MPs tell Treasury to “up its game” on Whole of Government Accounts

Written by Jim Dunton on 14 October 2016 in News
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Public Accounts Committee says cross departmental snapshot must be produced more quickly, include more comparative data, and be more risk-focused in the wake of the UK’s decision to leave the European Union
 

HM Treasury has been told to make a host of improvements to its Whole of Government Accounts publications to make them fit for purpose. 

MPs on the Public Accounts Committee saluted progress with the “world leading” annual publications – now in their sixth year – bringing together data from more than 6,000 public sector organisations. But in a new report they said the dataset still struggled to provide figures that were timely and in-depth enough to serve the needs of government, parliament and the general public.

They said the time lag between the financial period in question and publication was too great. Figures for 2014-15 were only published in May this year with delays to the Department for Education’s accounts and limitations in some academy schools’ data blamed for the 14-month delay. They called for the creation of an “enforceable plan” to speed things up.

The committee also flagged concerns with a “lack of alignment” between different sources of information on the government’s financial position that they said acted as a barrier to understanding the overall picture. MPs said that while there was no wider snapshot of what the government owned, owed and spent other than what was offered by the WGA, the Treasury used other sources, such as Office for Budget Responsibility forecasts, and the measures of current deficit and public sector net debt produced by the Office for National Statistics, when it described its work.


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Committee members said the Treasury needed to find a way for the WGA to provide clarity over how the different sources of information used by the government are employed in managing public finances.

They added that the UK’s potential exposure to financial shocks had been underscored by the aftermath of June’s EU referendum, but said the WGAs to date were unclear about the extent to which economic shocks could “crystalise” the liabilities that they reflected. 

MPs also pointed to the government’s rising pension liability, which it said had increased by 32% to £1.5 trillion as of March 2015. They said year-on-year movements in the WGA were distorted by the discount rate and called on the Treasury to provide extra analysis to explain the situation and “bridge the gap” between the accounts and the information it uses to assess affordability.

Committee chair Meg Hillier said that while the current WGA provided valuable insights, there was scope to improve the speed with which they are published and their ease of use.

“The WGA shed light on patterns of spending by government departments within given financial years – patterns which in some instances reflect a short-term approach to the spending of public funds,” she said.

“Clearly, this is not compatible with a value-for-money approach to spending taxpayers’ money on complex projects that may run for many years.

“There is still much to do before parliament and the public can be confident long-term financial planning is properly factored into political decisions and in the coming months the Treasury must set out its plans for achieving this.

“In particular it must demonstrate it is prepared for the very serious challenges of Brexit and put in place robust plans to safeguard public money from economic risks arising in the months and years ahead.”

Hiller added that the WGA also highlighted the government’s “growing liability” for clinical negligence claims, provision for which the committee said had almost doubled to £28 billion since 2009-10.

“The Treasury needs to act now to get a grip on such growing liabilities and they must not be allowed to fester on the balance sheet,” she said. 

The report said HM Treasury estimated that the legal costs for some cases were more than three times the amount of compensation given to individuals involved and that a failure on the part of government to admit liability in a timely way “could be driving up costs”.

An HM Treasury spokesman said officials were pleased MPs recognised the WGA's groundbreaking nature and were "committed to further improving its quality and timeliness".

 

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