The Treasury is continuing to make improvements to the Whole of Government Accounts (WGA), which shows in a single document the overall financial position of the UK public sector. The document is also being produced more quickly. Since the Treasury first published the 2009-10 WGA, it has brought forward publication of the WGA by five months. The 2012-13 WGA was published some 15 months after the financial year to which it relates compared to 20 months for the 2009-10 WGA. The Treasury aims to deliver the 2014-15 WGA within nine months of the year end.
According to today’s report from the National Audit Office, all these improvements enhance the timelines and robustness of the WGA allowing it to be a key part of the Treasury’s framework for managing the government’s finances.
However, the Comptroller & Auditor General, Amyas Morse, has again qualified the WGA because of significant continuing issues with the quality and consistency of the data included; and has again expressed concern that bodies such as Network Rail and FE institutions continue to be excluded, even though accounting standards require their inclusion.
The NAO points out that Mr Morse’s audit opinion on the 2012-13 WGA is similar to that for 2011-12 and previous years. However, if the Treasury is successful in its plans to address the issues that have led him to qualify his opinion, then he might be able to remove a number of qualifications in the next four years.
The Comptroller and Auditor General continues to regard the WGA as a key means through which Parliament and other stakeholders might gain greater insight into the wide range of activities that government undertakes, scrutinize public finances and hold government to account. He believes, however, that government could do more to exploit the WGA’s potential as a reporting mechanism.
The latest set of accounts, the fourth such to be published by the Treasury, shows that net expenditure for the year 2012-13 (the in-year shortfall between income and expenditure) decreased from £185 billion to £179 billion, largely owing to falls in the Government’s cost of borrowing and increases in revenue.
Direct expenditure (expenditure incurred in the direct delivery of the government’s policies) increased by £18 billion in 2011-12 to £666 billion. This increase was due to increases in the purchases of goods and services and in provision expense.
The Government’s overall net liability (the difference between what it owes and what it owns) increased in 2012-13 by £283 billion to £1,630 billion (compared with £1,347 billion in 2011-12). This was largely down to a £169 billion increase in public sector pension liabilities and a £31 billion increase to government borrowing in the form of issuing gilts to finance government spending.
As the Treasury now has more WGA trend data, it is starting to highlight some of the longer-term risks on the balance sheet, and beginning to use this information to help inform government’s spending plans. For example, WGA data has drawn attention to movements in nuclear decommissioning and clinical negligence provisions.