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The Comptroller and Auditor General, the head of the National Audit Office, today reported to Parliament that he has qualified his audit opinion on HM Treasury’s Resource Accounts for 2008-09.  This was because, in that year, HM Treasury incurred expenditure of some £24 billion more than Parliament had authorized.

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This arose because of the need to provide for expected net losses arising from the operation of the Asset Protection Scheme – under which HM Treasury provides banks with protection against future credit losses on certain assets in exchange for a fee.  HM Treasury knew from the outset that the Scheme would result in a significant loss but at that stage there was not enough certainty about which banks would participate and on what terms to include a provision in the Spring Estimates.

Subsequently the participation of the Royal Bank of Scotland Group and the Lloyds Banking Group was announced and they are currently in negotiations with HM Treasury.

HM Treasury’s Balance Sheet also shows the level of assets and liabilities recorded have increased significantly compared to last year.  Total assets less total liabilities now stand at £44 billion, up from £2 billion in 2007-08.

“This financial year has been an extraordinary one and has presented extraordinary challenges for HM Treasury. The department’s huge in-year growth in its assets and liabilities illustrates the extreme nature of the problems faced and action taken. It should be recognized that the pressure for the department to intervene by offering the Asset Protection Scheme gave it no time to seek from Parliament the additional resources needed. The breach of the Treasury’s expenditure limits has necessitated my qualifying my opinion on its resource accounts. This arose from the need to take action at a point when it was too late to obtain spending authority through the Parliamentary estimates process.”

Amyas Morse, the head of the National Audit Office


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