not well used or valued, or where the cost of a service is disproportionate to the outcome or value derived, we will discontinue them. Freed-up resources will then contribute to an overall reduction in the cost of Parliament or be used to fund new priorities. To date around £11.0 million has been identified, which primarily includes:

• £5.8 million from reviewing and reducing spending on a range of items including books, official publications, office supplies, uniforms, training, childcare, overtime, transport, management consultancy and third-party maintenance suppliers.

• £1.7 million from spare capacity and savings opportunities in certain budgets.

• £1.1 million from increased income generation (third-party banqueting events, visitor tours, catering, and rental income from commercial premises).

• £0.8 million from digital, such as reduced hosting and software costs and reduced contractor, / third party and in-house support costs.

• £0.7 million from developing new ways of working and using continuous improvement techniques to deliver efficiencies.

Further savings of £4.5 million are still to be identified and delivered by March 2020.

Our aim is that our commercial operations should deliver an increased net contribution to the House’s budget over time. One of the key planks of this growth as set out in our business plan was to extend our commercial visitor tours to some Sundays. In the event, we did not pursue this option because security considerations after the March 2017 attack meant the tours would not have been cost effective.

The contract for the provision of guides to take paid-for tours is due to end in October 2018, so in 2017–18 we reviewed the way in which guided tours operated throughout Parliament. This review covered democratic access, commercial and banqueting tours, but not the education tours offered through the Education Centre. The review recommended the creation of a trained

pool of full-time and part-time Visitor Engagement Assistants to conduct the majority of guiding within Parliament. These plans were approved by the Administration Committee (Commons) and Services Committee (Lords), along with the Commissions of both Houses. We will be recruiting and training new guides via a new Visitor Academy, with the new service launching in October 2018.

Improving our culture of complianceThe Commons Executive Board aims to develop an environment where all staff are aligned with the strategic direction of the organisation, as expressed in its policies and procedures. It is also the vision of the Board to remove barriers to compliance and gain sufficient assurance that we have effective governance arrangements in place. These efforts are strongly supported by the Administration Estimate Audit and Risk Assurance Committee (AEARAC), who are keen to see improvements in this area.

We have worked to improve compliance with the ‘Essentials’ – a package of mandatory training activities for all staff in the House of Commons. We have undertaken a range of communications activities to set out what is expected of staff, and why. At the same time, we have revised our online training modules to make it easier for staff to complete this training. Not all of our staff are desk-based, so we have made other arrangements for these staff to do their mandatory training. We now review compliance levels on a regular basis, identifying any areas of concern and addressing them as appropriate.

Working impartially, inclusively and in partnershipMany services in Parliament are already provided on a bicameral basis – for example, the Digital Service is a joint department of both Houses. While hosted in the House of Commons, Strategic Estates, Maintenance Service and the Security Department serve both Houses. Similarly, the Parliamentary Procurement and Commercial Service and the Parliamentary Archives are both hosted in the House of Lords.

In 2016 we established a Joint Working Programme with the House of Lords to explore options for further integration of activities. In the initial phase we reviewed which activities offered the most potential for joining up, and where the barriers to change were expected to be the lowest. As the work progressed it became clear that the barriers to merging activities, including catering and Hansard reporting, were more complex, and until such time as IT and staff terms and conditions were more closely aligned, formal joining would be

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difficult to achieve. The administrations of the two Houses had differing priorities and appetite for change, and agreed that the formal programme should close in 2017. Nevertheless, further opportunities for less formal joint working continue to be pursued as part of the Efficiencies Programme.

The ‘Improving Parliamentary Capability in the Civil Service’ project was a joint initiative between the Chamber and Committees Team in the Commons, the House of Lords and the Cabinet Office to promote a better understanding of Parliament across Whitehall. The project aimed to increase core capability and raise engagement at all levels of the Civil Service with a particular focus on the most senior civil servants. Some of the key successes have included:

• ‘Parliamentary Champions’ created in each government department, along with a buddying scheme linking these Champions to senior Commons and Lords staff.

• Annual events with top senior civil servants, including key speakers such as the Minister for the Cabinet Office, the Head of the Civil Service and the Clerks of both Houses.

• A new Parliament module included in the fast-stream induction event, which was judged ‘engaging’ or ‘very engaging’ by 92% of respondents.

• The Civil Service ‘Guide to Parliamentary Work’ has been updated with the support of staff from both Houses.

• House staff have been seconded to Civil Service Learning to support training for civil servants, including up to 2,500 recruits joining the Civil Service to support Brexit.

The project has now moved into business as usual and is looked after by the Commons’ and Lords’ Procedural Practice Centres of Excellence.

The Director General’s Programmes for 2017–18

During 2017–18 we put a particular emphasis on our customers, our staff and the ways in which we work. To help us make the transformational shifts we need – and to make them stick – we established three time-limited programmes, outlined below. The three Director General (DG) programmes are intended to work together to deliver cultural change.

Putting the customer at the centreThe Strategy for the House Service puts the customer at the centre, and one of our desired outcomes is to achieve the satisfaction of internal and external customers. In addition to Members, our customers also include Members’ staff, the public (whether as visitors or more widely) and our own staff as internal customers of others’ services. The Customer Programme has focused on ensuring that our services are appropriate, offer value for money, and help Members be effective in holding the Government to account and representing their constituents.

We know that we need to deliver services and interact with and listen to customers more consistently, as a single, seamless team; customers’ experiences rarely relate to just one part of the organisation. This involves cultural change but also putting more cross-service systems in place. In 2017–18 we:

• Established more personal engagement with Members and their staff, and piloted a role which leads on understanding and meeting the needs of Members’ staff alongside co-ordinating the constituency roadshows.

• Developed a compliments, complaints and comments system to enable these to be logged, tracked and reported on to identify and address underlying issues. Building on the success of the pilot, this will be progressively rolled out during 2018–19.

• Developed more consistent and wider-spread use of customer satisfaction measures. These now feed into the monthly performance dashboard for the Commons Executive Board (see page 36).

• Implemented improvements to services identified by a ‘customer journey mapping’ project, involving over 130 customers and a similar number of staff working together in cross-functional teams and sponsored by Board members.

• Introduced a more encouraging approach to staff ideas, linked to the Continuous Improvement team’s work.

• Introduced a staff recognition scheme (Star), which had previously run as a pilot.

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Laurence & Daniel Catering Services

In early 2018, our Head Chef, Laurence, and Chef de Partie, Daniel, took part in the annual Student Catering Forum at Havering College, to promote the benefits of pursuing a culinary career in our Catering Services team. Daniel is a former student of Havering College, and has recently won a gold medal award for the best main course in a nationally-recognised culinary competition. At the event, Laurence and Daniel gave an overview of their roles, explained the various professional development opportunities available to our employees, and fielded questions from the students. It was a great example of how the House is proactively engaging with young people as an employer, offering rewarding careers in a wide range of professional disciplines.

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Fostering a skilled, united and diverse workforce

People play a vital role in delivering the House Service Strategy and people development remains a top priority. In autumn 2016, we established our People Programme to raise the profile and impact of people development across the House, and to develop our capability to deliver our strategic outcomes. While the programme closed in 2017–18, the work continues as part of the mainstream activity within Corporate Services. Some of the outcomes during the year have included:

• Holding our first-ever event for all line managers in the House Service and Digital Service in the Commons Chamber, in May 2017

• Expanding our ‘Career Connectors’ network – a group of staff who act as informal points of contact to advise on the skills required for different roles in their teams and advise on development opportunities.

• Introducing a modular approach to management development to enable a more tailored and accessible approach.

• Introducing coaching masterclasses and peer coaching networks to support people managers in adopting a coaching approach to people development.

• Expanding our talent management programme

An evaluation report of the pilot talent management scheme was considered by the Commons Executive Board in January 2018, but it will take time before we can fully assess the impact of these initiatives. Feedback from those participating in the pilot stage of the Talent Management Programme has been very positive, and was used to help shape the expanded programme in 2018–19. Five of the 14 (36%) people participating in the pilot have been promoted since the programme ended on 31 October 2017.

In addition to the People Programme, we have undertaken other developments to improve the capacity and capability of our staff. We have improved our project and programme management through the work of the Enterprise Portfolio Management Office (EPMO) – one of our Centres of Excellence – with proportionate and clear governance, to reduce bureaucracy and duplication, learn from both successes and failures, and ensure accurate and consistent reporting.

The work of our Diversity and Inclusion Team is bearing fruit, and the House Service has achieved several successes in 2017–18:

• Being listed in Business in the Community’s ‘Best Employers for Race and Race Equality’ in November 2017.

• Reaching 23rd place in the Stonewall Workplace Equality Index in February 2018 (out of 430 employers), a rise of five places from the previous year.

• Receiving an ‘Autism Friendly Award’ from the National Autistic Society in recognition of the work staff had done to make Parliament more welcoming to visitors on the autism spectrum. This included staff training and improving the information for autistic visitors on Parliament’s website.

• Holding our sixth annual Diversity and Inclusion Awards, where over 300 staff attended from the House of Commons and Digital Service to see nominations and winners of five different awards.

Ways of workingThe Ways of Working Programme was launched in July 2017. (It began later than planned due to recruitment issues and the 2017 General Election.) It is leading the development of new, more flexible and agile ways of working which will enable us to meet the challenges of the future, including Restoration and Renewal. The programme has two strands: ‘Smart Working’ and ‘One Story’.

Although there were initial delays because of shifting accommodation priorities, the ‘Smart Working’ strand is running 20 pilots, engaging more than 250 staff across the House Service in developing sustainable ways of working. Many pilots are increasing the opportunity for people to work away from the Parliamentary Estate, whilst still providing excellent customer service. This potentially enables people to reduce commuting time, and making it easier for those with disabilities or caring responsibilities to work here. A small number of pilots have involved redesigning office space to provide activity-based working environments which optimise productivity and use of space.

Pilots are designed to make the most of new digital tools provided by Skype for Business and Office 365, as well as alternative mobile devices, collaboration software and work-flow management tools to make processes and collaboration more flexible and efficient.

Before the pilots started, a House-wide staff survey established a robust baseline of views and attitudes on the way we work, including indicators for benchmarking with other organisations. 84% of respondents welcomed efforts to develop our ways of working.

The programme is collecting data on behaviours and attitudes across pilot teams. Digital behaviour and space utilisation are monitored across most pilots,

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and a rolling weekly survey of staff involved enables us to build an understanding of what works and what does not. The data will underpin analyses and recommendations from the programme at the end of September 2018.

The House Service is undergoing change at a greater rate than ever before, and this sometimes creates uncertainty among staff and customers. A second strand of the Ways of Working Programme, ‘One Story’, has developed a strategic story about our future direction, which is being rolled out across the House Service to bring context to all the change and provide an inspiring vision for our staff. It is also developing a framework to better coordinate communication and engagement around change.

The programme in its current form will conclude at the end of September 2018 with a set of analyses and recommendations to the Commons Executive Board for further development of new ways of working in the House Service.

How performance is measured

There are three main strands to corporate performance measurement: the performance framework, risk management, and portfolio reporting.

Performance framework

The performance framework is based around the four strategic outcomes. It is reviewed by the Commons Executive Board monthly and the Commission receives a highlight report each quarter.

Satisfaction – We measure the satisfaction of different customer groups (Members, Members’ staff, the public and internal customers) across a range of different service areas such as procedural support, internal staff training, catering, tours and outreach work. In 2018–19 we will establish a new, regular way of seeking feedback from Members and their staff about our services in a more structured manner.

Reputation – In early Spring 2018 we piloted a small set of questions put to an externally-managed panel of the public. In 2018–19 we will be building on this using monitoring undertaken by the Reputation Institute.

Impact – Each quarter we produce a case study to look at the impact of different aspects of select committee and research work. We are reviewing the range of regular qualitative and quantitative feedback mechanisms from visitors and those who have engaged with Parliament – witnesses to select committees, school visitors, those who have attended chamber debates, and those who have interacted with Parliament in other ways. There is the potential to benchmark this against data from the external panel to help us judge how much difference we are making.

Sustainability – This covers a very wide range of activity but are currently focusing on the following:

• Financial sustainability, where we monitor our spending and compliance with internal financial policies.

• People and workforce, where we look at headcount and FTEs, staff turnover and sickness absence.

• Environment, where we monitor our progress in achieving our long-term targets for carbon reduction, recycling, waste and water usage.

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Risk management

The Commons Executive Board owns a set of principal risks that are reviewed and monitored on a monthly basis. These are focused on the things that would

prevent the House Service from achieving its strategic goals. These are overarching risks rather than relating to specific objectives. Some minor changes were made during 2017–18 but the risk register at the end of March 2018 was as follows:

Category Risk

Cyber security Cyber-attack against parliamentary systems causes serious disruption to the strategic plan objectives and to the work of Members and their staff.

Estate As a result of a loss of momentum across the various strands of Restoration and Renewal and NEP work before the transfer of the Parliamentary Estate to the delivery authority, the House Service has to deal with a failure of critical services while still in the Palace of Westminster.

Security Failure to keep secure the Parliamentary Estate, members, staff and visitors.

Information management The House fails to comply with data regulations and manage, protect or exploit its information adequately.

Joint working Differing approaches between the two Houses limits the ability of the House of Commons Service to achieve its strategic goals.

Digital The House Service fails to provide and maintain the right technology including a resilient digital network - to support Members and staff in their work.

Customer focus The House Service fails to provide the services to the quality required of both its internal and external customers.

HR The House Service does not have the right people capability, capacity or culture to deliver its strategic goals.

Reputation The House suffers a loss of reputation, at least in part through the action or inaction of House staff (including poor levels of performance), Members or their staff.

Finance The ineffective management of financial resources and contracts impacts on the House Service’s ability to achieve its strategic goals.

Member confidence Failures in maintaining and delivering our core services results in a loss of Member confidence which affects the House Service’s ability to achieve its strategic goals.

Change The House Service fails to manage the pace or impact of change across the business and this affects the ability of staff to deliver their core work and prevents the organisation from delivering its strategic goals.

In addition each team, along with individual projects and programmes, maintain their own risk registers to support management decision-making, develop mitigations for key risks and escalating them where necessary. The Risk Management team in the Governance Office has oversight of all risk registers and advises on best practice. [See page 60 for more information about the operation of risk management].

Portfolio reporting

A significant part of achieving our strategic goals relies upon the successful delivery of various projects and

programmes across the House Service. There are currently 18 programmes and another 13 standalone projects under way which together account for many millions of pounds of investment in helping to secure Parliament’s future.

Our Enterprise Portfolio Management Office (EPMO) maintains oversight of all project and programme activity across both Houses of Parliament and the Digital Service. It reports on project and programme activity to the Boards of both Houses (and the Joint Investment Board) to monitor progress and help ensure that the change the organisation wants is delivered.

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Annual Report and Accounts 2017–18 Performance Report

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UK

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liam

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Mar

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uff

y

Other corporate reporting

Staff engagement

The House of Commons and Digital Service undertake regular staff surveys to obtain views and feedback from staff about their work experiences. The surveys aim to help senior management understand what works well within the organisation, identify any potential areas of concern, and where improvements can be made. The Commons Executive Board is committed to encouraging engagement and investment in our staff; completing the surveys is an important part of developing the reputation and success of Parliament.

Following a one-off ‘snap-shot’ survey in November 2016, a new annual staff survey was launched in May 2017. Overall, the response rate was 61%, which was higher than the 2014, 2015 and 2016 surveys – 59%, 51% and 58% respectively.

Employee Engagement was calculated using the set of questions asked in the Civil Service People Survey, which therefore allows for wider benchmarking. The Employee Engagement Index score for the House of Commons and Digital Service was 67% – eight percentage points higher than across the Civil Service, although one percentage point lower when compared to 2016.

82% of staff said they were proud to be part of the House Service, which is 23 percentage points higher than the Civil Service equivalent, and two percentage points higher than the 2016 result. Staff in the House Service are significantly more likely than the Civil Service average to be advocates of the House Service and to have a strong personal attachment. The one area where results compared poorly to the public sector benchmark was satisfaction with working environment, where the House of Commons/Digital Service scored 12 percentage points lower. A significant proportion of the workforce moved to refurbished accommodation in May 2018. The next annual staff survey was undertaken in May 2018, with results due in July 2018.

The Communications Office provides a range of accessible and innovative communications to maintain ongoing dialogue with colleagues across both Houses and the Digital Service. It promotes the work of the Commons Executive Board (previously the Board and Executive Committee) by communicating key decisions, providing strategic communications advice to leaders and supporting the senior leadership programme.

Supplier payment performance

In 2017–18 87.2% of supplier invoices were paid within 30 days of receipt. This is a reduction in the performance level from 2016–17 when the figure was 91.7%. The volume of invoices received in 2017–18 (41,117) was 1.5% higher than the 40,487 paid in 2016–17. In the last part of the financial year a pilot was run to explore the impact of reducing the number of supplier payment runs from twice per week to once per fortnight in January 2018, then once per week in February and March 2018. Invoice payment performance fell to 73% in January but recovered to 87.5% and 90.6% in February and March respectively. The pilot showed that satisfactory performance levels could be maintained with weekly payment runs, and this frequency will continue into the new financial year. Fortnightly payment runs had an adverse impact on workflow in Financial Services and in teams, and increased the need for special payments, which are both more time-consuming and expensive.

Climate change, sustainability and the environment

This section follows – as far as possible and to the extent it is appropriate – the template and guidance issued to Government departments in HM Treasury’s Financial Reporting Manual. All the data (including expenditure) relate to Parliament as a whole.

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GREENHOUSE GAS EMISSIONS

2014–15 2015–16 2016–17 2017–18

Non-Financial Indicators (tCO2e)

Total Gross Emissions for Scopes 1 & 2.

19,466 17,781 17,550** 16,343

Total Net Emissions for Scopes 1 & 2. (i.e. less green tariffs)

4,502 4,623 10,760** 16,343

Gross emissions Scope 3 business travel 1,264*

1,521

1,952

1,434

Related Energy Consumption (million kWh)

Electricity: Non-Renewable 0.0 1.05 27.2 28.32

Electricity: Renewable 28.55 26.27 0.93 0

Gas 24.33 24.56 29.21 29.94

Financial Indicators (£’000s)

Expenditure on Energy 4,263 3,835 3,996 4,020

Expenditure on accredited offsets (e.g. GCOF)

0 0 0 0

Expenditure on official business travel 2,558* 4,632 5,398 4,734

Glossary The following scopes of carbon dioxide (CO2) emissions are defined in HM Treasury’s Financial Reporting Manual:

Scope 1: Direct emissions of greenhouse gasesScope 2: Energy indirect emissions Scope 3: Emissions as a result of official business travel

tCO2e: tonnes of carbon dioxide equivalent kWh: kilowatt hours GCOF: Government Carbon Offsetting Facility

Notes:

* Information on carbon emissions scope 3 (business travel) and business travel costs for 2014–15 refers to the period 01/09/14 to 31/03/15 only due to a change in provider.

** Figures for carbon emissions for 2016–17 have been revised due to application of the 2017 grid conversion factors.

The main source of Parliament’s carbon dioxide emissions is energy consumption across the Estate. Parliament’s environmental improvement plan sets out a range of actions that have been put in place to improve energy efficiency, and is updated annually.

Parliament’s total gross carbon emissions for 2017–18 reflect the 2017 grid conversion factors provided by the Department for the Environment, Food and Rural Affairs for reporting purposes. The 2018 grid conversion factors were not available at the time of publication.

Parliament’s long-term target is to reduce absolute carbon dioxide emissions resulting from energy use by 34% by March 2021, relative to 2008–09 baseline levels. In order to meet this target, Parliament’s 2017–18 emissions should have fallen by 25.9% on baseline. By the end of 2017–18,

Parliament had achieved a 30% reduction relative to its 2008–09 baseline year, exceeding its target for the year.

At the end of the financial year, the solar panels installed on the Palace of Westminster were turned on. This will allow us to reduce the amount of electricity that we have to source externally to power the Parliamentary Estate. Parliament was previously able to opt for a 100% renewable tariff under the Crown Commercial Services energy and utilities framework. Since August 2015, only a mixed-generation tariff has been available under this framework (This change does not affect our carbon footprint, however, since carbon has always been calculated on the basis of the grid mix and not a specific tariff).

All projects and programmes are required to identify environmental impacts to identify potential carbon savings.

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Achieving a reduction in Parliament’s direct carbon emissions continues to be a priority, but where appropriate, procurement specifications are used to

encourage reductions in our supply chain. Parliament is working to develop a method to assess carbon emissions from its supply chain.

