Public sector told to tighten controls on spending

The Gibraltar Government has instructed senior civil servants to implement strict controls on spending in the last two months of the financial year, against the backdrop of the impact of Covid-19 and Brexit on public finances.

Managers in the civil service have been told to cut all nonessential spending including discretionary overtime, and ensure they adhere to budgets, with any supplementary spending requiring prior approval by the Cabinet.

They were reminded that failure to adhere to the instructions could expose them to personal financial liability for any unauthorised spending.

Managers were also asked to keep tight controls on inventory management and avoid nonessential purchases, as well as produce performance-related objectives that will be reviewed by the Chief Secretary’s office.

The instructions were set out in two circulars on Thursday, one from Chief Secretary Darren Grech, the other from Financial Secretary Albert Mena.

“These instructions have Cabinet approval and are absolutely necessary in order to navigate the difficult times still to come in a manner that protects the stability of the public finances of Gibraltar and the sustainability of the public sector, both of which I know will be hugely important to all of you,” Mr Grech wrote.

In stressing the need for budgetary control, the Chief Secretary reminded controlling officers that they risked “being made personally liable for the financial costs” of any additional expenditure that had not been first approved by ministers.

That message was underscored by Mr Mena in his separate memo.

“Given the uncertainties of Brexit negotiations that we will be facing in the months ahead and the unprecedented levels of expenditure that we have had to incur, and will continue to incur in relation to the Covid-19 pandemic, it is now far more critical than ever for all public servants to ensure that expenditure (both recurrent and capital) is tightly controlled and limited to essential items,” Mr Mena wrote.

“The Cabinet has therefore directed that I should contact all Controlling Officers and Accounting Officers to formally remind you that absolutely no ‘nonessential’ expenditure is to be entered into or committed to (be it of a recurrent or capital nature) from now until the end of the financial year unless such expenditure has been preapproved by your minister.”

Mr Mena reminded managers too that they should avoid the “common practice” of spending any remaining funds in the budget before the close of the financial year.

“This is never acceptable,” he wrote, adding: “In a situation where Covid related expenditure now exceeds £167m we all need to be focussed on ensuring Government deploys its available funding on essential spending only.”

Mr Mena said the Chief Minister had directed the finance team to monitor “far more closely than ever” the departmental spend from now to the end of the financial year.

“You are therefore formally notified that should it appear to this office that proper budgetary control and cost cutting practices have not been observed by any Department, Agency or Authority, appropriate action – including surcharging your salary with the unauthorised expenditure - will be taken against the respective Controlling Officer or Agency/Authority Head for failing to adhere to this strict Government instruction,” he said in the memo.

Civil service managers were told that only urgent and essential supplementary funding would be considered above approved budget spending. Civil servants were told too that all discretionary overtime had been suspended with immediate effect and that work must be completed during office hours.

Any essential overtime must first be approved by the Chief Secretary’s office in advance, and the reasons for it must be “well documented.”

Senior Officers and equivalent or higher grades will not be entitled to overtime at all.

“In the period of the pandemic we have seen huge numbers of workers in our economy having to rely on furlough schemes funded by the BEAT mechanisms introduced by the Government with the unanimous support of all parliamentarians,” Mr Grech said.

“In the public sector, however, all officers have been paid their full salaries without deduction even when not at work.”

“Many officers have, additionally, also worked overtime and not charged for the same.” “Now, as we see the effect that the pandemic has had on the finances of governments around the world, not least in Gibraltar, all discretionary overtime is suspended with immediate effect. Staff are requested to complete work during working hours.”

Substitutions for absent colleagues of a higher grade will not be automatic, the Chief Secretary’s memo added.

Only officers who have been temporarily promoted will be deemed to be substituting, while all others will revert to their original grade.

Acting in post will be approved by the Chief Secretary’s office only where necessary and where the functions of the absent grade require activities to be undertaken by the junior officer acting up.

The memo highlighted too the need for departments in the public sector to cooperate in the process of digitisation of government services.

“In the public sector in Gibraltar we have been lucky to have been able to see this period through with no loss of earnings,” Mr Grech wrote.

“Many in the private sector have found themselves relying on BEAT handouts from our Government, in many instances at much lower rates of pay than they are contracted to receive.”

“The Chief Minister has expressed repeatedly how proud he is of the way the public sector has ‘stepped up’ during the pandemic.” “Now we have to ensure that we protect the stability of our public finances and the sustainability of our service by following these instructions.”