Toughen Government credit card rules, say MPs

Stricter rules must be introduced to stop government credit cards being open to abuse by civil servants, MPs warned today.

A one-off Cabinet Office investigation found 99 cases of "inappropriate use" of the cards in Whitehall over the past three years, according to the Public Accounts Committee.

MPs found rules over use varied significantly between departments and highlighted the Department for Work and Pensions (DWP), which "doesn't even have receipts for a third of its transactions".

The committee called for a clampdown on who can use the Government Procurement Cards (GPCs) and for what. It recommended there should be fewer bookings made for five star hotels and a ban on alcohol purchases.

Previously released details of spending on the 24,000 procurement cards showed they had been used to buy doughnuts and shop at iTunes, as well as for air tickets and luxury hotels.

Margaret Hodge, who chairs the committee, said: "The controls currently applied to the use of the Government Procurement Card by civil servants and other public employees are not strict enough to deter and prevent inappropriate use.

"The Ministry of Defence is by far the biggest spender, accounting for three-quarters of all expenditure using the cards, but checks only a sample of its transactions. We were told that this sample could be as small as 5%.

"The Department for Work and Pensions doesn't even have receipts for a third of its transactions using these cards."

The GPC system was introduced in 1997 to allow staff to make small purchases conveniently.

MPs said the cards meant suppliers were paid more quickly but warned of the risks of inappropriate or fraudulent use.

The MoD, which accounts for around three-quarters of total GPC expenditure, limits checks to only a sample of its transactions.

Cabinet Office guidance was introduced last November setting out a minimum standard across government.

But MPs called for the policy to include 100% transaction checking, a ban on use of the card for certain items such as alcohol and restrictions to ensure cardholders are permanent staff members.

Mrs Hodge added: "There may be clear benefits to using the card. Transactions are quicker to process and suppliers are paid more quickly. In principle, departments can exercise greater control over what is being bought and from where. Detailed management information is also generated automatically.

"But there are inconsistencies in how the cards are used and controlled across government. Some departments block certain categories of spending; others do not.

"Some departments allow only permanent members of staff to use the cards; others are happy to hand them over to non-permanent staff. There is not even a central system for collecting and monitoring cases of card fraud and subsequent prosecutions.

"We are not convinced that this represents an appropriate use of public funds. We welcome the Cabinet Office's new central policy but it must be consistently implemented by all government departments.

"The policy could go further. Departments could check 100% of transactions; restrict the use of the cards to permanent staff; and ban the use of the cards for certain items, such as alcohol. All of these options should be given serious consideration.

"We are pleased that the Cabinet Office has promised to produce an up-to-date business case demonstrating how cost-effective these cards are compared to other payment methods."

The Cabinet Office said that the 99 cases of misuse of cards took place over the three years before new controls were implemented in November 2011.

Welcoming today's report, Cabinet Office minister Francis Maude said: "Procurement cards were introduced in 1997 but in the past there was no consistent approach to monitoring them or controlling procurement spend.

"By clamping down on waste, making procurement smarter and slashing the use of these cards, we saved the taxpayer hundreds of millions of pounds since May 2010. And information on procurement card use is now published for everyone to see and scrutinise.

"Since May 2010, my department has tightened the controls on the use of cards and implemented new cross Whitehall standards, a taskforce to tackle fraud, and a group that monitors these spend and activity on cards.

"Properly used these cards can save the taxpayer money, and make fraud easier to detect, but we will not tolerate their abuse."

A Ministry of Defence spokesman said: "The MoD is one of the largest Government departments with over 250,000 individuals based all over the world. The vast majority of our items are necessary purchases by military personnel and civilians while on duty overseas.

"This means we need the speed and flexibility in procurement that the Government Procurement Card (GPC) provides. The GPC also cuts overhead costs and so provides good value for money for the taxpayer.

"The MoD frequently checks up to 100% of transactions, but it would be misleading to focus only on checks as all GPC spending is subject to other rigorous controls and we have a robust system to monitor and audit their use."

Robert Oxley, campaign manager of the TaxPayers' Alliance, said: "Civil servants will have legitimate expenses, but previously there has been evidence of extravagant spending on these cards.

"Government Procurement Cards can be an efficient way of paying necessary bills, but there must be transparency to weed out inappropriate use and save taxpayers' money. The Government should adopt these sensible suggestions from the Public Accounts Committee to protect against future abuse of these cards."

PA