WASTE

2014–15 2015–16 2016–17 2017–18

Non Financial Indicators (tonnes)

Total waste 1,929 1,467 1,778 1,959

Hazardous waste Total 2 4 4 7

Non hazardous waste

Landfill 0 0 0 0

Reused/Recycled/Recovered

1,205 918 1,136 1,230

Incinerated/energy from waste

723 549 641 728


Total disposal cost 440 561 539 415

Hazardous waste - Total disposal cost**

N/A* N/A* 7** 16

Non hazardous waste - Total disposal cost**

Landfill 0 0 0 0

Reused/Recycled N/A* N/A* 89** 207

Incinerated/ energy from waste N/A* N/A* 73** 191

Notes: * Parliament’s previous waste contract did not break down costs by waste stream, but was priced on the basis of an aggregation

of standing charges, costs per collection and per tonne. There was no breakdown of annual costs of hazardous and non- hazardous wastes.

**Information on figures for the hazardous waste and waste costs are from 1 November 2016 when a new waste contract commenced. 2016–17 figures have been restated.

Parliament continues to prioritise a reduction in waste generation and improvements in recycling rates, and, where appropriate, procurement specifications are used to encourage the supply chain to improve performance in these areas.

Parliament’s long-term target is to reduce the amount of waste it generates (measured by weight) by 30% by 2020–21, relative to 2008–09 baseline levels. In order to meet this target, waste should have been reduced by 24.0% against the baseline by the end of 2017–18. The actual figure achieved was 8.5%. This is due to a number of factors, including the growing number of people working within, and visiting, the Parliamentary Estate, and the increase in construction

and refurbishment activities (for example, Canon Row refurbishment and the Northern Estates Programme).

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Waste audits have taken place and training on the segregation of waste has been undertaken with those responsible for transferring and consolidating waste on the Estate. The final disposal of waste streams follows best practice against the waste hierarchy.

Parliament will be introducing a new scheme during the coming financial year to divert food and compostable disposable items from its general waste stream. Current work to replace or eliminate single use plastics will include replacing single use packaging with reusable alternatives. Additionally, a new initiative will be implemented across the Estate to reduce paper waste, the primary constituent of our dry mixed recycling

waste stream. This will be achieved, for example, by cutting down on unnecessary printing.

Revised procedures will be implemented to incorporate the environmental impact of packaging into the weighting of relevant procurement and tender exercises. These procedures will incentivise suppliers to reduce the amount of single-use packaging, including avoidable plastics used for delivering their goods and services, leading to a reduction of waste.

Parliament operates with a zero waste to landfill policy. Its general office waste is disposed of by incineration at an energy-from-waste facility.

FINITE RESOURCE CONSUMPTION – Water

2014–15 2015–16 2016–17 2017–18

Non-Financial Indicators (m3)

Water Consumption

Supplied 145,200 116,176 91,567 76,958

Abstracted 88,641 82,010 94,793 107,055


Water Supply Costs 383 275 204 324

Smart water meters have been installed across the Parliamentary Estate which enable the Environment Team to closely monitor water usage, highlighting leaks and identifying instances of high consumption requiring urgent action. This has contributed to the reduction in water usage. The long-term target for water use is to reduce the volume used by 50% by March 2021, relative to 2008–09 baseline levels. In order to meet this target, Parliament’s 2017–18 water use should have fallen by 38.6% against the baseline. The actual figure achieved was 43.8%, putting Parliament on course to meet our long-term target.

Parliament continues to prioritise reduced water use. In addition, where procurement exercises have a potential impact on water use, specifications are used to encourage the supply chain to improve water efficiency. During the forthcoming refurbishment projects, the Environment Team will attempt to ensure water supplies are isolated wherever possible.

Information rights (Freedom of Information)

In 2017–18 the House of Commons replied to 539 requests for information which were handled under either the Freedom of Information (FOI) Act or the Environmental Information Regulations. We met the statutory response deadlines in 97.4% of these cases. Where some or all of the information is disclosed, we publish selected responses, especially if they are topical or repeated. We also publish all responses that contain datasets, in accordance with our obligations under the Protection of Freedoms Act 2012. These can be viewed on our disclosure log on the Parliament website at www.parliament.uk/site-information/foi/foi-and-eir/commons-foi-disclosures Our main FOI page at www.parliament.uk/site-information/foi contains information about our publication scheme, how to make an FOI request and our transparency publications.

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http://www.parliament.uk/site-information/foi/foi-and-eir/commons-foi-disclosures/

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Health and safety

We place great importance on protecting the health and safety of all those who visit or work in our premises. The Parliamentary Estate has a wide and complex safety risk portfolio. In addition to being the place of work for Members of both Houses, their staff, and staff of both Houses, Parliament is a major tourist attraction. There is also a diverse events programme, including cultural exhibitions, weddings and film making. There are significant demands on accommodation and an extensive programme of construction and maintenance activities. All of these activities are co-located in a relatively compact location and potential safety risks need to be carefully managed.

In 2017–18, 246 incidents and near misses were reported to the Parliamentary Safety Team, five requiring notification to the Health and Safety Executive under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR). Just over half of these incidents resulted in an injury; the most frequently reported cause was as a result of a slip, trip and/or fall, which is in keeping with the national picture. 102 “near misses” were reported, i.e. narrowly-avoided accidents where no injury or damage occurred; in the region of 50% of these were caused by ‘premises faults’ – damaged flooring, poor lighting, wet floor etc. Incidents involving premises faults are forwarded to the Parliamentary Maintenance Service Team for repair. Six of the incidents were classified as having the potential to cause serious harm:

• A section of suspended ceiling collapsed during cabling work.

• A piece of corrugated metal roof covering blew onto the Terrace from scaffolding above.

• A car windscreen was smashed by falling masonry.

• An excavation in the car park was found to be unsafe.

• A gas leak occurred.

• A live cable was struck during drilling work.

All of these incidents were thoroughly investigated by the Parliamentary Safety Team and remedial action was taken as appropriate.

Auditors

The Comptroller and Auditor General audits the financial statements of the House of Commons by agreement.

His certificate and report is included in the accounts on pages 85–87. The external audit cost of the House was £85,000 represented as a notional charge. Further information is provided in Note 3 to the accounts.

Sir David Natzler KCB, Accounting Officer, House of Commons

13 July 2018

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Corporate Governance 46

Remuneration and Staff Report 66

Parliamentary Accountability 77 and Audit Report

Parliamentary Accountability Disclosures 84

Certificate and Report of the Comptroller 85 and Auditor General to the House of Commons

02 Accountability Report

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Accountability ReportCorporate Governance

Statement of Accounting Officer’s responsibilities

The House of Commons (Administration) Act 1978 gives the House of Commons Commission the power to appoint the Accounting Officer. The Accounting Officer is responsible for accounting for the use of resources for the service of the House of Commons.

The annual report and accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the House of Commons Administration, the net operating cost, changes in taxpayers’ equity and cash flows for the financial year.

In preparing the annual report and accounts, the Accounting Officer is required to comply with the requirements of the Financial Reporting Manual as applied by the House of Commons. He should ensure that the accounts:

• Observe the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis.

• Include judgements and estimates made on a reasonable basis.

• State whether applicable accounting standards, as set out in the Financial Reporting Manual as applied by the House of Commons, have been followed, and disclose and explain any material departures in the accounts.

• Have been prepared on a going concern basis.

The responsibilities of the Accounting Officer include:

• Responsibility for the propriety and regularity of the public finances for which an Accounting Officer is answerable, for keeping proper records and for safeguarding the organisation’s assets, as set out in Managing Public Money published by HM Treasury.

• Confirming that as far as he is aware there is no relevant audit information of which the auditors are unaware, he has taken all the steps he ought to have taken to make himself aware of any relevant audit information, and to establish that the auditors are aware of that information.

• Confirming that the annual report and accounts are fair, balanced and understandable and that he takes personal responsibility for the annual report and accounts and the judgements required therein.


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Governance Statement10

Introduction

As Accounting Officer, I am required to prepare an annual governance statement. This statement records the stewardship of the House of Commons Administration, drawing together evidence on governance and risk management. The statement is intended to give a sense of both the House of Commons Administration’s vulnerabilities and also how the organisation has coped with the challenges it faced during the year.

Governance framework of the House of Commons

The House of Commons Commission is the ultimate authority for the administration of the House, but day- to-day management of the organisation is delegated to the House of Commons Executive Board. As Accounting Officer, I am mindful of HM Treasury’s guidance on the scope of the governance statement as it applies to government departments, but I emphasise that the House’s constitutional and governance circumstances are different to those of government departments.

Likewise, the extent to which the House Service is able to follow the Treasury’s Corporate Governance Code will differ. Significant variations from the Code include the fact that the Commons Executive Board is not equivalent to the single management board of a Whitehall department. I am content that the House Service’s structure meets the overall objective of separating policy and operations, and that the necessary element of non-executive challenge and scrutiny is available through the external members of the Commission and the Administration Estimate Audit and Risk Assurance Committee.

10 The House of Commons Members’ Estimate is the subject of a separate Governance Statement published with the House of Commons Members’ Annual Accounts.

In recent years the Governance framework of the House has undergone substantial changes, following the report of the House of Commons Governance Committee and the subsequent House of Commons Commission Act 2015, as well as changes arising from an organisational review conducted by the Director General. This year saw a further change following a review of the operating arrangements of the Commons Board, which resulted in the Executive Committee and the Commons Board combining to become the Commons Executive Board. This was agreed by the Commission on 20 November 2017.

The Commons Executive Board is accountable to the Commission for the delivery of the strategy for the House Service and also manages the day to day operation of services. During the year, the Commons Executive Board held meetings on a fortnightly basis. As a result of the recommendations of the review of the Board, the membership was changed to comprise the heads of Teams, the Clerk of the House and the Director General.

There have been no major changes to the organisational structure during the year. The structure is comprised of the eight broad functional areas – six Teams and two supporting offices – which were recommended in the Director General’s Review.


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House Service

Prep

are

Prep

are

Del

iver

Ass

ure

CommissionSpeaker, Leader of the House, Nominee of the Leader of the Opposition, Backbench

Commissioners x 4, External Appointees x 2, Clerk of the House, Director General of the

House of Commons

Commons Executive Board

The Director General of the House of Commons (Chair), the Clerk of the House, the

Managing Directors of House Teams and Directors of bicameral departments

Administration Committee

11 Members

Finance Committee

11 Members

Administration Estimate Audit &

Risk Assurance Committee

2 Backbench Commissioners,1 Member of the Finance,

Committee, 2 External Appointees of the

Commission,1 External Appointee

Man

ages

Advises

Del

egat

es p

ow

er t

o

Appoints

Advises

Advises

* Joint service with the House of Lords

Ad

vise

s

Supports

Ch

airs

Att

end

sC

hai

rs

Assures

Chamber and Committees

Communications Corporate Services

GovernanceParliamentary

Digital Service*

In-House Services

Participation Research and Information

Strategic Estates

Parliamentary Security

Department

Speaker

Speaker’s Office

Works of Art Committee

CommissionChairman:

The Speaker

Clerk of the House

Director General


Administration Estimate

Audit & Risk Assurance Committee

Finance Committee

Administration Committee

Consultative Panel on Parliamentary

Security

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How the House is Governed

The House of Commons Service is governed by the Commission, which is chaired by the Speaker. The Commission sets the strategic framework for the provision of services to the House, Members and to the public, signs off the annual budget (the Estimate) for the House, and is the legal employer of House Service staff.

Until November 2017, the Commission delegated day-to-day management to the Executive Committee. The Executive Committee was supported by the Board in fulfilling its delegated responsibilities. From December 2017, the Executive Committee and the Board were replaced by a single body, the Commons Executive Board.

The Commission is supported by two Select Committees of the House which act as advisory bodies to the Commission. The Administration Committee, chaired by Sir Paul Beresford MP, recommends improvements to services. The Finance Committee, chaired by Chris Bryant MP, considers expenditure and the House’s budgets.

The Commission is also supported by the Administration Estimate Audit and Risk Assurance Committee (AEARAC)11. The AEARAC supports the Accounting Officer in discharging his responsibilities under the Administration Estimate, particularly with regard to the maintenance of an effective system of internal control. Since April 2017, the Committee has also had an enhanced role in providing independent assurance to the Commission, and to the Accounting Officer, that the system of risk management is operating effectively and that risk is being effectively managed by the organisation and monitored by the Commons Executive Board. The Committee also has oversight of the work of Internal Audit and the external audit carried out for the House by the Comptroller and Auditor General. More detail about the Administration

11 The House of Commons has two Audit Committees, one for each of its Estimates. The AEARAC, on behalf of the Commission, and the Members Estimate Audit Committee (MEAC), on behalf of the Member Estimate Committee (MEC). The annual accounts and Audit Committee report for the Members Estimate are published as a separate document [HC 1382].

Estimate Audit and Risk Assurance Committee is provided in their annual report (page 122).

Organisational structure of the House of Commons ServiceThe House of Commons Service comprises seven House of Commons Teams (departments), the Parliamentary Digital Service (a joint department of the House of Commons and the House of Lords) and two smaller offices.

The new organisational structure comprises the following Teams, a number of which provide shared services to the House of Lords:

• Chamber and Committees

• Research and Information

• Participation

• In-House Services

• Parliamentary Security Department

• Corporate Services

• Strategic Estates

• Communications Office

• Governance Office

• Parliamentary Digital Service (a joint department with the House of Lords)

In addition, the House of Commons Service is supported by the Parliamentary Procurement and Commercial Service, a shared service based in the House of Lords Finance Department, and the Parliamentary Archives, also based in the Lords.

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House of Commons Commission

Under the House of Commons (Administration) Act 1978 (as amended by the House of Commons Commission Act 2015), the House of Commons Service is overseen by the House of Commons Commission.

The membership of the Commission during 2017–18 was:

12 Dame Janet is the Chair of the House of Commons Administration Estimate Audit and Risk Assurance Committee.13 External members are not voting members of the House of Commons Commission

Name Served Attendance

The Rt Hon John Bercow MP; Speaker (Chairman, by virtue of office) full year 14/14

The Rt Hon David Lidington MP; Leader of the House of Commons (by virtue of office)

until 11 June 2017

1/1

The Rt Hon Andrea Leadsom MP; Leader of the House of Commons (by virtue of office)

from 11 June 2017

12/13

Sir Paul Beresford MP full year 12/14

Rt Hon Tom Brake MP full year 10/14

Rt Hon Dame Rosie Winterton MP full year 14/14

Valerie Vaz MP full year 14/14

Stewart Hosie MP full year 13/14

David Natzler; Clerk of the House (by virtue of office) full year 14/14

Ian Ailles; Director General of the House of Commons (by virtue of office) full year 12/14

Dame Janet Gaymer,12 external member13 full year 14/14

Jane McCall, external member13 full year 13/14


Annual Report of the House of Commons Commission

The Commission met 14 times during 2017–18. Minutes of Commission meetings – the ‘Decisions’ – are published on its pages on the Parliament website14. During the period covered by this report the Commission dealt with a range of administrative and financial matters including:

14 www.parliament.uk/business/committees/committees-a-z/other-committees/house-of-commons-commission/minutes

• Agreeing Votes on Account and Estimates for 2018–19.

• Agreeing Supplementary Estimates for the Members Estimate 2017–18.

• Agreeing the pay remit for 2018–19.

• Endorsing the Corporate Business Plan 2018–19.

• Agreeing steps to improve parliamentary cyber security.

• Endorsing the proposals of the Director of the Parliamentary Security Department in response to the recommendations made in the Murphy Review of perimeter security.

• Agreeing that the Clerk as Corporate Officer should award the contract for the refurbishment of the Elizabeth Tower.

• Endorsing a change in direction in the Northern Estate Programme and Richmond House from a limited refurbishment to a legacy building project inside the secure perimeter.

• Agreeing the governance arrangements for the Restoration and Renewal Programme.

• Agreeing the proposed approach to a Gender-Sensitive Parliament audit in 2018.

• Agreeing to streamline the process for those in the House Service pursuing bullying or harassment complaints as well as other grievances.

• Agreeing plans to implement the recommendations of the Cross Party Working Group on an Independent Complaints and Grievance Policy.Agreeing to the initiation of an inquiry into the bullying and harassment of House staff to be set up by the Non-Executive members of the Commission.

• Approving updated remits for the Finance and Administration Committees, and proposals to improve communication between the Domestic Committees and the Commission.

• Endorsing the 2017 dissolution guidance.

• Endorsing the creation of a single Commons Executive Board in place of the Executive Committee and the Board.

The Commission is supported by two Select Committeesof the House: the Finance Committee and theAdministration Committee, which act as advisory bodiesto the Commission. Sir Paul Beresford MP chairs theAdministration Committee, and is also a backbenchmember of the Commission. Chris Bryant MP chairs theFinance Committee.

The Commission is also supported by the AdministrationEstimate Audit and Risk Assurance Committee.Membership of the Committee currently comprises thechair of the Administration Committee, a member ofthe Finance Committee (Mr Clive Betts MP), one of thebackbench members of the Commission (Rt Hon TomBrake MP), the external members of the Commission (one of whom, Dame Janet Gaymer, chairs the Committee) and an independent expert member (Bob Scruton). The Committee advises the Commission and the Accounting Officer and has oversight of the work of Internal Audit and the work carried out for the House by the National Audit Office. Since April 2017

Since April 2017 the Committee has been providing assurance to the Commission, and to the Accounting Officer, that risks are being effectively managed by the organisation and monitored by the Commons Executive Board. More detail about the Administration Estimate Audit and Risk Assurance Committee is provided in the Governance Statement and in their own annual report (page 102).

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Executive Committee

The management of the House Service and its operations was previously delegated by the Commission through an Instrument of Delegation to the senior officials who formed the House of Commons Executive Committee. Membership of the Executive Committee from 1 April to 30 November 2017 was:

• Ian Ailles, Director General of the House of Commons (Chair)

• David Natzler, Clerk of the House

• Myfanwy Barrett, Managing Director of Corporate Services and Director of Finance

The Clerk is Accounting Officer, Corporate Officer and Data Controller, and responsible for ensuring proper stewardship of resources and for maintaining an appropriate system of internal controls. He issues delegation letters to the heads of each Team of the House on appointment, and they receive an annual budget letter. They submit to him an annual letter of assurance, setting out how they have ensured the effective and efficient management of the responsibilities delegated to them and their Team by the Clerk.

Until 30 November 2017 the Executive Committee was accountable to the Commission for the delivery of the strategy for the House Service. Day-to-day operation of services was managed on behalf of the Executive Committee by the Board (see below). The Executive Committee and Board supported the Corporate Officer and Accounting Officer in meeting his statutory duties.

The Executive Committee met quarterly to hold the Board to account for the performance of the organisation and to provide assurance on risk. The agendas and minutes of these meetings are published on the UK Parliament website15.

15 www.parliament.uk/mps-lords-and-offices/offices/commons/executive-committee/executive-committee-publications/executive-committee-papers 16 www.parliament.uk/mps-lords-and-offices/offices/commons/the-board/board-decisions/previous-boards/the-board

The Board

Until 30 November 2017, the Board was responsible for the delivery of the House’s strategic objectives, the efficient and effective conduct of business, regular performance and risk management, and addressing operational issues. The Board’s membership between 1 April and 30 November 2017 was:

• Ian Ailles, Director General of the House of Commons (Chair)

• David Natzler, Clerk of the House (by virtue of office)


• Carlos Bamford, Managing Director, In-House Services

• John Benger, Clerk Assistant and Managing Director, Chamber and Committees

• Brian Finnimore, Managing Director, Strategic Estates

• Penny Young, Librarian and Managing Director, Research and Information and Participation

• Rob Grieg, Director of the Parliamentary Digital Service (until 8 September 2017)

• Tracey Jessup, Director of the Parliamentary Digital Service (from 9 September 2017)

• Eric Hepburn, Director of Security for Parliament

• Lee Bridges, Head of Communications

• Marianne Cwynarski, Head of the Governance Office

• Annette Toft, Leader, Ways of Working Programme

• Patsy Richards, Leader, Customer Programme

• Edge Watchorn, Leader, People Programme

Decisions of the Board for the period up to 30 November 2017 are published on the Parliament website16. The Board monitored the performance of the House Service principally through monthly consideration of data on performance against corporate key performance indicators, the delivery of key milestones outlined in the Corporate Business Plan for 2017–18, the financial health of the organisation, monthly reports of the performance of major projects and programmes, and the status of principal risks. The Board agreed policies to enable the delivery of the corporate strategy, held quarterly meetings to focus on individual strategic outcomes and commissioned a review of governance arrangements.


https://www.parliament.uk/mps-lords-and-offices/offices/commons/executive-committee/executive-committee-publications/executive-committee-papers/

https://www.parliament.uk/mps-lords-and-offices/offices/commons/executive-committee/executive-committee-publications/executive-committee-papers/

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In the autumn of 2017, a review of governance arrangements was undertaken by the Governance Office with the aim of delivering clearer, more streamlined, better joined-up governance for the House of Commons Service. One of the key recommendations was the creation of a single Commons Executive Board in place of the Executive Committee and the Board. The recommendations were endorsed by the Commission, and a revised Instrument of Delegation was agreed to give formal effect to these changes at its meeting on 20 November 2017. The membership of the Commons Executive Board from 1 December 2017 to 31 March 2018 was as follows:

• Ian Ailles (Chair)

• David Natzler, Clerk of the House (by virtue of office)


• Carlos Bamford, Managing Director, In-House Services

• John Benger, Clerk Assistant and Managing Director, Chamber and Committees

• Brian Finnimore, Managing Director, Strategic Estates

• Penny Young, Librarian and Managing Director, Research and Information and Participation

• Tracey Jessup, Director of the Parliamentary Digital Service

• Eric Hepburn, Director of Security for Parliament

The Commons Executive Board provides leadership for the House of Commons Service. It acts as a sub-committee of the Commission and is accountable to it. Its responsibilities are:

• To assist the Commission in setting strategic objectives for the House of Commons Service, and to be accountable to the Commission for the delivery of the strategy.

