THE Home Office has lost control of its finances and its accounts are in a mess, according to a report published by the public spending watchdog.

The National Audit Office is so alarmed at what it has uncovered that it has refused to give its approval to the department’s flawed financial records.

The Permanent Secretary at the time the trouble developed was Sir John Gieve. He left the Home Office in December to join the Bank of England as Deputy Governor in charge of financial stability.

It is the first time in modern history that the nation’s Auditor General has delivered such an indictment on the financial records of a key government department.

Sir John Bourn uncovered numerous errors and inconsistencies in the accounts, with officials unable to reconcile cash going in and out of the department with its bank statements. At one point Home Office officials wanted to write off a £3 million discrepancy in the figures.

His report bluntly said that book-keeping at the Home Office, which spends £13 billion a year, was severely deficient last year. “In my opinion the Home Office has failed to maintain proper books and records in 2004-05,” he said. The report catalogues a series of problems in the final months of David Blunkett’s period as Home Secretary and the five months after Charles Clarke took over.

Sir John blames some of the problems on the introduction of a new computer system intended to bring greater efficiency and control to the finances. But staff were not trained to use the new system on time.

Mr Clarke has made a series of changes since taking over as Home Secretary. The changes have involved the departure of three permanent secretaries — Sir John Gieve, Martin Narey and Leigh Lewis.

Edward Leigh, chairman of the Commons’ Public Accounts Committee, said that such failings must never be repeated. “It is extraordinary that one of the principal departments of state should fail so spectacularly to meet its accounting obligations,” he said.

BIG SPENDER

Annual budget £13 billion

Staff 73,306

Top officials at the time Sir John Gieve, now deputy Governor Bank of England; Martin Narey, now chief executive of Barnardos; Leigh Lewis, now at the Department of Work and Pensions

Key areas police, prisons, passports, ID cards and asylum and immigration

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