Fee-based services – risk of inefficiency when government agencies determine fee level and revenue use

Government agencies’ activities are to be financed mainly by appropriations. In activities that are nevertheless financed by fees, situations must be avoided in which a government agency both determines the fee level and how the resulting revenue is used. The Swedish National Audit Office considers that there is a risk that fee-based services governed by public law – for which government agencies nevertheless determine the fee level and how generated revenues are used – will not be developed and offered to the level of efficiency or productivity that is possible.

The Government has expressed that there are efficiency structures in government agencies’ fee-based activities and that work is in progress to develop government agencies’ fee-based services with productivity requirements and pressure to enhance efficiency. However, it is the assessment of the Swedish National Audit Office that the Government has not specifically managed the risks of inefficiency that are present when government agencies determine the fee level and how resulting revenue is used. For example, the Government has not performed regular monitoring of the Riksdag’s guidelines for determining when government agencies may decide on the use of revenue from fee-based services governed by public law.

Neither does the Government, in its management, systematically address government agencies’ dialogue with purchasing companies. The Swedish National Audit Office considers that this can impede achieving the intent of government agencies’ efforts to simplify regulations, which is closely linked to issues of efficiency and productivity. The few existing examples – such as in the Government’s agency dialogues – taken together do not exert pressure to enhance efficiency, according to the assessment of the Swedish National Audit Office. There are also no clear means for systematic monitoring and evaluation, such as key performance indicators.

For central government fee-based activities, the National Financial Management Authority (ESV) has the task of providing support to other government agencies and reporting on fee-based activities. According to the Swedish National Audit Office’s assessment, the ESV does not take any specific measures with regard to government agencies that determine the level of their fees governed by public law and how the resulting revenue is used, and the Authority’s role in this context is limited.

Government agencies’ consultation process with the ESV is a core element of the ESV’s work on fee-based services. It is the assessment of the Swedish National Audit Office that the ESV’s process review and development efforts are of importance in exerting pressure to enhance the efficiency of government agencies’ fee-based services.

The Swedish National Audit Office’s assessment is that there is potential for the ESV to apply further pressure to enhance the efficiency of fee-based services governed by public law by providing guidance to government agencies, developing principles, regulations and methods for effective financial governance in the central government and through its reporting of central government fee-based activities.

It is the Swedish National Audit Office’s assessment that government agencies included in this audit do not specifically address issues concerning efficiency and productivity in fee-based services governed by public law, for which they both determine the fee level and how the resulting revenue is used. This is despite the fact that, in such cases, government agencies are operating under derogation. The Swedish National Audit Office therefore sees a tangible risk of this leading to government agencies failing in their efforts to work effectively to meet requirements for higher productivity and efficiency.

Furthermore, the Swedish National Audit Office notes that there are no requirements for government agencies to have an active dialogue with purchasers of their services. However, it is the Swedish National Audit Office’s assessment that such a dialogue is important for identifying companies’ needs and for ensuring that government agencies’ services are appropriate and effective. This may include matters such as the number of fees, the fee level, processing times, transparency, predictability and a long-term perspective.