17 www.parliament.uk/mps-lords-and-offices/offices/commons/the-board/board-decisions/ceb-decisions

• To assist the Finance Committee in the preparation of the Estimates and of other papers relating to those Votes, before their submission to the House of Commons Commission; and to carry out such other functions relating to the expenditure on the administration of House of Commons services as may from time to time be allocated to it by the Commission.

• To fulfil the statutory responsibilities delegated to it by the House of Commons Commission in relation to the employment of House staff.

• To direct the House of Commons Service, deciding policy and operational issues as delegated to it by the Commission, the Speaker or the Clerk, managing performance KPIs and driving efficient use of resources.

• To provide assurance to the Administration Estimate Audit and Risk Assurance Committee on the management and mitigation of risk.

• To support the Clerk in the exercise of his/her responsibilities as Corporate Officer, Accounting Officer and Head of the House of Commons Service, and to support the Director General in the exercise of his/her responsibilities.

The Commons Executive Board is committed to creating a unified House Service, listening to staff and involving senior leaders through the Strategy Delivery Group and the Commons Leadership Forum. Its members are not simply there by virtue of running a Team or functional area. It is also committed to working in partnership with the House of Lords Management Board.

Decisions of the Commons Executive Board (from 1 December 2017) are available on the UK Parliament website17.

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Sub-groups of the Commons Executive Board

The Commons Executive Board has seven sub-boards, six of which are bicameral (with the House of Lords). Powers are delegated to these groups, and, where necessary, decisions are referred from the groups to the CEB:

Bicameral

• The Business Resilience Group directs and reviews business resilience policy, strategy and implementation across both Houses. Chair: Managing Director, In-House Services, House of Commons.

• The Digital Strategy Board is responsible for monitoring the delivery of the Digital Strategy for Parliament. It supports the work of the Digital Service, in ensuring that digital delivery is at the forefront of Parliament’s work. Chair: Clerk of the Parliaments, House of Lords.

• The Information Authority helps to ensure that information can be found, accessed and shared appropriately and securely, and can be understood, used and trusted over time. The Authority owns and makes decisions on matters of cyber security. Chair: Managing Director, Research and Information, House of Commons.

• The Joint Investment Board helps to develop the Medium Term Investment Plan and monitors delivery of major investment programmes. Chair: Director General, House of Commons.

• The Parliamentary Safety Assurance Board provides leadership and oversight of fire and safety management. Joint Chairs: Director of Facilities, House of Lords, and Head of the Governance Office, House of Commons.

• The Parliamentary Safeguarding Board, which ensures that appropriate safeguarding practices and procedures are in place for the young people and vulnerable adults who visit Parliament or who engage with Parliament through outreach activities. Chair: Clerk Assistant, House of Lords.

Commons only

• The Senior Remuneration Committee, which makes recommendations to the Clerk of the House on pay for staff in the Senior Commons Service (House of Commons and Digital Service only). Chair: Bronwen Curtis (external appointment).

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System of Internal Controls

As Accounting Officer, this governance statement represents my assurance that I am satisfied that the organisation’s system of internal control is effective.

The House Service has policies and procedures that underpin its governance arrangements. These include rules and guidance on finance and procurement, a Staff Handbook which sets out HR policies and practices and a mandated system of risk management. All managers are required to be familiar with, promote and comply with these policies and procedures.

The House has a system of risk management which is reviewed annually by Internal Audit. My review of effectiveness describes work that has been undertaken this year to address issues previously raised by internal audit activity and to address risks that materialised during the year.

Under the current governance arrangements for risk management, the House of Commons Commission is responsible for the strategic overview of the House of Common’s risk management system, which includes oversight and review of the principal risks18. The Commission also undertakes regular ‘horizon scanning’ to ensure that the House identifies and monitors areas of concern which may affect or impact upon the delivery of the corporate strategy. The Commons Executive Board is responsible for providing internal oversight of the risk management system and for providing assurance to the Commission on how the organisation is managing its risks. The Administration Estimate Audit and Risk Assurance Committee is responsible, under their terms of reference, for reviewing governance, and the systems and processes by which risk management and internal control are undertaken by the House Service and for providing assurance to the Commission that risk is being managed effectively by the organisation.

18 Principal risks are those risks that are either immediate impact risks to the organisation’s ability to continue operating e.g. loss of customer data, or slowburning risks that grow and eventually prevent delivery of objectives e.g. staff turnover or leadership capability. Management of Risk in Government –

January 17 page 7

At the beginning of the year, ten principal risks were identified linked to the 2017–18 Corporate Business Plan giving oversight of risk in the following areas: security, loss of reputation, relationship with Member bodies, differing interests between the two Houses, information management, people capability and capacity, financial management, digital, lack of customer focus and Restoration and Renewal. During the year, elements of the principal security risk materialised and were subject to three major reviews, the Murphy and Moody reviews commissioned by the Speakers and Clerks of both Houses following the terrorist attack in Westminster on 22 March 2017 and the Ashton Review commissioned following the cyber-attack on all parliamentary user accounts on 23 June 2017. All recommendations from the reviews have been considered and management action plans are in place, and have included the creation, in July 2017, of a new principal cyber-security risk.

Over the year, the Commons Executive Board continued to regularly monitor and review its risks, as part of its regular review of performance and risk. In November 2017, the Risk Team, supported by the new Head of Internal Audit and Risk, commenced work with the Board on strengthening the reporting of risk management and to improve the mechanisms for reviewing and challenging risks; this work included streamlining the reporting of risk by using a simple, more visual format to help facilitate a strategic level of discussion. In addition, the Enterprise Portfolio Management Office (EPMO) is leading the improvement of Risk Management across Parliament’s portfolio of projects and programmes, supported by portfolio and programme offices and has drawn up a Risk Assessment and Management Framework for Programmes and Projects.


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Review of effectiveness

The evidence base As Accounting Officer, I have responsibility for reviewing the effectiveness of the system of Internal Controls. In order to undertake this review, I have obtained evidence of the organisation’s effectiveness through a variety of means. The most important are: the annual letters of assurance from each Head of Team and the Parliamentary Digital Service; separate letters of assurance on security, on information security (from the Information Authority), on business resilience (from the Business Resilience Group), on projects and programmes (from the Joint Investment Board), and on health and safety (from the Parliamentary Safety Assurance Board); the Director of Internal Audit’s annual report and opinion; advice and reports from the Administration Estimate Audit and Risk Assurance Committee; and reports from the external auditor. The letters from Heads of Team were subject to internal challenge and review by the Governance Office and the Corporate Services team. In addition, account has been taken of the monthly corporate performance and risk reports and the information gathered from detailed feedback interviews with both Members and Members’ staff.

The Head of Internal Audit concluded in his annual report and opinion that the governance, risk management, and control (GRC) processes in place are generally adequate for the purposes of the House of Commons, but there are significant weaknesses in the operation of aspects of the control environment that indicate issues in relation to the effectiveness of delivery of the framework. Consequently, the House is exposed to some degree of risk, and the level of assurance that he can offer is a Limited one. Overall the extent to which the information available leads to a Limited as opposed to Moderate opinion is relatively marginal. The Head of Internal Audit has emphasised the extent of progress that management has made in regard to the GRC framework over the year in question, particularly governance, compliance and risk management. In the audit of Key ICT controls, while overall being rated ‘limited’, those conducting the audit noted a distinct qualitative improvement in the approach been taken by management in relation to the control environment compared to previous years. The general picture is one of improvement across the board; however, in some crucial areas, such as safety, management need to take action to improve the operation of the control environment. In general, governance, risk management activities, processes and controls are in place and adequate; however, in some areas it is the effectiveness

of the performance of management that is the issue. The control weaknesses that have led to this conclusion are explained in the findings on effectiveness below.

Findings on effectiveness

In this section I review the evidence about the organisation’s effectiveness. As I set out in the introduction, the past 12 months have been particularly challenging for the House Service given the terrorist attack, the cyber-attack, reports of bullying, harassment and sexual harassment within Parliament, and the calling of a snap General Election. This section provides detail on efforts to address outstanding and emerging issues.

GovernanceWhen the Director General’s review was published in April 2016, it established that this was only the first step towards making the House Service an organisation which is used to and expects to be regularly reviewed. As with other organisations, we have to be self-critical and responsive to change whether internally or externally driven. Therefore, in October 2017 the House of Commons Commission agreed to the


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Board’s proposal to merge the Executive Committee and the Board into one single body with a smaller overall membership. The return to a smaller Board membership is more consistent with best practice, and came at a time when the programmes that were key to implementing the initiatives coming out of the Director Generals’ Review had neared completion. As the Customer, People and Stepping Up Programmes are now integrated into our core business, the Programme leaders are no longer Board members. Additionally, we found that having a separate Board and Executive Committee did not work as we expected. In practice we wanted to involve Board members in key decisions and we know the organisation found the separate role of the Executive Committee confusing. I hope that this more streamlined structure will make for better governance and be clearer and simpler for those seeking decisions. Board members agree that the new Commons Executive Board is working better, but I am conscious that this change has made the Board less diverse. It will be kept under review.

Risk managementIn the last year, several of the principal risks we had identified have materialised.The crystalisation earlier in the year of our security and cyber-security risks had an immediate impact to our ability to operate, but the House was able to resume business the next sitting day.This gives me some assurance that the procedures we have in place to mitigate these risks are correct. We have also addressed the consequences and sought to learn lessons from these events which should help us to mitigate risks in future and to better prepare ourselves to deal with handling similar incidents. More recently our reputation risk materialised, with a less immediate impact, but which could prevent the delivery of our objectives. In the past year we have made further improvements to our system of risk management, as our principal risks have been challenged at the Commons Executive Board, and we have sought independent assurance from the AEARAC.

ComplianceFollowing initial work by the Internal Audit Team in 2015, which was taken forward as part of the Stepping Up Programme, the organisation has sought to address staff understanding of compliance issues across the House Service. I am pleased that significant improvements have been achieved, principally through ‘the Essentials’, a set of mandatory actions that all staff are required to complete. These are now well established and are embedded into annual reporting processes. As a result, we are achieving compliance

rates of over 95% in relation to annual safety and security training, the induction of new joiners, the completion of Individual Performance Reviews and the registration of staff interests. This has been aided by a united and determined message from Board members, which has been cascaded to senior leaders and which staff have consistently acted on. The Business Management Directors have also played an instrumental role in supporting the changes and improvements we have sought. However, I am aware that there are still improvements to be made to our management information in this area, and there are a number of key policies that are not covered by ‘the Essentials’ that our staff should be periodically reminded of. Work is ongoing to address these issues, and I am assured that further progress will be made in the coming year.

Financial managementIn recent years, significant investment has been made to improve the finance function to raise awareness and standards in the House. A key part in improving standards and the culture of financial management has been both the regular financial challenge meetings and the finance business partner model. I am pleased that the benefits of this investment are being seen. Across the House this year there has been better monitoring of budgets with the bedding in of quarterly challenge meetings. Additionally, through the Finance Business Partners, Teams have surrendered budgets which has led to better management of the in-year position supported by mid-year change control notices issued to all Teams to reflect new budgets. The overall resource underspend hides this improved performance as in most areas resource expenditure is broadly in line with budget. A decision was made not to surrender allocated budget due to uncertainties about the accounting treatment of the Richmond House transfer. With regard to capital expenditure, the underlying underspend is similar to last year despite having returned some of our allocated budget, which related to decisions around the Restoration and Renewal of the Palace of Westminster and the Northern Estate Programmes. Improvements can still be made in the financial management of capital projects and programmes, and the Enterprise Portfolio Management Office have been working to achieve this by providing support in relation to business case training, development and guidance. I expect to see the impact of these measures in the coming years.

The improvements that have been seen have been led by the Corporate Services Team. Additionally, I was pleased that a recent internal audit of the adequacy and


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effectiveness of key financial processes gave substantial assurance that the key controls are operating effectively, and that in an audit covering approximately forty separate process and specific control points there was only one issue of note. This reflects the efforts made by that Team, and shows that the control environment is strong.

Procurement and contract managementThe unified Parliamentary Procurement and Commercial Service (PPCS) has supported the procurement activities of both Houses since 2014. The Service has increased the capacity and expertise of both Houses’ procurement and contract management function as well as making it easier to identify and realise opportunities for savings through tendering for contracts that cover the Commons and the Lords. Demand on this service has been rapidly increasing over the years as the House refreshes its day to day service provision contracts, and takes steps to ensure all historic contracts are reviewed for compliance. The work of the Service has also influenced positive cultural changes in relation to diversity and inclusion and other social and economic sustainability objectives across Parliament. It has also promoted wider public engagement more generally, and improved the reputation of each House externally. However, I am aware that there are weaknesses in relation to our contract management function, and the Director General has made improvements a priority. This has resulted in action being taken to improve the standard of contract management and ensuring that contract managers understand their role. The Director of In-House Services, whose Team is responsible for the management of the widest range of contracts, has been appointed as Contract Management Champion, and is taking forward the Contract Management Improvement initiative which will seek to establish consistent practice and improve capability in line with industry standards.

People managementFollowing a number of allegations of bullying and harassment, including sexual harassment, there has been a need to reflect on how we tackle these issues. Where the allegations have concerned Members and Members’ staff, the House has resolved to introduce an Independent Complaints and Grievance Policy. Additionally, the House of Commons Commission established an Independent Inquiry under Dame Laura Cox into the bullying of House staff, following the public testimony of some of our own staff. A number of staff have initially assisted the Working Group on an Independent Complaints and Grievance Policy and are now working to deliver this policy over the

next few months. These demands have put pressure of some Teams, particularly Corporate Services, and implementing the recommendations of the Working Group will require additional resource. We are determined that through this priority undertaking our workplace should be free of bullying and harassment, and we will learn from where things have gone wrong in the past.

Throughout the year, we have found some specialist roles difficult to recruit to, such as within the Enterprise Portfolio Management Office and Internal Audit. In some Teams, such as Strategic Estates, there have been difficulties in competing with the wider recruitment market, but I am pleased that the Digital Service have been able to recruit the staff they need by emphasising the range of opportunities which make Parliament an appealing place to work. For our existing staff, I am keen that we do more to promote career development across the House Service, that we encourage greater learning and development on the job, that we better identify and develop talent at all levels of the organisation, that we commit to improving our management and leadership capability and that we support staff to take individual responsibility for their own progression. The People Programme has supported us on all these fronts over the past year and will continue to do so now it has become business as usual within the Corporate Services Team.

SecuritySince last year, when Parliament and the Westminster area was subject to a terrorist attack from a lone assailant, the terrorist threat has remained high and has been kept under review. Following that attack, a full external review of perimeter security was commissioned, and its recommendations have or will be fully implemented. A follow-up review of their implementation thus far will take place during 2018. Much of the response to the review will be achieved through the multi-year Security Programme, which has required substantial resourcing and has been prioritised above other projects. This year saw the project to provide support for Members away from the Estate become ‘business as usual’ within the Members’ Security Support Service, and the feedback received has been largely positive. During the year, new-style passes have been issued for Members of both Houses to assist recognition and deter forgery, and these will be rolled out to parliamentary staff and other users as existing passes expire. It has been necessary at times this year to raise the screening level for mail temporarily for individual Members. In these circumstances, consent


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was sought from the Member for whom the additional protection was felt necessary. The experience of this year, and since 2014, has reinforced my view that bringing in-house the Metropolitan Police Service (MPS) civilian workforce was the right decision, and that attempting to maintain the status quo would have been a strategic error. I am assured that considerable efforts are continuing to develop an effective and efficient in-house security operation.

Information security and personal data incidentsSince the Information Authority was established in January 2017, it has provided a bicameral structure for information governance aligned with current public sector best practice. I am assured by the activity of the Authority, and its oversight of Teams, that measures are in place to maintain information security. This has been tested within the year, as the cyber-attack on Parliament in June 2017 demonstrated both the reality of the threat and the progress that was achieved over the preceding year in terms of Parliament’s capability to identify, respond to and recover from a sustained and determined attack. Following this, an independent review was commissioned and reported positively that Parliament’s cyber security capability was significantly improved compared with three years before. However, the cyber risk remains high, and while work is ongoing to embed the progress made to date, success is not guaranteed.

Following the cyber-attack, in which some personal data were compromised, I, as Data Controller, of the House of Commons, together with the Clerk of the Parliaments (Data Controller of the House of Lords) voluntarily notified the Information Commissioner’s Office (ICO). 26 network accounts were compromised, which is less than 0.5% of the 9,000 accounts on the Parliamentary Network. In total, 39 mailbox accounts were compromised. This number is greater than the total of 26 users because two users had more than one mailbox; and because 11 generic organisational mailboxes were affected. Analysis was undertaken as to the volume and nature of data in the relevant mailboxes, and an assessment made in line with ICO guidance. In the case of one compromised generic organisational mailbox, a Select Committee mailbox, 77 people were notified that personal data (information on personal circumstances provided to support the work of the Committee) was contained in the mailbox and was potentially at risk of compromise19. In response to the notification, the ICO concluded that no further action was necessary, in large part because of the work already being done through the cyber security programme.

19 See www.parliament.uk/mps-lords-and-offices/offices/commons/media-relations-group/news/update-following-cyber-attack/ for more information.

No other incidents reported were judged to be significant enough and did not meet the threshold of being reported to the ICO.

The Information Authority has taken action to improve awareness and behaviour towards information security, with themed monthly messages being communicated across Parliament, and an additional member being added to the Authority to improve engagement with the business. Staff have also been updated on how they need to handle and process information as they have prepared for the introduction of the General Data Protection Regulation. Steps have been taken to ensure that the House can meet its accountability responsibilities, and training has also been provided to Members of Parliament so they can fulfil their legal obligations as data controllers.

Business resilienceOver the course of the year, business resilience across the House has been maintained and developed by the Business Resilience Group, which has oversight across Parliament. In the last year the group has in particular sought assurance on the Relocation Contingencies Programme, several papers on electrical resilience and several reports on the work underway to strengthen our salvage arrangements. During the year we have had occasion to use various of our plans and arrangements in response to significant live incidents. The terrorist attack of March 2017 resulted in a significant review of our Incident Management Framework, resulting in 68 recommendations, 65 of which have now been completed. It has been necessary to engage our Incident Management arrangements on other occasions, such as when there was an escalation of the national security level, during a power outage in the Palace of Westminster, and following an incident of falling masonry. Events such as these have also required Teams to refer to their Business Continuity Plans, and feedback received indicates that Teams have used these occasions to review and revise their plans in a manner which indicates a good understanding of their purpose and the need to keep them up to date. Parliament has again achieved accreditation against the ISO 22301:2012 business continuity standard, and the accompanying report confirmed there is evidence of continual improvement within business continuity systems. During the year, the Relocation Contingencies Programme ended and is now a business as usual activity. However, it remains a high priority area of work in terms of mitigating the risk that access to the Palace is prohibited.

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Estates programmes and projectsIn February, the two Houses endorsed the conclusion of the Joint Committee on the Palace of Westminster, that a full and timely decant of the Palace is the best and the most cost-effective delivery option for its restoration and renewal. Since then, work has proceeded on setting up a Sponsor Board and Delivery Authority, initially in shadow form, before the necessary legislation is enacted. The Restoration and Renewal Programme has a considerable interface with the planning and design of the Northern Estates Programme, so the decision has enabled progress to also be made this major Estate project. However, it will be some years before these programmes complete, and therefore in addition to a number of ongoing projects, we have initiated a Mechanical, Electrical, Public Health & Conservation (MEPC) Programme to maintain the Palace of Westminster before it is possible to decant.

Throughout the year we have continued to evaluate our property portfolio, to ensure that we are able to meet the needs of Members and staff, both in the short and medium term. This year we agreed a lease to occupy Richmond House, which will provide decant accommodation for Members during the Northern Estate Programme and beyond. It has been put to use already, with staff being housed there while refurbishment work is ongoing in other buildings.

