The National Audit Office (NAO) has today published its report on HM Treasury’s Whole of Government Accounts (WGA). The WGA provides the most complete and accurate picture of the financial performance and position of the UK public sector in 2016-17. It sets out what the government receives, pays, owns and owes.

The NAO report highlights that the WGA is increasingly important to the ongoing management of the public finances, with the Treasury continuing to increase the impact and profile of the accounts. The Office for Budget Responsibility and outside government, the Institute for Fiscal Studies and the International Monetary Fund, have all drawn upon the WGA in their reports on the management and sustainability of the public finances. The Treasury used the WGA to scope its balance sheet review, launched in November 2017, and identify initial opportunities to make more effective use of assets, improve the return from investments and reduce the cost of liabilities. The Treasury plans to provide an update on the review findings in the 2018 Budget.

The NAO found that the Treasury has continued to improve the presentation of the 2016-17 WGA, providing better quality analysis of the cross government finances and the main drivers of movements in the accounts. This should assist users of the accounts in better understanding where the WGA sits within wider fiscal measures, and provides a more complete picture of the economic performance and position of the UK public sector.

Despite recent improvements, the WGA continues to lack specific detail in key areas that would enable a fuller analysis of the public finances. There remains limited information in the WGA in relation to the purchase of goods and services by government which represents some £194.8 billion of government expenditure. As the UK exits from the European Union and the process of managing the government’s deficit progresses, these disclosures and the underlying data will be increasingly relevant and useful; and will improve the ability to scrutinise the Treasury’s management of the public finances.

The usefulness of the WGA remains limited by the time it takes to produce, which has been an average of around thirteen months after the accounting year end. The Treasury has a significant challenge to meet its ultimate aim to publish the accounts within nine months of the financial year-end as more timely publication is reliant upon a number of factors, including the receipt of consolidation information from component bodies.

The Treasury has continued to make progress in improving the completeness and accuracy of transactions and balances in the WGA accounts, allowing the Comptroller and Auditor General to reduce the number of qualifications to his opinion. The remaining qualifications relate to technical issues, including the exclusion of Royal Bank of Scotland from the accounts, and underlying accounting problems in the Ministry of Defence and the academy sector.

The NAO recommends that the Treasury should continue to raise the profile of the WGA. Treasury should embed the WGA into the routine monitoring of risks to public finances and ensure that the balance sheet review process has a lasting effect., Whilst continuing to improve the quality of the information in the WGA to address qualification issues, Treasury should also set out its plan for producing the WGA sooner, setting out key milestones to achieve their target of producing the WGA within nine months.

Read the full report

Whole of Government Accounts 2016-17

Notes for editors

  1. The WGA consolidates the accounts of over 7,000 bodies across the public sector to produce an accounts-based picture of the UK’s public finances. It is the only set of audited, consolidated accounts in the world that includes the financial performance and position of both central and local government. It includes public corporations such as the Bank of England, but does not include independent public sector organisations such as Parliament, the Crown Estate or the National Audit Office.
  2. The WGA shows that total expenditure on public services across the year increased by £18.5 billion from £742.2 billion in 2015-16 to £760.7bn. This increase was offset by an increase in tax revenues of £35.5 billion to £628.1 billion, meaning that net expenditure on public services (income less expenditure) fell by £8.4 billion to £39.9 billion. Wages and salaries remained relatively stable at £151 billion compared with £149.6 billion in 2015-16, despite a decrease in full-time equivalent staff of 55,160.
  3. The government’s net liabilities (the shortfall between assets and liabilities) increased from £1,986.0 billion to £2,420.7 billion during the year, which is mainly due to increases in pension liabilities of £410.0 billion as a result of pensions scheme revaluations. Government borrowing increased by £28.4 billion to £1,289 billion, and the total cost of financing this debt during the year rose by £3.5 billion from £28.3 billion in 2015-16 to £31.8 billion in 2016-17.
  4. Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
  5. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services. Our work led to audited savings of £741 million in 2017.

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