Treasury told to detail plans for publishing true Brexit costs

Written by Jim Dunton on 25 January 2019 in News
News

Public Accounts Committee demands clarity on how Whole of Government Accounts will present EU exit spending

Meg Hillier Credit: PA

Parliament’s Public Accounts Committee has told HM Treasury to explain how future publications of the Whole of Government Accounts will present detailed information on the current and future impact of Brexit.

The MPs said the department’s annual snapshot of public spending – based on data from around 7,000 bodies – would not provide the level of “comprehensive information” that parliament and the public expected unless it included “additional detail”.

They said that while the Treasury expected it would need to report on the amount spent preparing for Brexit, the financial exit settlementand and the replacement of EU schemes – such as agricultural payments – it must also properly unpack these disclosures.


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This would mean including a “comprehensive explanation of the likely impact on the public finances in the current and future years”, the committee said. It also told the Treasury to consider how any “Brexit dividends” would be disclosed in future years.

Last summer, prime minister Theresa May said a "Brexit dividend" could contribute towards a £20bn funding package she announced for the NHS ahead of its 70th aniiversary celebrations. The move had echoes of one of the most contentious claims made by the Vote Leave campaign leading up to the 2016 EU referendum: the suggestion that £350m "sent to Europe" each week could be better spent on the health service.

The Treasury expects to publish the WGA for 2017-18 in May – more than 12 months after the reporting period it covers. This would nevertheless be a quicker turnaround than in any year since the reports began with 2009-10’s data, which was made public in November 2011.

PAC chair Meg Hillier said that although the annual WGA had provided valuable detail on public spending, the report still didn’t “tell the whole story” and wasn't available quickly enough to help shape decision making.

“Uncertainty about the true costs of Brexit highlights the importance of producing the WGA in a more timely and transparent manner,” she said.

“This document offers the most complete picture of the UK’s public finances. But the 2016-17 WGA was published in June last year, some 15 months after the end of the financial year – a year in which [NAO] comptroller and auditor general [Sir Amyas Morse] qualified his opinion on government accounts for multiple reasons.

“That is too long to wait for information that could play a critical role in shaping decisions on public spending.

“The government has listened to concerns raised previously by our committee but there is more it can and should do to improve the WGA’s usefulness to taxpayers, parliament and other decision-makers.

Committee members gave the Treasury until the end of March to report back on how it will present “comprehensive and easily understood” information on the impact of Brexit in the WGA 2017-18 and in future years.

Despite accepting that the Treasury had made “clear progress” in improving the commentary and analysis published with the WGA, MPs said it could do more both to share the report and to make it more relevant to the public and parliament.

The PAC also said the report's readers needed more detailed information on the government’s potential future exposure to liabilities as the nation’s effective insurer of last resort.

The report said that although WGA 2016-17 included a £185bn liability related to nuclear decommissioning, there was currently no information on the decommissioning of fracking sites available.

“The Treasury accepted that there might be scenarios where if companies did not have sufficient capital to clean up any leaks or catastrophic failures, this may fall to the public sector and could affect public finances in the future,” it said. 

MPs also said that despite the Treasury’s renewed focus on the public sector balance sheet some liabilities have worsened, with clinical negligence liabilities rising to almost £77bn as of 2017-18. 

They added that the Department of Health and Social Care had identified a further £46bn of potential expenditure relating to cases with greater uncertainty.

But the report noted that DHSC’s “inability to accurately forecast its exposure to clinical negligence costs” had resulted in a £14.8bn underspend for 2017-18, according to the department’s annual accounts.

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