I have seen some improvement in the governance of the estates projects and programmes that have started more recently. The audit report on the Elizabeth Tower Refurbishment Project, re-emphasised previous concerns in this area, and in particular in relation to the extent to which lessons are learned and are applied to all capital projects. The report gave an unsatisfactory assurance level in relation to the business case development process and the adequacy of systems to maintain project control. The majority of the issues related to the earlier stages of the project, including the development of the Outline Business Case, and I am assured that action was taken to address these through the more rigorous procedures applied to develop the Full Business Case, which effectively re-baselined the project. However, it is regrettable that through this process, the anticipated cost and time for the project increased significantly. One of the actions taken since then, and outlined in the Strategic Estates Improvement Plan, has been to better quantify the expected level of Optimism Bias and Quantified Risk at key junctures in the lifecycle of Category A projects, contributing to an improved level of project delivery assurance. Additionally, the Governance Framework for Projects and Programmes, approved by the Joint Investment Board in November 2016, includes

a requirement for Category A projects to have an SRO and a Project Board, which were absent from this project at its initiation. The action taken by management since this project began was reflected in the report, which commented that a current assessment of the project would provide an improved assurance rating. It is vital that the lessons from this experience are applied to our other projects. In terms of the restoration work undertaken in this project, I have been impressed by team of experts involved in this refurbishment. The project board have also been able to tell the story of the conservation of this this much-loved landmark to the public, and we must learn these lessons too, particularly when considering the future work on the Palace of Westminster.

The delivery of capital projects is an area of oversight where the two Houses work together, via the Joint Investment Board chaired by the Director General, to decide on the priorities for funding and to gain assurance on, and address concerns regarding, projects and programmes. I am assured that the Joint Investment Board is providing scrutiny and challenge to the prioritisation of the Strategic Estates Portfolio, to ensure that there is an understanding of the capacity and capability to deliver the portfolio and Parliament’s capacity to absorb the changes.

Environmental standardsI am conscious of my statutory responsibilities for compliance with environmental regulations. Progress against our environmental compliance action plan has been made in the year, and we are compliant with all statutory requirements for environmental performance. During the year, we have made preparations drastically to reduce Parliament’s consumption of single-use plastics by 2019. These were announced on 15 May 2018, and the measures will virtually eliminate single-use avoidable plastics, replacing them with compostable alternatives or reusable options.

Health and safetyI am assured that in relation to both food safety and to lower risk and office-based activities we have satisfactory safety management practices. However, there is some scope to make improvements to ensure that these risks are consistently managed.

With regard to higher risks activities, chiefly those related to construction and maintenance, the Parliamentary Safety Assurance Board have informed me that safety management has been found to be variable. This assessment corresponds with an Internal Audit report, which provided limited assurance that safety was effectively managed within the Parliamentary Maintenance Services Team. The audit was commissioned


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by the Managing Director of In-House Services, following his concerns with the health and safety management system and in order to obtain specific information on the location and extent of the weaknesses. While I am concerned by the report, I am assured that immediate action was taken in response to the report, with the formulation of a health and safety transformation plan, and that progress against the plan is being monitored by the In-House Services Management Board. With regard to construction, the volume of activities taking place in close proximity to other users of the Parliamentary Estate has increased, which increases the risk of accidents. It is essential that risk owners work to mitigate these risks, and that our arrangements keep pace with the scope and complexity of the current works. Given the extent of work on the Estate, either underway or being planned, the inherent risk in this area is increasing. To meet this challenge, and maintain an Estate that is safe for all who work within it, it is essential that we improve and update our ways of working, training, risk management, reporting and monitoring in this area. This has begun, through the recognition of the good practices observed among those construction contractors working on the estate. Steps have been taken to learn by example and to improve the health and safety culture within the House Service. In addition, the Parliamentary Safety Assurance Board have set a target that the assurance rating for construction safety be ‘Substantial’ by 2020, achieved through improvements to governance and reporting systems and through strengthening the first and second lines of defence within the risk management framework.

The Fire Safety Manager’s opinion is that the level of assurance for fire safety in 2017−18 remains at ‘Moderate’. During the year, the Crown Premises Fire Inspection Group has held a number of meetings to consider the progress of the Fire Safety Improvements Works Programme, which is intended to achieve life safety mitigations by the end of 2018. To date these meetings have shown that the action plan date of December 2018 will be met, but that any delay in the expected progress would put this date at risk.

Joint workingThere is an important bicameral element to the work of the Commons Executive Board. For this reason, a robust relationship between the administrations of the two Houses is needed to enable both of them to deliver our objectives effectively. The existence of a Board-level risk, which was discussed several times during the year, reflects the importance that is placed on the relationship. Bicameral issues are also considered at joint meetings of both Houses’ Audit Committees,

providing oversight of areas of joint working. This year this has included consideration of the work of the Parliamentary Procurement and Commercial Service, the Enterprise Portfolio Management Office and lessons learned from the cyber-attack.

ConclusionI am grateful to all House Service and Digital Service staff for the admirable professionalism that they have displayed throughout the past 12 months. Thanks to their efforts, often in challenging circumstances, business as usual activity has continued, a phrase which does scant justice to the excellent services of many different sorts provided at all hours and every day of the year. The House Service met the challenge of a snap General Election, with little preparation or planning time for a complex project. The rapid and very effective delivery of this project was achieved through the cooperation and enthusiasm of staff, and demonstrated what can be achieved by colleagues across the House working together. All staff involved in delivering the post-election service, in whatever capacity, should be rightly proud of their achievements. The House Service has continued to provide excellent services to Members, and I am sure that this will continue in the coming year.

In recent years there has been an overall trend of improvement and further bedding down of governance arrangements. The enhanced governance arrangements in place have provided me with a robust assurance regime through which I have been able to assess properly the effectiveness of governance, risk management and internal controls and I am satisfied that the mechanisms in place to manage risks are adequate.

Sir David Natzler KCB, Accounting Officer

House of Commons

13 July 2018


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Remuneration and Staff Report

This section of the report sets out the financial information and commentary about the Commons Executive Board and staff pay for the year ended 31 March 2018.

a. Remuneration policyThe House of Commons Commission has delegated to the Clerk of the House responsibility for ensuring that staff complement, grading, pay and conditions of service of staff in Teams are broadly in line with those of the Home Civil Service. The House operates three separate pay structures for three sections of the organisation; Senior Commons Structure (SCS, in line with Senior Civil Service grades); Catering Staff; and the remaining staff of the House (A-E grades). The House of Commons is an accredited London Living Wage employer.

Those in the Senior Commons Structure (SCS) received consolidated increases ranging from zero to 2%. Awards of 2% were paid to outstanding performers whose salary was below comparators in the Civil Service. The pay band minima for some SCS pay bands was increased, resulting in a small number of staff receiving increases of greater than 2%. The average consolidated increase for those in SCS was 1.49%. In addition SCS staff can also benefit from a system of additional performance awards, that are one-off payments and not consolidated as part of an individual’s future salary entitlement, if the Remuneration Committee considers that they meet the criteria. Those that met the criteria were paid a one-off payment of £7,000, pro-rata for those that had been in post for less than a year.

Staff in A-E pay bands paid below the target rate for their pay band and whose performance was recorded as ‘fully effective’ or ‘outstanding’ in their annual IPR assessment received an award which equated to a one-step progression. Staff already at the target rate, band maximum, or in the higher contribution zone received consolidated awards that amounted to a 1% increase. An additional non-consolidated award, that are one off payments and not consolidated as part of an individual’s future salary entitlement varied from 0.5% to 1.00% to staff at the target rate, band maximum, or in the higher contribution zone . The average consolidated increase for staff in pay band A-E was 1.97%.

Staff in catering bands received a consolidated basic pay award between 1% and 1.76% (average increase

1.49%) in September 2017. An additional non-consolidated award, that are one-off payments and not consolidated as part of an individual’s future salary entitlement, varied from 1% to 1.5%.

Remuneration (salary, benefits in kind and pensions)

Commission external members

The Commission is supported by two external memebers who receive remuneration for their services as follows:

External MembersSalary(£000)

2017–18 2016–17

J Gaymer DBE 25–30 25–30

J McCall 15–20 15–20

Figures in table have been subject to audit

The external members do not receive any bonus payments, benefits-in-kind or pension benefits.


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20 The value of pension benefits accrued during the year is calculated as the real increase in pension multiplied by 20, plus the real increase in any lump sum, less the contributions made by the individual. The real increases exclude adjustments due to inflation or the transfer of pension rights.

The salary and benefits in kind of members of the Commons Executive Board were:

Officials Salary (a)Bonus Payments

(£000)

Benefits in kind (b)

(nearest £100)

Pension benefits20

(£000)

Total

(£000)

2017–18 2016–17 2017–18 2016–17 2017–18 2016–17 2017–18 2016–17 2017–18 2016–17

D Natzler 180–185 175–180 - - 16.2 15.6 (5) 37 190–195 230–235

I Ailles (c) 160–165 160–165 - 0–5 - - - - 160–165 165–170

M Barrett (d) 120–125 120–125 - - - - 18.2 23 140–145 140–145

C. Bamford (d) (from 12 September 2016)

105–11055-60(100-

105FYE)0–5 - - - 18.8 10 125–130 65–70

J Benger 125–130 125–130 - - - - 6 83 130–135 205–210

J Borley CB (e) (until 31 October 2016)

-165–170

(125–130FYE)

- - - - - 29 - 195–200

L Bridges(from 25 April 2016 until 30 November 2017)

50–55 (75-80FYE)

65–70 (70–75FYE)

- - - - 20 27 70–75 95–100

M Cwynarski(from 10 Oct 2016 until 30 November 2017)

50–55 (80–85FYE)

35–40 (80–85FYE)

- - - - 25 21 75–80 60–65

B Finnimore(from 10 June 2016 until 31 March 2018)

90–9585–90 (105–

110FYE)- - - - 36 34 125–130 120–125

T Goldsmith(from 25 April 16 to 9 October 2016)

-30–35

(70–75FYE)- - - - - 14 - 45–50

R Greig (f)(until 8 September 2017)

50–55 (120–125FYE)

115–120 - 5–10 - - 21 47 70–75 170–175

E Hepburn(from 1 September 2016)

105–11060–65 (100–

105FYE)0–5 - - - (33) 13 75–80 70–75

M Hutton(from 25 April 2016 to 24 June 2016)

-15–20

(95–100FYE)- - - - - 4 - 15–20

T Jessup (f)(from 9 September 2017)

50–55 (95–100FYE)

- - - - - 49 - 100–105 -


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OfficialsSalary (a)

(£’000)

Bonus Payments

(£000)

Benefits in kind (b)

(nearest £100)

Pension benefits21

(£000)

Total

(£000)

2017–18 2016–17 2017–18 2016–17 2017–18 2016–17 2017–18 2016–17 2017–18 2016–17

P Martin(from 25 April 2016 to 9 September 2016)

-

35–40(100– 105 FYE)

- - - - - 10 - 45–50

P Richards(from 25 April 2016 until 30 November 2017)

45–50(70–75

FYE)

65–70(65–70

FYE)- - - - 19 25 65–70 90–95

A Toft(from 25 June 2016 until 30 November 2017)

40–45(65–70

FYE)

45–50(60–65

FYE)- - - - 39 18 80–85 65–70

A Walker (e)(until 31 October 2016)

-165–170

(125– 130 FYE)

- - - - - 18 - 185–190

E Watchorn(from 1 October 2016 until 30 November 2017)

45–50(70–75

FYE)

30–35(65–70

FYE)- - - - 26 23 70–75 55–60

P Young 120–125 120–125 - - - - 48 47 170–175 165–170

Figures in the table have been subject to audit

21 The value of pension benefits accrued during the year is calculated as the real increase in pension multiplied by 20, plus the real increase in any lump sum, less the contributions made by the individual. The real increases exclude adjustments due to inflation or the transfer of pension rights.

(a) Salary includes gross salary and allowances.

(b) Benefits in kind: The monetary value covers any benefits provided by the House and treated by HM Revenue and Customs as a taxable emolument. These figures represent the benefit from the official residences that officers are required to use in the course of their duties.

(c) I Ailles has opted out of the Civil Service pension arrangements.

(d) Two board members, M Barrett and C Bamford, have opted to have partnership pensions rather that joining the Civil Service Pension Scheme. The figures shown under pension benefits are the employer’s contributions.

(e) Compensation for loss of office: J Borley and A Walker received compensation payments of £90,000–£95,000 when they left the House of Commons on 30 September 2016 following an organisational restructure. These payments were agreed in the 2015–16 reporting year.

(f) The salary and pension benefits for the Director of Parliamentary Digital Service are paid directly by the House of Commons; 30% of the costs are recharged to the House of Lords. The salary and pension benefits disclosed represent the total remuneration package paid between the two Houses. During the year R Greig left the House of Commons and was replaced by T Jessup.


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Pension benefits (audited)

The pension entitlements for the members of the Commons Executive Board, covering the period during which they were on the Board, were as follows (for

22 The figures may be different from the closing figures in the 2016–17 Annual Accounts due to the Cash Equivalent Transfer Values (CETV) factors being updated to comply with the Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008.

23 Taking account of inflation, the CETV funded by the employer has decreased in real terms

2016–17 figures, see House of Commons Annual Accounts, HC 226):

Accrued pension and related lump sum at 31/3/18

(£000)

Real increase in pension and related lump sum at 31/3/18

(£000)

CETV at 31/3/18

(£000)

CETV at 31/3/1722

(£000)

Real increase In CETV

(£000)

D Natzler 95–100 plus lump sum of 285–290

0–2.5 plus lump sum of 0–2.5

2,002 1,976 (6)23

J Benger 45–50 plus lump sum of 145–150


1,127 1,050 6

L Bridges(from 25 April 2016 until 30 November 2017)

10–15 0–2.5 127 110 9

M Cwynarski(from 10 Oct 2016 until 30 November 2017)

15–20 plus lump sum of 35–40


284 256 13

B Finnimore(from 10 June 2016 until 31 March 2018)

20–25 0–2.5 337 292 27

R Greig (until 8 September 2017) 5–10 0–2.5 61 49 7

E Hepburn (from 1 September 2016)


0 plus lump sum of 0–2.5

834 801 (32)23

T Jessup(from 9 September 2017)


0–2.5 plus lump sum of 2.5–5

282 252 22

P Richards(from 25 April 2016 until 30 November 2017)

5–10 0–2.5 112 99 9

A Toft(from 25 June 2016 until 30 November 2017)

15–20 0–2.5 245 214 25

E Watchorn(from 1 October 2016 until 30 November 2017)

10–15 0–2.5 154 138 11

P Young 5–10 2.5–5 105 66 28



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Civil Service Pensions

Pension benefits are provided through the Civil Service pension arrangements. From 1 April 2015 a new pension scheme for civil servants was introduced – the Civil Servants and Others Pension Scheme or alpha, which provides benefits on a career average basis with a normal pension age equal to the member’s State Pension Age (or 65 if higher). From that date all newly appointed civil servants and the majority of those already in service joined alpha. Prior to that date, civil servants participated in the Principal Civil Service Pension Scheme (PCSPS). The PCSPS has four sections: three providing benefits on a final salary basis (classic, premium or classic plus) with a normal pension age of 60; and one providing benefits on a whole career basis (nuvos) with a normal pension age of 65.

These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus, nuvos and alpha are increased annually in line with Pensions Increase legislation. Existing members of the PCSPS who were within 10 years of their normal pension age on 1 April 2012 remained in the PCSPS after 1 April 2015. Those who were between 10 years and 13 years and 5 months from their normal pension age on 1 April 2012 will switch into alpha sometime between 1 June 2015 and 1 February 2022. All members who switch to alpha have their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the member has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes.) Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a ‘money purchase’ stakeholder pension with an employer contribution (partnership pension account).

Employee contributions are salary-related and range between 4.6% and 8.05% for members of classic, premium, classic plus, nuvos and alpha. Benefits in classic accrue at the rate of 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to three years initial pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum. Classic plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as

per classic and benefits for service from October 2002 worked out as in premium. In nuvos a member builds up a pension based on their pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member’s earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and the accrued pension is uprated in line with Pensions Increase legislation. Benefits in alpha build up in a similar way to nuvos, except that the accrual rate is 2.32%. In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004.

The partnership pension account is a stakeholder pension arrangement. The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member) into a stakeholder pension product chosen by the employee from a panel of providers. The employee does not have to contribute, but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.5% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement.)

The accrued pension quoted is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age. Pension age is 60 for members of classic, premium and classic plus, 65 for members of nuvos, and the higher of 65 or State Pension Age for members of alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes, but note that part of that pension may be payable from different ages.)

Further details about the Civil Service pension arrangements can be found at the website www.civilservicepensionscheme.org.uk

Cash Equivalent Transfer Values

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made


http://www.civilservicepensionscheme.org.uk

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by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.

The figures include the value of any pension benefit in another scheme or arrangement which the member has transferred to the Civil Service pension arrangements. They also include any additional pension benefit accrued to the member as a result of their buying additional pension benefits at their own cost. CETVs are worked out in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

Real increase in CETV

This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Fair Pay Disclosure

Reporting bodies are required to disclose the relationship between the remuneration of the highest-paid director in their organisation and the median remuneration of the organisation’s workforce.

The following table shows the ratio of the median of all House staff remuneration compared to the highest paid member of the Commons Executive Board:

2017–18 2016–17

Highest earner’s total remuneration (£000)

195–200 195–200

Median of total remuneration (£) 30,772 31,050

Ratio 6.42 6.36


Total remuneration includes annualised salary, non-consolidated performance-related pay and benefits-in-kind. It does not include severance payments, employer pension contributions and the cash equivalent transfer value of pensions.

In 2017–18, no employee received remuneration in excess of the highest paid member of the Commons Executive Board (2016–17: 0). Remuneration ranged from £3,000 to £200,000 (2016–17: £3,000 to £200,000).


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b. Staff Report

Staff costs and related numbers

The House of Commons staff costs comprise:

2017–18 2016–17

Charged to revenue

budgets

Charged to capital budgets

TotalCharged

to revenue budgets

Charged to capital budgets

Total

£000 £000 £000 £000 £000 £000

Wages and salaries 81,395 539 81,934 76,674 548 77,222

Social security costs 8,514 68 8,582 7,863 60 7,923

Other pension costs 15,721 76 15,797 14,768 107 14,875

Contributions to stakeholder

pensions273 11 284 216 - 216

Sub Total 105,903 694 106,597 99,521 715 100,236

Inward secondments/agency staff 8,885 1,608 10,493 6,570 1,306 7,876

Sub Total 114,788 2,302 117,090 106,091 2,021 108,112

Less recoveries in respect of outward

secondments(928) - (928) (733) - (733)

Total net costs 113,860 2,302 116,162 105,358 2,021 107,379


The increase in staff costs when compared to the prior year can be explained by additional security staff and an increase in staff resources to deliver projects and programmes.

The Principal Civil Service Pension Scheme (PCSPS) and the Civil Servants and Others Pension Scheme (CSOPS), known as ‘alpha’, are unfunded multi-employer defined benefit schemes in which the House of Commons is unable to identify its share of the underlying assets and liabilities. The full actuarial valuation was carried out as at 31 March 2014. Details can be found in the resource accounts of the Cabinet Office: Civil Superannuation (www.civilservicepensionscheme.org.uk/about-us/resource-accounts).

For 2017–18, employer contributions of £15,818,000 (2016–17: £14,875,000) were payable to the civil service pension schemes at one of four rates in the range 20.0 to 24.5 per cent of pensionable pay, based on salary bands. The Scheme Actuary reviews employer contributions every four years following a full scheme valuation. The contribution rates are set to meet the

cost of the benefits accruing during 2016–17 to be paid when the member retires, and not the benefits paid during this period to existing pensioners.

Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution. Employers’ contributions of £283,800 (2016–17: £216,360) were paid to one or more of a panel of three appointed stakeholder pension providers. Employer contributions are age-related and range from 8% to 14.75% of pensionable pay. Employers also match employee contributions up to 3% of pensionable pay. In addition, employer contributions of £10,000 (0.5%; 2016–17: £8,000, 0.5%) of pensionable pay, were payable to PCSPS to cover the cost of the future provision of lump sum benefits on death in service and ill health retirement of these employees. Contributions due to the partnership pension providers at the reporting period date were £nil (2016–17: £4,600).

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Exit packages

Exit package cost Number of redundancies

Number of other departures agreed

2017–18 2016–17 2017–18 2016–17

<£10,000 - - 39 2

£10,000 – £25,000 - - 8 18

£25,000 – £50,000 - - 5 11

£50,000 – £100,000 - - 2 12

Total number of exit packages by type - - 54 43

Total Resource cost ( £) - - 527,148 1,620,505


Departure costs during 2017–18 have been calculated in accordance with the provisions of the Civil Service Compensation Scheme (CSCS), a statutory scheme made under the Superannuation Act 1972. Exit costs are accounted for in full in the year that the departure is agreed. The House did not run a voluntary exit scheme in 2017–18 however as a consequence of a judicial review on the CSCS, the voluntary exits the House agreed in 2016–17 were reviewed and as a consequence the House incurred additional costs. These are shown above along with new exit packages agreed in the year.

