A National Audit Office study says there is no modern business case for using procurement cards.

It said departments still pointed to a 1998 report that had found card transactions were on average £28 cheaper than other procurement methods.

That figure was “based on procurement processes that are no longer used. This outdated figure can no longer serve as the basis of a business case for using the card,” the report said, noting that research in the Ministry of Justice suggested the average saving was just £5.

The study also revealed that civil servants spent £132m on travel and accommodation through government procurement cards in 2010/11.

Parliament’s spending watchdog found that travel and accommodation was the largest single category of spending through the cards, though definitions of this varied between departments.

The report said use of the cards was generally good value for money but called for tighter controls to prevent waste and fraud.

There were 23,998 cards in circulation as of October 2011, and the NAO looked only at purchasing cards issued to an individual or team and virtual cards ‘lodged’ with one supplier for a particular category of spending.

Central government spent £322m through the cards in 2010/11 of which 41%, equivalent to £132m, was on travel and accommodation.

The Ministry of Defence was by far the largest users of the cards, accounting for 74% of all such transactions across Whitehall.

Departments set their own rules on who may use the cards and for what, and the NAO noted, “approaches are inconsistent and this is not entirely justified by business need”.

NAO head Amyas Morse said: “The taxpayer needs to have confidence that departmental staff are using [cards] appropriately.
“There is a risk of this confidence, and the reputation of departments, being undermined where there is inconsistency between departments in the controls on the use of the cards and a lack of central guidance.”

Some departments had large backlogs of unapproved transactions, while others had systems too weak to properly monitor the cards’ usage.

Cards were most often used for “low-value, high-volume transactions, such as travel, hotel accommodation and office supplies”, the report said.

This created a large number of transactions for departments to check for probity, but the auditors found wide variations.
Greatest scrutiny was in Department of Health, which required card transactions to be checked by three separate people.

By contrast, the MoD, despite its high number of transactions, and the Department for Business, Innovation and Skills did not even require their first level approvers to review all transactions.

Public Accounts Committee chair Margaret Hodge said: “This report has uncovered evidence of unauthorised transactions and a culture of complacency in some departments.

“Given the risks of fraud and poor value for money, I am concerned that neither departments nor the Cabinet Office know enough about the use of procurement cards in government.”

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