Within the figures above are 32 cases (£254,000) that are broadly consistent with the CSCS although they were not part of a formal House-wide exit scheme. They are also included in note 4 (Parliamentary Accountability Disclosures).

Ill-health retirement costs are covered by the pension scheme and are not included in the table.

Average number of persons employed

The average number of full-time equivalent (FTE) persons employed during the year including those staff involved in delivering shared services funded by the House of Lords, were:

2017–18 2016–17

Average number (permanent staff)

2,374 2,321

Average number (agency staff)

57 46

Staff composition

The House holds information of the number of people who have declared a non-binary gender, the figures are too low to publish as it may be possible to identify individuals. The following table analyses the number of people in each of the two main genders.

At 31 March 2017 Male Female

ExCo 2 1

Board 6 5

SCS 47 27

Employees 1,407 1,110

At 31 March 2018 Male Female

CEB 6 3

SCS 47 34

Employees 1,483 1,179


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Sickness absence data

The recorded sickness absence figure for 2017–18 stands at 6.6 average working days not worked per person. (2016–17: 6.1 average workings days). The 2016–17 figure compares with 5.9 days in the Civil Service (this is the latest figure available).

Staff policies applied during the financial year

Candidates are asked at application stage if they require any adjustments at any stage of the recruitment process, for example additional time to undertake written tests. The House Recruitment team are responsible for ensuring that requests for adjustments from candidates are managed effectively. In some cases this may require liaison with the Diversity and Inclusion team. In addition, the House runs a ‘Recruiting for Excellence’ one day training course which is mandatory for managers to attend prior to recruiting new staff - this course includes a session on diversity. The House also introduced a set of training requirements called ‘the essentials’, which all staff had to complete in the

reporting year. These included financial training (for budget managers), diversity and inclusion training and fire safety training.

Expenditure on consultancy

During 2017–18 £1,024,000 was incurred on consultancy costs. (2016–17: £1,616,000)

Tax arrangements of Public Appointees

On 23 May 2012 the Treasury published Review of the Tax Arrangements of Public Sector Appointees, and on 24 August 2012 the Cabinet Office published the Procurement Policy Note Tax Arrangements of Public Appointees.

Off-payroll engagements within Parliamentary Digital Services (formerly PICT) are reported in full in the following table even though their costs are shared with the House of Lords.


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Table 1: For all off-payroll engagements as of 31 March 2018, for more than £245 per day and that lasted for longer than six months

Number

Existing engagements as of 31 March 2018 44

Of which at the time of reporting have existed for:

less than one year 13

between one and two years 26

between two and three years 2

between three and four years -

for four years or more 3

Table 2: For all new off-payroll engagements, or those that reached six months in duration, between 1 April 2017 and 31 March 2018, for more than £245 per day and that last for longer than six months.

Number

New engagements, or those that reached six months in duration between 1 April 2017 and 31 March 2018

38

Of which:

Number assessed as caught by IR35 1

Number assessed as not caught by IR35 37

Number engaged directly (via PSC contracted to the House) 1

Number of engagements reassessed for consistency/assurance purposes during the year 0

Number of engagements that saw a change to IR35 status following the consistency review 0

Table 3: For any off-payroll engagements of Board Members, and/or, senior officials with significant financial responsibility, between 1 April 2017 and 31 March 2018

Number

Off-payroll engagements of board members, and/or senior officials with significant financial responsibility, during the financial year.

-

Individuals that have been deemed ‘board members, and/or senior officials with significant responsibility’, during the financial year both off-payroll and on-payroll. 15

Of the 15 officials, 10 are members of the Commons Executive Board and 5 were senior officials (not Board Members) with budgetary responsibility in excess of £10 million.

Sir David Natzler KCB, Accounting Officer,

House of Commons

13 July 2018


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3. Parliamentary Accountability and Audit Report

24 Explanations of variances between the Estimate and Outturn are provided in the Statement of Parliamentary Supply Commentary).25 DEL equivalent represents Departmental Equivalent Limit equivalent as defined in the Main Estimate (HC1119) and Supplementary Estimate (HC788).

a. Statement of Parliamentary SupplyIn addition to the primary statements prepared under IFRS, the Financial Reporting Manual (FReM) requires the House to prepare a Statement of Parliamentary Supply with supporting notes to show outturn against the Supply Estimate presented to Parliament. It further compares the outturn performance against the

Department Equivalent Limit equivalent (DEL equivalent) expenditure control set by the Estimate.

Figures in the area outlined in bold are voted totals or other totals subject to Parliamentary control and audit. For Estimate purposes, the House’s expenditure is classified as administration except for donated assets.

Summary of Resource and Capital Outturn 2017–18

Estimate

Outturn 2017–18

2016–17Outturn

Note VotedNon-

VotedTotal Voted

Non-Voted

Total

Voted outturn

compared with

Estimate: saving/

(excess)24

Total

Departmental

Expenditure

Limit

equivalent25

£000 £000 £000 £000 £000 £000 £000 £000

ResourceSoPs

1.1255,833 100 255,933 228,693 - 228,693 27,140 211,028

Capital SoPs

1.2202,700 - 202,700 194,175 - 194,175 8,525 46,891

Total 458,533 100 458,633 422,868 - 422,868 35,665 257,919

Net cash requirement 2017–18

Note2017–18Estimate

2017–18Outturn

Outturn compared

with Estimate:

saving/ (excess)

2016–17Outturn

£000 £000 £000 £000

SoPS 3 328,300 275,629 52,671 231,903


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Administration Costs 2017–18

2017–18 Estimate

2017–18 Outturn

2016–17 Outturn

£000 £000 £000

SoPS 3 255,933 228,693 211,028

Notes to the Statement of Parliamentary Supply (SoPS)

SoPS 1. Net outturn

SoPS 1.1. Analysis of net resource outturn

Estimate Outturn 2017–18 2016–17

Gross Income Net Gross Income Net Variance

net

Outturn

to

Estimate

Outturn

£000 £000 £000 £000 £000 £000 £000 £000

Spending in DEL

equivalent273,933 (18,100) 255,833 248,271 (19,578) 228,693 27,140 211,028

Non-voted 100 - 100 - - - 100 -

SoPS 1.2. Analysis of net capital outturn

Estimate Estimate Outturn 2017–18 2016–17

Gross Income Net Gross Income Net Variance

net

Outturn to

Estimate

Outturn

£000 £000 £000 £000 £000 £000 £000 £000

Spending in DEL

equivalent202,700 - 202,700 194,175 - 194,175 8,525 46,891

Non-voted - - - - - - - -

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SoPS 2. Reconciliation of net resource outturn to net operating cost

NoteOutturn2017–18

Outturn2016–17

£000 £000

Total resource outturn in Statement of Parliamentary Supply SoPS 1.1

Voted 228,693 211,028

Non-Voted - -

Donations classified as capital income - (15)

Net Expenditure in Statement of Comprehensive Net Expenditure 228,693 211,013

SoPS 3. Reconciliation of net resource outturn to net cash requirement

Note Estimate Outturn

Net total outturn

compared with estimate:

saving/ (excess)

£000 £000 £000

Resource Outturn SoPS 1.1 255,933 228,693 27,240

Capital Outturn SoPS 1.2 202,700 194,175 8,525

Accruals to cash adjustments:

Adjustments to remove non-cash items:

Non-cash items – other administration costs 3 (27,200)

(31,382) 4,182

Non-cash items – other capital costs 2,084 (2,084)

Adjustments to reflect movements in working balances:

Increase/(decrease) in inventories 10 106 (106)

Increase/(decrease) in receivables 12 3,575 (3,575)

(Increase)/decrease in payables 13 (10,027) 10,027

(Increase)/decrease in payables falling due after more than one year 13 (103,033) (111,728) 8,695

Use of provision 14 133 (133)

Removal of non-voted budget items SoPS 1.1 & 1.2

(100) - (100)

Net Cash Requirement 328,300 275,629 52,671

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b. Statement of Parliamentary Supply Commentary

Scope of the Estimate

These accounts cover expenditure arising from general administration of the House of Commons and activities undertaken to meet Parliament’s objectives, associated commercial activities; grants to organisations who promote the House of Commons’ objectives, and other non-cash costs. Income arising from rental, fees and charges in connection with activities within Parliament.

The cost of Members’ salaries, allowances and other related expenditure is borne in the main by the Independent Parliamentary Standards Authority (IPSA) Estimate; a small amount of expenditure is met by the House of Commons Members Estimate.

Resources

The 2017–18 budget was the second year of the 2016–21 strategy, with a key focus on delivering the House Services three objectives, whilst seeking to improve our services to customers, enhance the House’s reputation, ensure that we deliver value for money and use our resources effectively, and that we have a positive impact in the work of Members.

The House of Commons Commission agreed a resource budget of £258.0 million (£257.9 million voted and £0.1 million non-voted) (HC 1119) in April 2017. This was reduced by £2.1 million via supplementary estimate (HC 788) in February 2018 to reflect the transfer of budgets from the Members Estimate to the Administration Estimate. There were a number of reasons for this transfer but the key driver was to improve financial monitoring of these budgets. The budgets transferred included Members IT equipment, whose net asset value (£2.1 million) was transferred to the Administration Accounts.

The resource budget shows an underspend of £27.1 million against the budget of £255.8 million. Most of this underspend relates to property rent and rates (£14.1 million) and in particular an assumption that the House would be permitted to use part of 100 Parliament Street which did not happen. In addition resource building projects associated with 100 Parliament Street, Restoration and Renewal and 7 Millbank were delayed or cancelled which accounts for another £12.1 million.

The snap election in June 2017 also had an impact on some budgets but to a much lesser extent; a substantial part of the Chamber and Committee Team’s £2 million underspend was due to the election. In addition, income was less than expected for catering, tours and retail.

Forecasting building valuations continues to be challenging; a drop in investment property values due to challenges faced by the retail market resulted in a £3.0 million charge to resource. However this was off-set by a lower depreciation charge as a result of delays in the capital programme.

Capital

The House agreed an initial capital budget of £154.1 million which was increased by £48.6 million via the supplementary estimate. At the time of the supplementary estimate the accounting treatment of Richmond House was under review and budgetary cover was required to cover a variety of options. Richmond House was occupied by the Department of Health but the building is owned by the Department for Communities and Local Government. There is an agreement that the House of Commons will occupy the property at a peppercorn rent until the summer of 2019. It is the intention of all parties concerned that Richmond House will be transferred to the House of Commons during 2019 at book value but for no consideration. This transaction has been included in these accounts as a finance lease.

Capital expenditure totalled £194.2 million against the total budget of £202.7 million, of this £117 million relates to Richmond House, £18.3 million for 1 Canon Row, £12.2 million for fire safety works, £6.5 million for work on the cast iron roofs as well as the main strategic programmes detailed in the following sections. The £8.5 million underspend is due to delays in a number of projects, notably Canon Row (£7.2 million) off-set by £2.1 million transfer of assets from the Members Estimate.


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Strategic Programmes

Restoration and Renewal The Joint Committee on the Palace of Westminster and the Public Accounts Committee both recommended full decant whilst the Palace of Westminster is restored and for the work to be delivered through an arm’s-length delivery authority. This was put to both Houses in January and February 2018 and both Houses concurred with this approach.

Spend this year on the Restoration and Renewal programme was less than the estimate due to the delay in reaching this decision and progress continues to be slow as legislation is now required to establishe the delivery body. However, plans continue to progress the programme in terms of setting up the structure of a shadow delivery authority and in delivering the outline business case to support the programme.

The House of Commons’ contribution to the Programme in 2017–18 was £3.9 million in capital expenditure and £1.8 million is resource expenditure. The contribution from the House of Commons in prior years is:

Pre 2015–16 2015–16 2016–17 2017–18

£million £million £million £million

Resource 0.4 0.8 1.3 1.8

Capital 3.2 3.8 2.7 3.9

Northern Estates Programme

The Northern Estate Programme involves the refurbishment of four currently occupied listed buildings, Norman Shaw North, 1 Derby Gate, Norman Shaw South and 1 Parliament Street, preceded by the acquisition and refurbishment of Richmond House.

The original plans for this building were to use it for Members’ and Members’ staff accommodation for the duration of works to the Northern Estate. Whilst the medium term plans for Richmond House remain the same, in the short-term, the building is being used to accommodate House staff from 7 Millbank to enable disruptive works to be undertaken on that property.

Costs incurred on the Northern Estate Programme in 2017–18 are £13.9 million (£13.2 million capital, £0.7 million resource). Of this, £5.7 million relates to the development of Richmond House for its future use but does not include the cost of temporary decant of staff from 7 Millbank. Prior years costs are:

2015–16 2016–17 2017–18

£million £million £million

Resource 0.1 3.0 0.7

Capital 1.2 6.8 13.2

Elizabeth Tower

Work started early in 2017 to erect the scaffolding around the Elizabeth Tower to facilitate the refurbishment of this iconic landmark. It has taken nearly a year to erect the 800 tonnes of scaffolding around the 96 metre tower. The House of Commons has contributed £8.3 million capital to date with £7.2 million spent in 2017–18.

Cash

Changes to planning assumptions on the Restoration and Renewal and Northern Estate Programmes have resulted in a lower capital requirement. For Restoration and Renewal the delay in obtaining a Decision in Principle contributed to a £9.8m million underspend for the accommodation complexities mentioned earlier in the report contributed towards the £46.3 million underspend Northern Estates. The combined impact is a cash reduction to Capital of £56.1 million.

The House agreed an initial cash requirement of £384.4 million for 2017–18 but this was reduced by £56.1 million to £328.3 million via the supplementary estimate. This reduction was due to changes in the planning assumptions for the Restoration and Renewal, and Northern Estate Programmes.

The cash underspend of £52.7 million is driven mainly by the underspends on the resource and capital budgets (total £38.9 million) along with £14.5 million in working capital movements (details can be found in SoPS 3: Reconciliation of net resource outturn to net cash requirement).


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4. Parliamentary Accountability Disclosures

a. Losses and special payments This section is subject to audit

Losses Statement

2017–18 2016–17

Total number of cases 13 41

Total value of cases (£000) 60 (34)

Details of cases over £300,000

There were no cases over £300,000 in 2017–18 (2016–17: nil)

Special Payments

2017–18 2016–17

Total number of cases 64 34

Total value of cases (£000) 533 608

There are no special payments which exceed £300,000. (2016–17: nil.)

b. Fees and ChargesThis section is subject to audit

The main areas for generating income are catering (including banqueting), and tours (including retail). Fees and charges for all areas are set in accordance with the House of Commons policy which is published at

www.parliament.uk/site-information/foi/transparency-publications/hoc-transparency-publications/financial-information/financial-policies

Income received during 2017–18 was £9.7 million for catering (£10.1 million in 2016–17) and £4.3 million (£4.6 million for 2016–17) for tours and retail. Catering were affected by the snap election and tours and retail were affected by terror related closures. Tours and retail are expected to recover the cost of providing the service, whereas the cost of the catering services was £3.0 million.

c. Remote Contingent LiabilitiesThis section is subject to audit

In accordance with IAS 37, the House discloses for parliamentary reporting and accountability purposes certain statutory and non-statutory contingent liabilities where the likelihood of a transfer of economic benefit is remote, in accordance with the HM Treasury publication Managing Public Money.

As at 31 March 2018 there is a remote contingent liability relating to Works of Art on loan from various collections. Whilst there is no expectation this will be triggered, the liability is estimated at £2.4 million (2016–17: nil).

Sir David Natzler KCB, Accounting Officer,

House of Commons

13 July 2018


http://www.parliament.uk/site-information/foi/transparency-publications/hoc-transparency-publications/financial-information/financial-policies/



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5. Certificate and Report of the Comptroller and Auditor General to the House of Commons

Opinion on financial statements

I certify that I have audited the financial statements of the House of Commons Administration for the year ended 31 March 2018. The financial statements comprise: Statements of Comprehensive Net Expenditure, Financial Position, Cash Flows, Changes in Taxpayers’ Equity and the related notes, including the significant accounting policies. These financial statements have been prepared under the accounting policies set out within them.

I have also audited the Statement of Parliamentary Supply and the related notes, and the information in the Accountability Report that is described in that report as having been audited.

In my opinion:

• the financial statements give a true and fair view of the state of the House of Commons Administration’s affairs as at 31 March 2018 and of its net expenditure for the year then ended; and

• the financial statements have been properly prepared in accordance with the Financial Reporting Manual as adapted or interpreted for the House of Commons context.

Opinion on regularity

In my opinion, in all material respects:

• the Statement of Parliamentary Supply properly presents the outturn against voted Parliamentary control totals for the year ended 31 March 2018 and shows that those totals have not been exceeded; and

• the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Basis of opinions

I conducted my audit in accordance with International Standards on Auditing (ISAs) (UK) and Practice Note 10 ‘Audit of Financial Statements of Public Sector Entities in the United Kingdom’. My responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of my certificate. Those standards require me and my staff to comply with the Financial Reporting Council’s Revised Ethical Standard 2016. I am independent of the House of Commons Administration in accordance with the ethical requirements that are relevant to my audit and the financial statements in the UK. My staff and I have fulfilled our other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Responsibilities of the Accounting Officer for the financial statements

As explained more fully in the Statement of Accounting Officer’s Responsibilities, the Accounting Officer is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

Auditor’s responsibilities for the audit of the finan-cial statements

My responsibility is to audit, certify and report on the financial statements in accordance with ISAs (UK).

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


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As part of an audit in accordance with ISAs (UK), I exercise professional judgment and maintain professional scepticism throughout the audit. I also:

• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the House of Commons Administration’s internal control.

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the House of Commons Administration’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the entity to cease to continue as a going concern.

• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

I am required to obtain evidence sufficient to give reasonable assurance that the Statement of Parliamentary Supply properly presents the outturn against voted Parliamentary control totals and that those totals have not been exceeded. The voted Parliamentary control totals are Departmental Expenditure Limit equivalent (Resource and Capital), Non-Budget (Resource) and Net Cash Requirement. I am also required to obtain evidence sufficient to give reasonable assurance that the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.


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Other Information

The Accounting Officer is responsible for the other information. The other information comprises information included in the annual report, other than the parts of the Accountability Report described in that report as having been audited, the financial statements and my auditor’s report thereon. My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon. In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

Opinion on other matters

In my opinion:

• the parts of the Accountability Report to be audited have been properly prepared in accordance with the Financial Reporting Manual as adapted or interpreted for the House of Commons context;

• in the light of the knowledge and understanding of the House of Commons Administration and its environment obtained in the course of the audit, I have not identified any material misstatements in the Performance Report or the Accountability Report; and

• the information given in the Performance and Accountability Reports for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which I report by exception

I have nothing to report in respect of the following matters which I report to you if, in my opinion:

• adequate accounting records have not been kept or returns adequate for my audit have not been received from branches not visited by my staff; or

• the financial statements and the parts of the Accountability Report to be audited are not in agreement with the accounting records and returns; or

• I have not received all of the information and explanations I require for my audit; or

• the Governance Statement does not reflect compliance with HM Treasury’s guidance.

Report

I have no observations to make on these financial statements.

Sir Amyas C E Morse KCB

Comptroller and Auditor General

National Audit Office 157-197 Buckingham Palace Road

Victoria, London, SW1W 9SP

17 July 2018


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Statement of Comprehensive Net Expenditure 90

Statement of Financial Position 91

Statement of Cash Flows 92

Statement of Changes in Taxpayers’ Equity 93

Notes to the Accounts 94

03 Financial Statements

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Financial Statements

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Financial StatementsStatement of Comprehensive Net Expenditure

For the Year ended to 31 March 2018

This account summarises the expenditure and income generated and consumed on an accruals basis. It also includes other comprehensive income and expenditure,

which include changes to the values of non-current assets and other financial instruments that cannot yet be recognised as income or expenditure.

2017–18 2016–17

Note £000 £000

Income from sale of goods & services 5 (17,510) (16,732)

Other operating income - -

Total operating income (17,510) (16,732)

Staff costs 3 113,860 105,358

Purchase of goods & services 3 99,481 97,571

Depreciation & Impairment 3 26,828 20,721

Grants 3, 4 3,548 3,605

Other costs/(gain) 3 4,554 490

Total operating expenditure 248,271 227,745

Net expenditure before transfer of estimate 230,761 211,013

Transfer of estimate (2,068) -

Net expenditure for the year 228,693 211,013

Other Comprehensive Net Expenditure 2017–18 2016–17

£000 £000

Items which will not be reclassified to net operating costs:

- revaluation of Property, Plant and Equipment 2.1 (174,213) 38,347

Comprehensive net expenditure for the year 54,480 249,360


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Statement of Financial Position

As at 31 March 2018

This statement presents the financial position of the House. It comprises three main components: assets owned or controlled; liabilities owed to other bodies; and equity, the remaining value of the entity.

31 March 2018

31 March 2017

Note £000 £000 £000 £000

Non-current assets:

Property, plant and equipment 6 1,493,350 1,153,729

Intangible assets 8 786 658

Total non-current assets 1,494,136 1,154,387

Current assets:

Inventories 10 588 482

Trade and other receivables 12 15,731 12,156

Cash and cash equivalents 11 1,677 4,995

Total current assets 17,996 17,633

Total assets 1,512,132 1,172,020

Current liabilities

Trade and other payables 13 (51,147) (44,449)

Total current liabilities (51,147) (44,449)

Total assets less current liabilities 1,460,985 1,127,571

Non-current liabilities

Provisions 14 (5,055) (4,614)

Finance Lease liability 13 (111,728) -

Total non-current liabilities (116,783) (4,614)

Total assets less liabilities 1,344,202 1,122,957

Taxpayers’ equity and other reserves:

General fund 855,960 801,020

Revaluation reserve 486,942 320,648

House of Commons Commission reserve 1,300 1,289

Total equity 1,344,202 1,122,957

Sir David Natzler KCB, Accounting Officer, House of Commons, 13 July 2018


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Statement of Cash Flows

For year ended 31 March 2018

The Statement of Cash Flows shows the changes in cash and cash equivalents of the House during the reporting period. The statement shows how the House generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of service costs and the extent to which these

operations are funded by way of income from the recipients of services provided by the House. Investing activities represent the extent to which cash inflows and outflows have been made for resources which are intended to contribute to the Houses’ future public service delivery. Cash flows arising from financing activities include Parliamentary Supply and other cash flows.

2017–18 2016–17

Note £000 £000

Cash flows from operating activities

Net operating cost (230,761) (211,013)

Adjustments for non-cash transactions 3 31,382 21,211

(Increase)/Decrease in trade and other receivables 12 (3,575) 9,478

(Increase)/Decrease in inventories 10 (106) 51

Increase/(Decrease) in trade payables 13 10,027 (4,291)

Less movements in payables not passing through SCNE 9.3 (5,272) -

Use of provisions 14 (133) (433)

Transfer of estimate26/Donated Asset 6 (16) (15)

Net cash outflow from operating activities (198,454) (185,012)

Cash flows from investing activities

Purchase of property, plant and equipment 6 (193,778) (46,361)

Purchase of intangible assets 8 (397) (530)

Net cash outflow from investing activities (194,175) (46,891)

Cash flows from financing activities

From the Consolidated Fund (Supply) – current year 272,300 233,433

Interest received on Commission Reserve Balance 11 1

Capital element of payment in respect of finance lease and on balance sheet

(SOFP) Service concession contracts117,000 -

Net financing 389,311 233,434

Net increase/(decrease) in cash and cash equivalents in the period before and

after adjustment for receipts and payments to the Consolidated Fund(3,318) 1,531

Cash and cash equivalents at the beginning of the period 11 4,995 3,464

Cash and cash equivalents at the end of the period 11 1,677 4,995

26 The transfer of estimate relates to non-cash items totalling £2,084,000. The net transfer of £2,068,000 includes cash items totalling £16,000.


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Statement of Changes in Taxpayers’ Equity

For the year ended 31 March 2018

This statement shows the movement in the year on the different reserves held by the House, analysed into ‘general fund reserves’ (i.e. those reserves that reflect a contribution from the Consolidated Fund). Financing and the balance from the provision of services are

recorded here. The Revaluation Reserve reflects the change in asset values that have not been recognised as income or expenditure. Other earmarked reserves are shown separately where there are statutory restrictions on their use.

General Fund

Revaluation Reserve

Commission Reserve

Total Reserves

Note £000 £000 £000 £000

Balance at 31 March 2016 775,455 363,583 1,288 1,140,326

Net Parliamentary Funding –

drawn down233,433 - - 233,433


deemed13 2,178 - - 2,178

Supply (payable)/receivable

adjustment13 (3,706) - - (3,706)

Net Operating Cost (211,013) - - (211,013)

Non-Cash Adjustments

Non-cash charges – auditor’s

remuneration3 85 - - 85

Movement in Reserves

Additions - - 1 1

Recognised in Statement of

Comprehensive Expenditure- (38,347) - (38,347)

Transfers between reserves 4,588 (4,588) - -

Balance at 31 March 2017 801,020 320,648 1,289 1,122,957


drawn down272,300 - - 272,300

Net Parliamentary Funding – deemed 13 3,706 - - 3,706

Supply (payable)/receivable adjustment 13 (377) - - (377)

Net Cost (228,693) - - (228,693)

Non-Cash Adjustments

Non-cash charges – auditor’s

remuneration3 85 - - 85

Movement in Reserves

Additions - - 11 11

Recognised in Statement of

Comprehensive Expenditure- 174,213 - 174,213

Transfers between reserves 7,919 (7,919) - -

Balance at 31 March 2018 855,960 486,942 1,300 1,344,202


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Notes to the Accounts

1. Accounting conventions

1.1 Accounting policies These financial statements have been prepared in accordance with the Financial Reporting Manual (FReM) as adapted or interpreted for the House of Commons context which applies International Financial Reporting Standards (IFRS). Where the FReM permits a choice of accounting policy, the policy which is judged to be the most appropriate to give a true and fair view has been selected. The particular policies adopted by the House of Commons are described below. They have been applied consistently in dealing with items that are considered material to the accounts.

In addition to the primary statements prepared under IFRS, the FReM also requires the House to prepare an additional primary statement. The Statement of

Parliamentary Supply and supporting Notes show outturn against Estimate in terms of the net resource requirement and the net cash requirement.

These accounts have been prepared under the historical cost accounting convention modified to account for the revaluation of property. Other non-current assets are not generally re-valued unless the adjustments are material.

1.2 Relationship with House of Lords The House of Commons and the House of Lords hold joint stewardship of the Palace of Westminster. Responsibility for maintenance of the Palace and the remaining parts of the Parliamentary Estate is shared between the Strategic Estates Team and the Parliamentary Maintenance Services Team which is part of In-House Services. General estates expenditure, individual maintenance and building projects including the Curators Office are shared between the House of Commons (60%) and the House of Lords (40%) and recharged accordingly, or solely allocated to the House of Commons or House of Lords. Other shared costs are split at agreed ratios for that service.

The Parliamentary Archives are a shared facility, operated on behalf of both Houses by the House of Lords. The costs of the Archives are split between the House of Commons (40%) and House of Lords (60%).

The Parliamentary Procurement and Commercial Service (PPCS) is a shared service, operated on behalf of both Houses by the House of Lords. The cost of PPCS is split between the House of Commons (70%) and the House of Lords (30%).

Arrangements for security are agreed jointly by the authorities of both Houses of Parliament with the Metropolitan Police. These costs are monitored jointly by the authorities in the two Houses but are billed individually to the House of Commons and House of Lords in a pre-determined ratio (70:30 for 2017–18). The cost of the Parliamentary Security Department is also shared on the same ratio.

The management of the ICT services for both Houses has been centralised within the Parliamentary Digital Service (PDS) (formerly Parliamentary Information and Communications Technology (PICT) service). PICT (now PDS) formally became a joint department of both Houses on 1 April 2008 under the terms of the Parliament (Joint Departments) Act 2007. Each House pays for its own ICT hardware with the costs of shared services being split between the House of Commons (70%) and House of Lords (30%).

1.3 Property, plant and equipment In accordance with International Accounting Standards (IAS 16), property assets (excluding the Palace of Westminster and special adaptations of Portcullis House) are valued at current value in existing use using a method determined by the Valuation Office Agency (VOA). The Palace of Westminster (including the Visitor Reception Building) and special adaptations of Portcullis House are valued at depreciated replacement cost due to their specialised nature.

All property is subject to a full professional valuation at least every five years. Annual interim reviews are undertaken to ensure that asset values remain in line with their fair value.

Revaluation losses are taken first to reserves and then to the Statement of Comprehensive Net Expenditure for any loss in excess of previous revaluation gains.

(i) Depreciated Replacement Cost Depreciated replacement cost (DRC) is used for specialised properties which are unique, either due to their design, configuration, size or nature and are rarely sold in the market. When producing a DRC valuation, the general assumption is that the replacement cost is calculated using ‘a modern equivalent’, where the replacement asset provides the same service potential but in a contemporary setting. However, there are situations where the only way that a replacement asset could provide the same service potential would be to reproduce the actual building. Public Sector Accounting Standard 17 (IPSAS 17) provides an example of a parliament building that would be reproduced (rather than


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replaced) because of its significance to the community. The Palace of Westminster is a Grade One listed building and forms part of a UNESCO World Heritage Site, therefore it is appropriate for it to be valued on the basis of it being rebuilt ‘as is’.

One component of the replacement cost calculation is the inflationary increase applied year on year to the cost of build – this is the Tender Price Index (TPI). There is also a location factor for the London Borough of Westminster. These indices are estimates and are therefore subject to fluctuations, for example, a one point movement in the TPI would have approximately £3 million impact on the DRC valuation of the Palace of Westminster as a whole.The VOA provide a draft valuation in the Autumn preceding the year end using the forecast TPI and location indices. The VOA then monitor these indices throughout the remainder of the year and notify the House of significant fluctuations, say over 3% for both Houses to review and assess the impact.

The VAT position of the House is complex and there are no comparators for the total rebuild of an asset of such unique and historic importance. The most prudent decision based on current HMRC guidelines to government departments at 31 March 2018 is that the valuation would include VAT. The assumption will be kept under review to reflect any future changes or clarifications. The total amount of VAT recognised within the valuation is estimated to be around £155 million (House of Commons only).

(ii) Freehold properties Title to freehold land and buildings is held as follows:

• The Palace of Westminster by the Sovereign.

• Property on the House of Commons part of the Parliamentary Estate by the Corporate Officer of the House of Commons (the Clerk of the House).

The whole of the Parliamentary Estate was re-valued in full by the VOA as at 31 March 2018.

(iii) Long leasehold A property, 102 Rochester Row, is held on a long leasehold and valued at fair value by the VOA.

(iv) Investment properties The House of Commons holds interests in land and buildings which are classified as investment properties with the rental income being negotiated at arm’s length. All contracts are treated on an

operating lease basis. These properties are the car park at Abingdon Street, 10 and 11 Bridge Street, and Units A, B and C in Portcullis House. Investment properties in 49 and 50 Parliament Street were subsumed into 53 Parliament Street during the refurbishment of that building.

In accordance with IAS 40 investment property is valued at fair value and not depreciated. A full VOA valuation is carried out at least every five years, with an annual interim review to ensure that asset values are in line with their fair value.

There is a restriction on Abingdon Street car park. Its use is restricted to that of an underground car park with public garden at ground level.

(v) Plant and machinery Plant and machinery includes the Great Clock mechanism and In House Services’ catering equipment and vehicles. The Great Clock was previously valued using appropriate indices at 31 March 2006. The cost of valuing the Great Clock outweighs the benefit provided, therefore there are no plans to re-value it. Catering equipment and vehicles are not re-valued on the grounds of not being material.

(vi) Equipment In accordance with IAS 16 computers, contemporary furniture and other equipment are recognised at depreciated historic cost due to short life and/or low value. Although the capitalisation threshold is £1,000, certain ICT equipment (including desktop computers, monitors and printers below the threshold) are considered to be grouped assets and therefore are capitalised.

1.4 Donated assets Donated assets are capitalised at fair value with the credit entry made to income.

Donated assets currently comprise works of art and are not subject to a depreciation charge in line with House policy on works of art.

1.5 Heritage Assets The FReM requires organisations to provide additional information, within the financial statements, of any heritage assets held by them as at the year end. The standard defines Heritage Assets as:

‘A tangible asset with historical, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture.’


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Each category of heritage asset held by the House of Commons, along with their applicable accounting policy is detailed below. Further information regarding asset management policies can be found in Note 7.

1.6 Antique furniture and House of Commons State Silver The House’s collection of antique furniture and State Silver is reported in the Statement of Financial Position at market value. The furniture collection consists mainly of historical furniture, silver, clocks and ceramics. Due to the importance of these collections, all assets have been capitalised regardless of their individual value.

A valuation of the collections was carried out by Bonhams and completed in March 2016.

It is the House’s policy to maintain its collection of antique furniture and State Silver in full working order and maintenance costs are charged to the Statement of Comprehensive Net Expenditure when incurred. Both the antique furniture collection and the State Silver are deemed to have indeterminate lives and as such the House does not consider it appropriate to charge depreciation.

1.7 Parliamentary Art Collection The Parliamentary Art Collection is the national collection of art relating to the history of Parliament. It contains portraits of Parliamentarians and parliamentary events, past and present, wall paintings, sculpture, mosaics and tapestries, oil paintings and works of art on paper within the Houses of Parliament. There is also a collection of coins and medals with associations to former parliamentarians. In total the collection has circa 9,000 objects.

For valuation purposes, the Parliamentary Art Collection is divided into two categories; those objects held as at 31 March 2000 and those objects acquired since that date. No valuation for the Collection at 31 March 2000 is currently included on the Statement of Financial Position because obtaining a valuation for a collection of this size and diversity would be costly. During 2012–13, it was determined that the benefit received by a valuation exercise at this time would not justify the expense incurred. This continues to be the position of the House.

Acquisitions since 1 April 2000 have either been made by purchase or donation. Purchases are recorded at cost and donations are recorded at current value ascertained by the House’s Curator of Works of Art with reference, where appropriate, to the commercial art market.

The House’s duty of care responsibilities for the

Parliamentary Art Collection are carried out by the Curator’s Office, with the cost of conservation etc charged to the Statement of Comprehensive Net Expenditure. The individual works of art in the Collection are deemed to have indeterminate lives and as such the House does not therefore consider it appropriate to charge depreciation.

1.8 Antiquarian books Almost all the House of Commons Library’s books were acquired after the 1834 fire in the Palace of Westminster, when most of the earlier stock was lost. During the second half of the 19th century, there was a deliberate policy of acquiring books that would have been found in a country house library of that period. As a result, the Library acquired through a mixture of purchase, gifts and legacies a wide-ranging collection of books, including some that are now of considerable antiquarian or scholarly interest.

The House of Commons antiquarian book collection was moved to the British Museum in June 2003 when the restoration of the King’s Library was finished. The House Library has retained at Westminster any books with parliamentary connections or which might be needed for its normal services for Members. All the books that have been moved to the British Museum remain in the Library’s catalogue and can be used at Westminster if required. They also appear in the Central Library catalogue of the British Museum, who are responsible for routine conservation, and are available under supervision for public use in the Museum.

The antiquarian books held by the British Museum are not valued in line with the practice adopted for the Parliamentary Art Collection. As such they are not shown in the Statement of Financial Position.

1.9 The Speaker’s state coach The Speaker’s state coach is a 17th century gilded and painted carriage. Following a programme of conservation and repair in 2007–08, it was loaned to the National Trust for public display at the Carriage Museum at Arlington Court in Devon. As part of the loan agreement, the National Trust indemnifies the coach for an indemnity value of £1.6 million.

The value of the Speaker’s state coach is not currently valued on cost benefit and practicality grounds. It is not therefore shown in the Statement of Financial Position.


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1.10 Archives (i) Broadcasting

The broadcasting archive consists of audio and video tape recordings of broadcast coverage from the Chambers in both Houses and also Committees selected by the broadcasters. In November 2015 the Broadcast Unit switched from tape to server recording. 38,000 video tapes are held in the collection in 7 Millbank. Audio dates from 1978 and the House of Commons video collection dates from 1989. 35,000 audio tapes are held at the BFI.

In 2017 Parliament began the process of digitising the video tapes in order to preserve the content stored on the ageing video tapes. Audio tapes will continue to be held in storage.

The archive is valuable in an historical sense but is difficult to quantify in practice. The content is made freely available as duplicated copies to anyone who orders it with a small fee applied to cover the costs of transfer. Consequently, the value for this archive is not included on the Statement of Financial Position.

(ii) Parliamentary Archives The Parliamentary Archives comprise several million documents that have been preserved at the Palace of Westminster from 1497 to date in a variety of formats from medieval vellum and parchment to born-digital and digitised records. Parliamentary records prior to 1497 form part of the National Archives. Most of the records are unique and have been preserved for their historical, legal and administrative importance, consequently it is not deemed cost effective to obtain a value.

The Parliamentary Archives who provide the service were established within the House of Lords in 1946. The administration costs of this service have been shared with the House of Commons since 1999. Any operational assets held by the Parliamentary Archives are disclosed within the House of Lords Resource Accounts. The Parliamentary Archives publishes an Annual Report which is available via www.parliament.uk. Full details of the Parliamentary Archives acquisition policy are also available at this web address.

1.11 Ceremonial items The House’s collection of ceremonial items consists of four swords used by the Speaker’s Office.

The value of the ceremonial items is not currently included on the Statement of Financial Position as it is not deemed practical to do so.

1.12 Architectural salvage and estate archives The architectural salvage collection consists of examples of architectural fragments from the Parliamentary Estate such as pieces of decorative stonework and wood carving. Many of these pieces have been retained to provide a record of the craftsmanship used in the Palace and Estate buildings throughout their life. Cost information is not readily available and the benefit of obtaining valuations would not justify the cost, therefore it has not been recognised in the Statement of Financial Position.

The Estate Archive consists of Strategic Estates’ permanent records such as plans and drawings which are not recognised in the Statement of Financial Position because cost information is not readily available and the benefit of obtaining valuations would not be cost effective. Nearly all the items are thought to have nominal financial value and no item is worth more than £1,000.

1.13 Depreciation Depreciation is charged to expenditure on the historic value or, for buildings, the re-valued amount of assets. For buildings, that element of the depreciation which relates to the increase in valuation in prior years is charged to the Revaluation Reserve. This amount is realised by transferring the Revaluation Reserve to the General Fund over the remaining useful life of the asset. Land assets are not depreciated.

Depreciation is charged on a straight line basis. The period over which to depreciate property assets is advised by the Valuation Office Agency (VOA). The rates adopted are calculated to write off the valuation of freehold buildings, plant, equipment and intangible assets by equal instalments over their estimated useful lives, with the exception of heritage assets (i.e. antique furniture, State Silver and the Parliamentary Art Collection with an estimated life of more than 200 years). Heritage assets are not depreciated because the long remaining life or high residual value of the asset makes any such charge immaterial. Capital works on leasehold property are depreciated on a straight line basis over the lease period. The capitalised costs for assets in the course of construction are not depreciated until the assets are brought into use.

For accounting purposes the lives of the property, plant and equipment and intangible assets such as software licences are in the following ranges:


http://www.parliament.uk

98


Property: Years

Land not applicable

Palace of Westminster 71

Freehold property (excluding Portcullis House) 13–38

Portcullis House 45

Leasehold property 3–31

Plant and equipment: Years

Furniture - standard 10

Plant & machinery 5–10

Fixtures and fittings - standard 10

General office equipment 3–5

IT equipment including telephony 3–5

Broadcasting equipment 10

Intangible assets 3–5

Heritage Items: Years

Antique furniture and Works of Art Indefinite

1.14 Intangible assets Intangible non-current assets are primarily software licences and other ICT enhancements provided by third parties costing in excess of £1,000. These are capitalised and amortised over the expected useful life of the asset.

1.15 Current investments The House of Commons holds short term current investments. These are all held in cash and are included in the “Bank and Cash in Hand” figures. Interest receivable on the House of Commons Commission Reserve is credited to that reserve. Any other interest received is treated as operating income.

1.16 Inventories Inventories are valued as follows:

• Finished goods and goods for resale are valued at cost or, where materially different at current replacement cost, and at net realisable value only when they either cannot or will not be used.

• Work in progress is valued at the lower of cost, including appropriate overheads, and net realisable value.

1.17 Impairment The House of Commons reviews its assets for impairment and accounts for any adjustments in accordance with the FReM (as adapted for the House).

1.18 Operating income Operating income relates directly to the operating activities of the House of Commons and includes, refreshments, retail and visitor ticket sales, videos, fees from filming, private bill fees, and royalties. Fees and charges are set in accordance with the House of Commons policy which is published via www.parliament.uk/site-information/foi/transparency-publications/hoc-transparency-publications/financial-information/financial-policies

1.19 Foreign exchange Transactions which are denominated in foreign currency are translated into sterling at the exchange rate ruling on the date of each transaction.

1.20 Leases In accordance with IAS17, leases are capitalised only when substantially all risks and rewards of ownership are transferred to the lessee. During the year the House occupied Richmond House under terms which were considered to be a Finance lease (see Note 9.3).






99


1.21 Private Finance Initiative (PFI) transactions During 2013–14 the House entered into a service concession agreement (see Note 9.2). This contract has been disclosed in accordance with the appropriate accounting standards (IFRIC 12: Service Concession Arrangements and IAS 17: Leases).

1.22 Contingent liabilities Where the time value of money is material, contingent liabilities which are required to be disclosed under IAS 37 are stated at discounted amounts. Contingent liabilities that are not required to be disclosed by IAS 37 are stated at the estimated current amounts.

1.23 VAT and Corporation Tax Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.

The House is not subject to Corporation Tax.

1.24 Third party assets The House of Commons holds third party assets in the form of gratuities and service charges on behalf of catering staff.

1.25 Impending application of newly issued accounting standards not yet effective There are no newly issued accounting standards not yet effective that would have a significant impact on these financial statements. IFRS 9 (Financial Instruments), IFRS 15 (Revenue from Contracts with Customers) will be effective from reporting periods beginning after 1 January 2018 and IFRS 16 (Leases) will be effective from reporting periods beginning after 1 January 2019. The impact of IFRS 9 and 15 on the 2018–19 accounts is not expected to be material. The impact of IFRS 16 on the 2019–20 accounts has yet to be determined.

1.26 Segmental Reporting The analysis provided at Note 2 meets the reporting requirement of International Financial Reporting Standard, Operating Segments (IFRS 8).

1.27 House of Commons Commission Reserve Under the powers provided by the House of Commons (Administration) Act 1978 as amended by the Government Resources and Accounts Act 2000, the House of Commons Commission has established a reserve for any excess income generated. Agreement of the Commission is required before any sums can be drawn down.

2. Statement of Net Expenditure by Operating Segment

Each of the House of Commons Teams (or segments) report their resource spend separately on a monthly basis to the Commons Executive Board. Total Assets and net assets are managed and controlled at a corporate level.

The work of each Team is described briefly below.

Chamber and Committees (CCT): provides secretariat, advice, procedural, reporting and other services that support the work of the Chamber and committees, and supports the House’s international relations.

In-House Services (IHS): provides the accommodation, logistics, catering, retail, estate and asset management, environmental management, fire safety, business continuity and other facilities required by the House.

Strategic Estates (SE): brings together all teams delivering capital investment along with supporting property, planning and design teams.

Corporate Services (CS): is responsible for corporate strategy and planning. It develops HR and finance policies to support internal customers across the House, organisational development and monitoring of performance.

Participation (PAR): seeks to engage the public in the work Parliament does. It provides educational and visitor tours and retail services.

Research and Information (R&I): informs the work of the House and its Members.

Parliamentary Digital Services (PDS): a joint department with the House of Lords which provides information and communications technology services to both Houses of Parliament, including the funding set aside for investment on ICT related programmes and projects.

The Parliamentary Security Department (PSD): is responsible for the strategy, planning and overall delivery of security across the Parliamentary Estate, including cyber security. The Director chairs the Parliamentary Security Board.

Central Provision (CP): covers other centrally held funds.

In addition to the Teams listed above there are a number of smaller offices, which for the purpose of this report are merged into one segment:

Governance Office (GO): supports the Clerk of the House of Commons in his roles as Accounting Officer and Corporate Officer, and provides assurance


100


to him through risk management, health and safety reporting and internal audit. It includes the secretariats for the House of Commons Commission, the Finance and Administration Committees and other domestic committees. It also supports the Commons Executive Board and the Director General.

Communications (CO): promotes the work of the House Service to Members and Members’ staff and is also responsible for House-wide corporate communications and media engagement.

Office of the Speaker (SPK): is responsible for supporting all aspects of the Speaker’s duties which include the Chamber, honours and awards and representative matters. Staff in the Speaker’s Office, help organise the Speaker’s meetings, talks and visits to public groups, schools and colleges across the UK.

2017–18 CCT IHS SE CS PAR R&I PDS GO/SPK

& CO

PSD CP Total

£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000

Gross

Expenditure35,054 44,826 60,604 11,075 8,680 12,504 38,829 4,842 28,648 3,209 248,271

Income (521) (10,485) (1,921) (44) (4,299) (18) (87) (17) (118) (2,068) (19,578)

Net

Expenditure

34,533 34,341 58,683 11,031 4,381 12,486 38,742 4,825 28,530 1,141 228,693

Total assets 1,512,132

Net assets 1,344,202


101


2016–17CCT IHS SE CS PAR R&I PDS GO/SPK

& CO

PSD CP Total

£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000

Gross

Expenditure35,396 40,546 55,290 14,923 8,703 11,351 27,576 4,629 25,348 3,983 227,745

Income (393) (10,248) (940) (477) (4,570) - (2) (99) (3) - (16,732)

Net

Expenditure

35,003 30,298 54,350 14,446 4,133 11,351 27,574 4,530 25,345 3,983 211,013

Total assets 1,172,020

Net assets 1,122,957

2.1. Reconciliation between Operating Segments and Statement of Comprehensive Net Expenditure

2017–18 2016–17

£000 £000

Total net expenditure reported for operating segments 228,693 211,013

Net (gain)/loss on revaluation of Property, Plant and Equipment

(174,213) 38,347

Net (gain)/loss pension liabilities due to changes in actuarial assumptions - -

Total net expenditure per Statement of Comprehensive Net Expenditure 54,480 249,360

The revaluation of the Parliamentary Estate during the financial year resulted in a net gain of £170,345,000 reflecting an improvement in the property market and changes to the tender price index and location factor used for interim valuations. The net revaluation gain of £170,345,000 has been allocated between the Revaluation Reserve (gain: £174,213,000) and the Statement of Comprehensive Net Expenditure (loss: £3,868,000).


102


3. Expenditure

2017–18 2016–17

Note £000 £000 £000 £000

Grants 4 3,548 3,605

Goods and services

Accommodation services 29,172 33,394

Security 18,648 15,461

Information 2,176 2,644

Computer maintenance 13,128 8,803

Finance and specialist services 5,227 4,521

Catering and other supplies 4,280 4,457

Communications 5,863 3,005

Other staff costs 3,589 3,272

Travel and subsistence 2,092 2,641

Broadcasting 1,264 1,336

Office supplies 1,002 604

86,441 80,138

Rentals under operating leases

Buildings rental 11,787 16,006

Other rental 636 721

12,423 16,727

Interest charges - -

Service Concessionary Arrangements

Service charge element of Finance Lease 605 677

Interest on Finance Lease 12 29

617 706

Non-cash items

Depreciation 6 26,291 19,679

Amortisation 8 269 273

Impairment 6 268 769

(Profit)/loss on disposal of property, plant & equipment 6 27 -

Net (gain)/loss on revaluation of property, plant and equipment 2.1 3,868 (130)

Auditors’ remuneration and expenses27 85 85

Provisions 14 574 535

31,382 21,211

Sub total 134,411 122,387

Staff Costs28 113,860 105,358

Grand Total 248,271 227,745

27 Auditors have received no remuneration for non-audit work28 See Accountability Report, page 72 for details of staff costs


103


4. Grants paid

2017–18 2016–17

£000 £000

Commonwealth Parliamentary Association (UK Branch) 1,273 1,261

History of Parliament Trust 1,156 1,139

Inter Parliamentary Union (British Group) 873 910

British Irish Parliamentary Assembly 91 104

British American Parliamentary Group 80 79

Association of Former Members of Parliament 13 12

Other parliamentary (various) 62 100

Total 3,548 3,605

Grants to parliamentary bodies are split between the House of Commons and the House of Lords on a 70:30 basis. The table above shows the House of Commons contribution only.

5. Income

2017–18 2016–17

£000 £000

Receipts from sales 14,321 15,245

Rental receipts and associated charges 929 939

Other receipts 2,248 506

Fees on private bills 12 15

Grants (from the Speaker’s Art Fund) - 12

Sub-total 17,510 16,717

Donated Asset (see note 6 for details) - 15

Total 17,510 16,732


104


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105


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106


Land and Buildings analysed by Net Book Value

Analysed by individual land, buildings and investment property

31 March 2018

Land Buildings Investment Total

£000 £000 £000 £000

Palace of Westminster34 82,200 726,518 - 808,718

Portcullis House 41,796 276,624 - 318,420

Richmond House 56,160 60,352 - 116,512

Norman Shaw North 20,628 16,878 - 37,506

1 Parliament Street 14,517 12,873 - 27,390

Norman Shaw South 10,083 9,687 - 19,770

1 Derby Gate 9,247 7,877 - 17,124

1 Canon Row 7,933 6,417 - 14,350

49-53 Parliament Street 3,073 5,015 - 8,088

Visitors Reception building - 9,134 - 9,134

Improvements to leasehold buildings - 3,788 - 3,788

Education centre - 4,300 - 4,300



4 Canon Row 1,300 1,200 - 2,500

2 Canon Row 1,291 1,149 - 2,440

102 Rochester Row 387 473 - 860

22 John Islip Street 600 200 - 800

Abingdon St Car Park - - 4,773 4,773

Units A, B & C Portcullis House - - 7,600 7,600

10 Bridge Street - - 4,260 4,260

11 Bridge Street - - 1,550 1,550

Net Book Value at 31 March 2018 253,726 1,146,724 18,183 1,418,633

34 The total value of the Palace at 31 March 2018 was £1,347,865,000 (House of Commons’ share £808,718,000)


107


31 March 2017

Land Buildings Investment Total

£000 £000 £000 £000

Palace of Westminster35 90,000 567,130 - 657,130

Portcullis House 42,291 230,644 - 272,935

Norman Shaw North 20,692 16,258 - 36,950


Norman Shaw South 9,986 9,985 - 19,971

1 Derby Gate 8,986 8,294 - 17,280

1 Canon Row 7,499 6,473 - 13,972

49 -53 Parliament Street 3,128 4,693 - 7,821

Visitors Reception building - 7,340 - 7,340

Improvements to leasehold buildings - 4,117 - 4,117

Education centre - 4,945 - 4,945



4 Canon Row 1,430 1,170 - 2,600

2 Canon Row 1,165 1,165 - 2,330

102 Rochester Row 387 473 - 860

22 John Islip Street 525 175 - 700

Abingdon St Car Park - - 4,794 4,794

Units A, B & C Portcullis House - - 10,380 10,380

10 Bridge Street - - 3,868 3,868

11 Bridge Street - - 2,120 2,120

Net Book Value at 31 March 2017 204,253 880,253 21,162 1,105,668

35 The total value of the Palace at 31 March 2017 was £1,095,217,000 (House of Commons’ share £657,130,000)


108


7. Heritage assets

7.1 Antique furniture and House of Commons State Silver

The collection consists of:

House of CommonsNumber of items

Shared with House of Lords

Number of items

Clocks 98 6

Silver (non State silver) 67 -

Furniture 3,639 1,782

Other 198 10

4,002 1,798

House of Commons State Silver 1,098 -

5,100 1,798

36 www. museumsassociation.org/collections/disposal-toolkit-and-training

Many of the items are in continual use throughout the Estate. Those items in storage are either held on-site or by a third party in secured off-site storage facilities.

The House’s detailed management, preservation, disposal and access policy have been approved by the Parliamentary Estates Forum. Subject to the approval of the House, the Head of Collection (Furniture and Decorative Arts) in the In-House Services Team, may

dispose of items from the collection, although this will only happen in exceptional circumstances and will be in accordance with the Museum Association’s disposal policy36. The vast majority of items in the collection were acquired over 40 years ago.

Note 6 includes the value of the Antique furniture (£15,573,970) plus House of Commons State Silver (£2,612,120).

A summary of transactions for the last five years is as follows:

2017–18 2016–17 2015–16 2014–15 2013–14

£000 £000 £000 £000 £000

At 1 April 16,280 16,280 16,267 16,254 16,254

Additions - - 13 13 -

At 31 March 16,280 16,280 16,280 16,267 16,254


http://www.museumsassociation.org/collections/disposal-toolkit-and-training

http://www.museumsassociation.org/collections/disposal-toolkit-and-training

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7.2 Parliamentary Art Collection

The Collection has circa 9,000 works of art, over 80% of which are on display throughout the buildings of the Parliamentary Estate at any one time. The earliest pieces date from the medieval age, with major holdings dating

from the 18th, 19th and 20th centuries, and significant contemporary holdings also. Although historically this is a single collection of art for the Palace of Westminster, in 1992 the Parliamentary Art Collection was divided between the two Houses, with each House assuming ownership responsibilities for its share.

The collection comprises the following categories:

Purchased prior to 31 March 2000

Donated priorto 31 March 2000

Number of items Number of items

Paintings & prints 4,796 1,534

Busts 170 49

Medieval statuary 6 -

Murals & mosaics 122 17

Tapestries 9 1

5,103 1,601

A summary of transactions for the last five years is as follows

2017–18 2016–17 2015–16 2014–15 2013–14

£000 £000 £000 £000 £000

At 1 April 7,305 7,214 7,118 6,737 1,669

Additions 67 76 71 31 68

Donations - 15 25 350 5,000

At 31 March 7,372 7,305 7,214 7,118 6,737

The Parliamentary Art Collection is managed by the Curator’s Office, which is responsible for all aspects of its management, care, conservation, documentation, presentation and interpretation in accordance with the policies that are approved by the Speaker’s Advisory Committee Works of Art. Further details, including examples of some of the artwork, can be found on the ‘Art in Parliament’ website at www.parliament.uk/art.

The Advisory Committee seeks to acquire works of art for the House of Commons Collection which fall into one or more of the following categories:

• Portraiture

• Parliamentary history

• Political satire

• Political commemoratives

• The United Kingdom and Parliament today


http://www.parliament.uk/art

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An active loans policy is pursued, with works of art acquired on loan to fill gaps in the Collection. Loans are from both public bodies and private individuals. Loans will not be accepted from bodies or individuals which would be seen to compromise the integrity of the House, and therefore the identity of each lender must be made known in advance of the loan proceeding.

The House of Commons will not acquire, whether by purchase, gift, bequest or transfer, any work of art or object unless the Works of Art Committee is satisfied that the Collection can acquire a valid title to the item in question, and that in particular it has not been acquired in, or exported from, its country of origin (or any intermediate country in which it may have been legally owned) in violation of that country’s laws.

The House’s disposal policy for the Parliamentary Art Collection was approved during 2012–13.

7.3 Medals

The Parliamentary Art Collection also includes a medal collection. The collection consists of awards instituted by the British Crown and issued to the armed forces over the last two centuries as well as medals for gallantry awarded to civilians.

A total of 546 medals are recorded in the collection on public display in the Medals Corridor in the House of Commons where it can be viewed.

7.4 Ceremonial items

The House’s collection of ceremonial items consists of the Mace, Swords and Medallions. Not all the items are owned by the House; many are owned by the Crown and are returned to St James Palace for safekeeping when Parliament is dissolved:

• The Mace is on loan from the Royal Household who bear the cost of any repairs that are required.

• The Speaker’s Office own four ceremonial swords and maintenance costs are charged to the Statement of Comprehensive Net Expenditure when incurred.

• There are forty two medallions which are worn by the Doorkeepers during parliamentary term time. Like the Mace, these are not owned by the House but are on loan from the Royal Household, hence their value is not included in the Statement of Financial Position. However, unlike the Mace, the House is responsible for the maintenance of the medallions and costs are charged to the Statement of Comprehensive Net Expenditure when incurred.


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8. Intangible assets

The House’s intangible assets comprise software licences and intellectual property rights.

Assets under construction

Software Licences

Trademarks & Artistic Originals

Total

£000 £000 £000 £000

Cost or valuation

At 1 April 2017 - 2,620 16 2,636

Additions - 397 - 397

Disposals - - - -

Reclassifications - - - -

At 31 March 2018 - 3,017 16 3,033

Amortisation

At 1 April 2017 - 1,976 2 1,978

Charged in year - 268 1 269

Disposals - - - -


At 31 March 2018 - 2,244 3 2,247

Carrying amount at 31 March 2017 - 644 14 658


Assets under construction

Software Licences

Trademarks & Artistic Originals

Total

£000 £000 £000 £000

Cost or valuation

At 1 April 2016 6 2,090 10 2,106

Additions - 530 - 530

Disposals - - - -

Reclassifications (6) - 6 -

At 31 March 2017 - 2,620 16 2,636

Amortisation

At 1 April 2016 - 1,704 1 1,705

Charged in year - 272 1 273

Disposals - - - -


At 31 March 2017 - 1,976 2 1,978

Carrying amount at 31 March 2016 6 386 9 401



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9. Capital and other commitments

9.1 Commitments under leases - Operating leases

37 In accordance with International Accounting Standards, the House is required to disclose details of all lease arrangements. The House has an option agreement with CEVA Logistics Ltd, provider of services relating to the Off-Site Consolidation Centre that could result in the House funding the lease costs of the warehouse that is used, however this agreement can only be triggered by the House.

Total future minimum lease payments based on current operating lease agreements are given in the table below for each of the following periods.

2017–18 2016–17

£000 £000

Obligations under operating leases comprise:

Buildings

Not later than one year 10,848 10,849

Later than one year and not later than five years 29,540 36,469

Later than five years 27,530 31,472

Total 67,918 78,790

Other37

Not later than one year 435 519

Later than one year and not later than five years 254 301

Later than five years - -

Total 689 820


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9.2 Commitments under PFI and other service concession arrangements

(i) On-balance sheet (SoFP) During 2013–14, the Houses of Parliament contracted with a supplier to provide and maintain specific parts of the IT network. Under IFRIC 12, the provision of assets by the supplier is considered to be an asset

of the Houses of Parliament and is capitalised. Consequently, the contract is considered to include a finance lease comprising two elements – imputed finance lease charges and service charges.

Details of the imputed finance lease charges are given in the table below for each of the following periods.

2017–18 2016–17

£000 £000

Rentals due within one year 28 342

Rentals due later than one year but not later than five years - 28

Rentals due later than five years - -

Sub-total 28 370

Less: interest element - (12)

Present value of obligations 28 358

Details of the minimum service charge are given in the table below for each of the following periods.

2017–18 2016–17

£000 £000

Service charge due within one year 38 463

Service charge due later than one year but not later than five years - 38

Service charge due later than five years - -

Total 38 501

(ii) Charge to the Statement of Comprehensive Net Expenditure and future commitments The total amount charged in the Statement of Comprehensive Net Expenditure in respect of off-

balance sheet (SoFP) PFI or other service concession transactions and the service element of on-balance sheet PFI or other service concession transactions was £605,000 (2016–17: £677,000).

9.3 Finance Lease

(i) Finance Lease liability During 2017–18, the House agreed a lease with DCLG for Richmond House covering the period from the date of occupation, 12 January 2018 to July 2019 at a peppercorn rent. It is the intention of all parties that in July 2019, the property will be transferred to the House for no consideration. This transaction has been treated as a finance lease.The finance

lease for Richmond House has been written down over the useful life of the building (27 years).The fair value of the lease is valued at £117,000,000 (Land £56,160,000; Building £60,840,000).


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2017–18

£000

Finance lease creditor 117,000

Write down in year (938)

116.062

Creditor falling due within 1 year 4,334

Creditor falling after due after 1 year 111,728

9.4 Capital commitments

2017–18 2016–17

£000 £000

Contracted capital commitments at 31 March not otherwise included in

these financial statements for property, plant and equipment.59,658 42,023

9.5 Financial instruments

As the cash requirements of the House are met through the Estimates process, financial instruments play a more limited role in creating and managing risk than would apply to a non-public sector body of a similar size. The majority of financial instruments relate to contracts for non-financial items in line with the House’s expected purchase and usage requirements and the House is therefore exposed to little credit, liquidity or market risk.

Liquidity risk The House of Commons is financed by resources voted annually by Parliament. As such it is not exposed to significant liquidity risks.

Interest rate risk All of the House’s financial assets and liabilities carry fixed or nil rates of interest. The House is not therefore exposed to significant interest rate risk.

Foreign currency risk Foreign currency would not usually form part of the House’s assets or liabilities and as such it is not exposed to any significant exchange risks.

Fair values The fair values of the House primary financial assets and liabilities as at 31 March 2018 are the same as the book values shown in the Statement of Financial Position.


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10. Inventories

2017–18 2016–17

£000 £000

Retail 413 354

Catering 68 25

Store equipment 74 74

Other 33 29

588 482

11. Cash and cash equivalents

2017–18 2016–17

£000 £000

Balance at 1 April 4,995 3,464

Net change in cash and cash equivalent balances (3,318) 1,531

Balance at 31 March 1,677 4,995

The following balances at 31 March were held at:

Government Banking Service 138 3,311

Commercial banks and cash in hand 239 395

House of Commons Commission Reserve account

(see note 1.27)1,300 1,289

Balance at 31 March 1,677 4,995


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12. Trade receivables, financial and other assets

2017–18 2016–17

£000 £000

Amounts falling due within one year:

Trade receivables* 9,057 2,901

Deposits and advances 620 594

VAT and other taxes 696 989

Prepayments and accrued income 4,716 6,012

Sub-total 15,089 10,496

Amounts falling due after more than one year:

Prepayments and accrued income 642 1,660

Total 15,731 12,156

* The large increase in trade receivables is mainly due to the increase (£4.6 million) in the House of Lords debtor figure. The House of Commons operates an imprest arrangement with the House of Lords – the House of Lords make payments ‘on account’ which is then off-set against actual costs incurred. The larger than expected balance at the end of the year indicates that more costs were incurred than paid on account.

13. Trade payables and other current liabilities

2017–18 2016–17

£000 £000

Amounts falling due within one year:

Other taxation and social security 2,854 2,723

Trade payables 3,866 2,416

Other payables 3,154 5,851

Accruals and deferred income 36,534 29,395

Current part of imputed finance lease element of on-balance sheet

(SoFP) service concession arrangements4,362 358

Sub-total 50,770 40,743

Amounts issued from the Consolidated Fund for supply but not spent

at year end377 3,706

Total 51,147 44,449

Amounts due to be paid after one year* 111,728 -

* The figure of £111.7 million for ‘amounts due to be paid after one year’ is the accounting impact of the finance

lease for Richmond House.


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14. Provisions for liabilities and charges

Legal Claims & Other

Dilapidation Costs

Departures Total

£000 £000 £000 £000

Balance at 1 April 2016 21 4,116 375 4,512

Provided in the year 133 351 51 535

Provisions not required written back - - - -

Provisions utilised in the year (58) - (375) (433)

Borrowing costs (unwinding of discounts) - - - -

Balance at 31 March 2017 96 4,467 51 4,614

Provided in the year 188 351 35 574

Provisions not required written back - - - -

Provisions utilised in the year (82) - (51) (133)

Borrowing costs (unwinding of discounts) - - - -

Balance at 31 March 2018 202 4,818 35 5,055

Legal claims Provision has been made for various legal claims against the House of Commons. This reflects all known claims where legal advice indicates that it is more than 50% likely that the claim will be successful and the amount of the claim can be reliably estimated.

Legal claims which may succeed but are less likely to do so or cannot be estimated reliably are disclosed as contingent liabilities in Note 15.

Dilapidation costs This reflects the legal obligation of the House, in accordance with the terms of the lease agreement of three leasehold properties, to provide for re-instatement and dilapidations.

Departures This relates to departures through the Voluntary Exit Scheme.

15. Contingent liabilities

The House of Commons has the following contingent liabilities:

1 April 2017

Increase in year

Obligationexpired in

year31 March

2018

£000 £000 £000 £000

Personal injuries and employee claims 310 14 (281) 43


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16. Related-party transactions

As Members of Parliament, any related party transactions of Commission Members should be recorded in the Register of Members’ Interests.

J Benger by virtue of his position as Clerk Assistant, is a Trustee of the History of Parliament Trust, which receives a grant from the House of Commons.

D Natzler KCB, the Clerk of the House and M Barrett, the Finance Director were both Trustees of the Speaker’s Art Fund during 2017-18, which receives a donation in lieu of commission on sales from the House of Commons (Participation).

P Young, a member of the Board, is a Trustee for the Speakers Parliamentary Placement Scheme which receives a donation from the Members’ Estimate.

During the year, no Board member has undertaken any material transactions with the House of Commons during the year.

The House of Lords and the House of Commons share some buildings and services. These include the Palace of Westminster, together with services provided by the Parliamentary Estates Directorate, Parliamentary Archives, Parliamentary Digital Services, and certain Education and Outreach activities.

These joint arrangements are charged between the two Houses on an agreed percentage basis of underlying costs for each service (certain accommodation and overhead costs are excluded). Each House includes its share of the relevant asset base and/or service cost in their Annual Accounts.

The major shared services, excluding minor shared services, are recharged on the following basis:

House of Commons House of Lords

Communications services, POST 70% 30%

Visitor Tours 70% 30%

Accommodation and Works services (including Curator’s Office) 60% 40%

Broadcasting services 60% 40%

Parliamentary Archives 40% 60%

Parliamentary Security Department 70% 30%

Parliamentary Procurement and Commercial Service 70% 30%

The House of Commons incurred expenditure of £86,061,000 (2016–17: £79,896,000) on behalf of the House of Lords during 2017–18. The balance as at 31 March 2018 relating to accommodation, works and other shared services owed to the House of Commons by the House of Lords was £4,206,000 (in 2016–17: £114,000).

The House of Lords incurred expenditure of £1,475,000 (2016–17: £1,481,000) on behalf of the House of Commons during 2017–18. The balance as at 31 March 2018 owed to the House of Lords by the House of Commons was £125,000 (2016–17: £296,000).

The Parliamentary Digital Service manages the ICT for both Houses. Each House pays for its own IT hardware, with the costs of shared services being split on an agreed 70:30 ratio (Commons: Lords).

The British-Irish Parliamentary Assembly (BIPA) is provided with accounting services and accommodation. The House made payments of £133,000 on behalf of the BIPA in 2017–18. At the year end, the balance due from BIPA in respect of 2017–18 expenditure was £nil. Accommodation is also provided to the British American Parliamentary Group (who are also given accounting support at the year-end), Commonwealth Parliamentary Association (UK Branch) and the British Group of the Inter-Parliamentary Union.


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17. Third-party assets

The House of Commons holds the following third party assets in a public bank account. These are not the

House’s assets and are not included in the accounts. The assets held at the reporting period date to which it was practical to ascribe monetary assets, such as bank balances were:

2017–18 2016–17

£000 £000

Gratuities and service charges 60 58

18. Events after the reporting period date

In accordance with the requirements of IAS 10, post Statement of Financial Position events are considered up to the date on which the accounts are authorised for issue by the Accounting Officer. This is the date of the Certificate and Report of the Comptroller and Auditor General. I confirm there are none.


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04Administration Estimate Audit and Risk Assurance Committee Annual Report 2017-18

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Administration Estimate Audit and Risk Assurance Committee Annual Report 2017-18

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Administration Estimate Audit and Risk Assurance Committee Annual Report 2017-18Introduction

1. This is the eighteenth annual report of the House of Commons Administration Estimate Audit and Risk Assurance Committee (AEARAC), which was established by the House of Commons Commission on 15 May 2000.

2. This report outlines the AEARAC’s conclusions in relation to the Administration Estimate for the financial year 2017–18. The Committee’s findings are set out by reference to the key areas on which it is required to provide assurance to the Accounting Officer under its terms of reference.

3. Details of the AEARAC’s terms of reference, membership and activity during the year are provided in the Appendix to this report.


Conclusion for the financial year 2017–18

The effectiveness of the system of governance, risk management and internal control (the “system of internal control”)

Main Conclusion

4. The financial year 2017–2018 has been challenging in many respects. The cyber attack in the week of 19 June 2017 tested the robustness of cyber security systems. On 31 January and 6 February 2018 the House of Commons and House of Lords respectively agreed motions in identical terms concerning the restoration and renewal of the Palace of Westminster which already presents a series of risks to be managed. Towards the end of the financial year, publicity concerning allegations of bullying and harassment and a need to address these has resulted in reputational and other risks. In the meantime, further governance changes have been introduced, including the setting up of a new Commons Executive Board in order to improve decision making. The Internal Audit function has undergone changes of personnel which have affected the content of the Internal Audit Plan for the financial year and, in particular, the limited number of audits completed before December 2017.

5. It has been encouraging to note some areas of improvement, following concerns expressed by the Committee. For example, work to improve risk management has continued but still has some way to go before its benefits in relation to good management are understood and used to the full. Some administrative changes have strengthened day to day compliance issues, such as the creation of a central log of policies and tracking and reporting of internal audit actions, a system for the registration of staff interests and the introduction of “The Essentials” action plan. The audit of Key Financial Controls received a substantial assurance rating, reflecting the strong nature of the control environment in this important area.

6. Notwithstanding some areas of improvement, overall progress has been inconsistent and disappointingly slow. Some areas of concern, identified in last year’s Report, still remain. These again reflect the ongoing need for an appropriate organisational culture.

7. We note the Director of Internal Audit’s overall opinion on the House’s framework of governance, risk management and control for 2017–2018 as a Limited opinion. This means that the management, control and governance processes in place are generally adequate for the purposes of the House of Commons but there are significant weaknesses in their operation which impair their effectiveness, such that they could be, or could become, inadequate and ineffective. We concur with this view. There has been a continued failure over, now, seven years to improve the pace of improvement despite recent valiant attempts on the part of management to reverse this. Given the expected pace of change and the current and future challenges facing the Service and the House of Commons, management may wish to reflect on whether the current state of affairs is acceptable and what further can be done, even allowing for the steps already taken to improve the effectiveness of the system of governance, risk management and internal control. In this respect, independent challenge, for example from Internal Audit and the Committee, will be of even more importance as new governance arrangements are put in place in order to support the restoration and renewal programme and the Service grapples with the undoubted tests and demands which lie ahead.


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Supporting evidence

8. Cyber security and security generally have continued to be a preoccupation of the Committee during the year, following the cyber attack in June 2017. A subsequent review found that there had been significant cyber security improvements but made a number of recommendations for further actions, which are ongoing and will be monitored by the Committee. Generally, the Digital Service has continued on its journey of change but there are some key controls which remain to be implemented.

9. Concerns about the statutory oversight of safety requirements led the Committee to request an audit of all boards and groups which exercise oversight functions, the so called second line of assurance, during the financial year 2017–2018. This concluded that there were significant variations between teams about the number and range of bodies in place to provide senior management with assurance and that assurance was not being provided in all areas of assigned responsibility. In relation to health and safety audit work found that there were significant weaknesses in the safety management of construction and maintenance activities. Given the forthcoming substantial work to be undertaken in relation to the restoration and renewal programme, the Committee will be paying close attention to progress in relation to this crucial area of activity in the future. A Review of Fire Safety had previously highlighted a number of significant ongoing risks which the Committee also continues to monitor.

10. Third party management, through procurement and contract management, continues to present critical and continuing challenges. An audit of Contract Management Compliance and Procurement Benchmarking identified behavioural and other issues which management have sought to address by a variety of means, such as a workshop and other initiatives.

11. Internal Audit work carried out by the House of Lords reinforced concerns raised in previous years about project and programme management. In particular, the audit of the Elizabeth Tower Capital Project revealed inadequacies in business case development and project control in the early stages of the project. These provided valuable lessons for the proper and efficient conduct of future work on the Estate.

The integrity of the Annual Accounts

12. We have reviewed the Annual Accounts.

13. We consider the Accounts acceptable for signature by the Accounting Officer. We are satisfied with the Annual Governance Statement and the process undertaken to produce it.

The work of the internal audit service

14. We note that Internal Audit largely completed its amended audit plan during the period, meeting its target. We note that the relationship between Internal Audit and Deloitte continues to work well, with Deloitte, in general, providing specialist knowledge in specific areas rather than taking on entire audits.

15. We also welcome the continued close cooperation by Internal Audit with its colleagues in the House of Lords.

16. Overall we are satisfied that the scope and nature of the work of Internal Audit, supported by its partnership with Deloitte, and in parallel with the work of the NAO as the external auditors, adequately underpins the assessment of the Accounting Officer of the system of internal control.

The external audit by the external auditor

17. We are satisfied with the scope and nature of the work of the Comptroller and Auditor General (C&AG) and believe that the C&AG has carried out its external audit work with due independence. We are satisfied that the unadjusted misstatements reported therein do not require adjustment. These errors, together with the recommendation contained within the audit completion report do not highlight any substantive weaknesses in financial control.

18. We have noted the contents of the letter of representation, which is standard, including the required disclosures on fraud and regularity.

19. We are satisfied that the audit opinion was appropriate.

Other matters as were referred to the Committee by either the Accounting Officer or the Commission

20. No other matters were referred to the Committee by the Accounting Officer or the Commission in 2017–18.


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Appendix

Terms of reference

1. The Committee has the following terms of reference, which are approved by the House of Commons Commission (the last changes were agreed in March 2017): Remit The Administration Estimate Audit and Risk Assurance Committee pursues its objectives and fulfils its responsibilities on behalf of the Commission and, as it deems appropriate, shall draw any matters arising within these terms of reference to the attention of the Commission. Membership The membership of the Committee shall be:

• 3 MP members, including: - A Member of the House of Commons Commission - A Member of the Finance Committee

• 3 external Members, appointed by the Commission

The Chairman shall be appointed by the Commission from amongst the external members of the Committee.

Quorum

The quorum of the Committee shall be 3, including 1 MP and 1 external member.

Objectives

The Committee supports the Accounting Officer in discharging his responsibilities under the Administration Estimate, particularly with regard to the maintenance of an effective system of internal control. The Committee also provides assurance to the Accounting Officer and the Commission that risk is being managed effectively by the organisation. The Committee’s objective is to give assurance to the Accounting Officer on:

• The effectiveness of the system of governance, risk management and internal control (referred to collectively as the “system of internal control”)

• The integrity of the Annual Accounts

• The work of the internal audit service

• The external audit by the external auditor

• Other matters as may be referred to it by either the Accounting Officer or the Commission


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Responsibilities

Governance, Risk Management and Internal Control The Committee is responsible for reviewing governance, risk management and internal control (“the system of internal control”). This reviewing will include:

• The effectiveness of the design and operation of the system of internal control

• The development and operation of the system of risk management, in accordance with the overall risk management policy

• The level and range of assurances on the management of risks

• The adequacy and implementation of proposed management actions to improve the effectiveness of internal controls

Annual Accounts The Committee is responsible for reviewing the Annual Accounts before their submission to the Accounting Officer. This review to include:

• any significant changes in the accounting policies or treatments

• major financial reporting judgements or estimates

• consistency of the Annual Governance Statement

• resolution of any matters raised by the external auditor

• significant adjustments resulting from the audit by the external auditor

Internal Audit The Committee is responsible for monitoring the work of the internal audit service. This includes:

• Involvement in the appointment of the Director of Internal Audit and the audit partner

• Agreement to the annual internal audit plan and monitoring of progress

• Consideration of the results and findings from internal audit work and the adequacy of management responses

• Consideration of the Director of Internal Audit’s annual report and opinion

External Audit The Committee is responsible for monitoring and reviewing the work of the external audit.This review to include:

• Recommendations on the appointment and scope of work of the external auditor

• Consideration of the external audit strategy

• The results of the external audit work, including any reports to those charged with responsibilities for governance, and the adequacy of management responses

• Representations made by management to the external auditor

• Annual review of the external auditor’s independence and effectiveness


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Membership

2. The Committee is chaired by an external member, Dame Janet Gaymer DBE, who is also an external member of the House of Commons Commission. Jane McCall and Robert Scruton are the other two external members of the Committee. The MP members of the Committee until December 2017 were Sir Paul Beresford MP, Tom Brake MP and Rt Hon Dame Rosie Winterton MP. Thereafter, Rt Hon Dame Rosie Winterton MP was succeeded by Mr Clive Betts MP. The Membership of the Members Estimate Audit Committee (MEAC) is the same as that of the AEARAC.

3. The Clerk of the House, The Director General of the House of Commons, the Director of Finance, the Head of Internal Audit and officials from the National Audit Office also attend the Committee’s meetings. These officials may withdraw for specific items at the Committee’s, or their own, request.

4. The Committee’s Secretary is the Private Secretary to the Clerk of the House. The Committee is also supported by a Committee Assistant.

Meetings

5. The Committee met formally six times in the financial year 2017–18: on 26 April, 3 and 5 July, and 1 November 2017, and 23 January and 21 March 2018. Attendance is shown in the table below.

Member

Total number of meetings attended

Dame Janet Gaymer DBE (Chair) 6/6

Sir Paul Beresford MP 3/6

Mr Clive Betts MP 1/2

Tom Brake MP 6/6

Jane McCall 6/6

Robert Scruton 6/6

Dame Rosie Winterton MP 1/4

6. In addition it held an informal joint seminar with the House of Lords Audit Committee to consider audit best practice on 20 March 2018.

7. The external members of the Committee held informal meetings with the House’s finance team and the NAO to discuss the draft House of Commons Administration Estimate Annual Report and Accounts on 13 June 2018.

Internal Audit

8. The Committee routinely receives an oral report at its meetings from the Head of Internal Audit and Risk Management, together with a paper showing progress against the annual work programme, summaries of the main conclusions from completed audit assignments and the balance between core audit and the other work undertaken by Internal Audit.

9. At the beginning of the financial year Richard Hill was the acting Head of Internal Audit. On 27 November 2017 Dr Richard Stammers assumed the role of Head of Internal Audit and Risk management.

10. All qualified staff maintained their continuing professional development in the year. The Internal Audit team updated their self-assessment against their professional standards and confirmed that a series of continuous improvements were being addressed.

11. Deloitte, as the Internal Audit external support, assisted in 2 audits during the year, as well as supporting the team with access to resources and information and some counter fraud work. Due to the specialist skills required, Deloitte supported audits in such areas as counter fraud, key IT controls and key financial processes and controls.

Internal audits considered by the Committee

12. During 2017–2018 the Committee was notified of 20 audits relating to the Administration Estimate, including 11 audits from the 2017–2018 work programme. Two further audits from the 2017/2018 work programme were considered at the July 2018 meeting, both of which had already been reported at final draft stage. Audit reports are usually considered first by the external members of the Committee, who may choose to bring matters to the attention of the full Committee.

13. Audits discussed by the Committee dealt with a wide range of topics, covering:

a. Core audit issues such as the internal control environment, health and safety, and key IT controls

b. Corporate issues, such as risk management, lines of defence and compliance culture

c. Core services provided by the House Service

d. The governance, progress and status of significant investment projects


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The Committee also followed-up implementation of agreed management actions.

14. Internal Audit also undertakes follow up reviews when an audit has been issued for six months and contains major findings and agreed actions. The Committee received a number of follow-up audits including regular progress updates on the completion of audit actions from tracking conducted by Internal Audit.

15. Further information on specific audits is included in the minutes of the Committee’s meetings which are available on the Committee’s website.

Risk Management

16. The Committee continued to fulfil its responsibility to review the development and operation of the system of risk management, in accordance with the overall risk management policy, and the level and range of assurances on the management of risks.

17. The Committee provides formal assurance to the Commission and the Accounting Officer that risks are being effectively managed by the organisation and monitored by the Commons Executive Board (previously the Executive Committee.). The Commons Executive Board (previously the Board) has day to day responsibility for managing risk.

Internal audit charter

18. The Internal Audit service works to the Public Sector Internal Audit Standards professional framework. The House’s internal audit charter, sets out the purpose, role, responsibility, status and authority of internal auditing within the House of Commons and outlining the scope of internal audit work. This charter was revised in April 2016 and agreed by the Committee.

Planning of the audit programme

19. The Committee agreed the Internal Audit programme for 2017–2018 in April 2017. The Committee agreed proposed changes to the programme in January 2018.

External Auditors

20. The Comptroller and Auditor General (C&AG) has continued to provide an external audit function for the House of Commons. C&AG staff routinely attend meetings of the Committee and receive all of its papers and minutes, although the Committee continues from time to time to discuss certain items of business without auditors present.

21. In November 2017 the Committee discussed the C&AG’s planned approach to auditing the House of Commons Annual Accounts 2017–2018. Other than the risks required to be presumed under ISA 240, the external auditors raised a significant risk of the valuation of the Parliamentary Estate on the balance sheet.

22. The external members of the Committee met with staff of the C&AG and Finance staff on 13 June 2018 to discuss the draft House of Commons: Administration Estimate Accounts for 2017–2018. Following this the accounts were discussed by the full Committee on 4 July 2018 prior to being signed off by the Clerk of the House, as Accounting Officer.

House of Lords Audit Committee

23. The Committee held joint meetings with the House of Lords Audit Committee in October 2017 and March 2018. The main items considered were ongoing governance changes, programmes and projects, including the audit of the Elizabeth Tower Refurbishment project, the Enterprise Portfolio Management Office, the Efficiencies Programme, the Parliamentary Procurement and Commercial Service, the General Data Protection Regulation and cyber security. The Committee also continues to share agendas and minutes with the House of Lords Audit Committee.

Members Estimate Audit Committee

24. A Members Estimate Audit Committee was established by the House’s Members Estimate Committee on 14 June 2004. It has the same membership as the Administration Estimate Audit and Risk Assurance Committee (AEARAC) and meets at the same time as the AEARAC – each agenda item sets out whether the Committee is considering it in its capacity as the AEARAC, the Members Estimate Audit Committee or both. The annual report of the Members Estimate Audit Committee will be published with the House of Commons: Members Estimate Accounts 2017–2018.

Further information about the Committee

25. The two Audit Committees publish annual reports and certain papers (agendas, minutes and actions arising) on their page on the parliamentary website www.parliament.uk/business/committees/committees-a-z/other-committees/estimate-audit-committees.


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