Recommendations & Conclusions
27 items
2
Recommendation
Twentieth Report - Whole of Government …
Accepted
Poor design and testing of OSCAR II caused significant delays to the Whole of Government Accounts. In July 2020 the Treasury replaced its now obsolete IT system with a new system, OSCAR II, used for collecting and consolidating data from component bodies into the WGA. This update was expected to …
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Poor design and testing of OSCAR II caused significant delays to the Whole of Government Accounts. In July 2020 the Treasury replaced its now obsolete IT system with a new system, OSCAR II, used for collecting and consolidating data from component bodies into the WGA. This update was expected to bring significant benefits including increased efficiencies, improved data collection and analysis and to lead to advancements in the quality of information in the WGA. However, the Treasury failed to anticipate a number of significant problems that arose during implementation which the Treasury estimates contributed to the delays to delivery by an estimated five months. The setbacks—which included issues with data submission by component bodies, incomplete and inaccurate report outputs, and various performance issues—took the Treasury significantly longer than would be expected to understand and resolve. The Treasury’s failure to identify and resolve these issues before the system was live indicates insufficient user acceptance testing and weaknesses in the system specification. The Treasury reports that all known issues have now been resolved ahead of the production of the 2020–21 WGA, but it anticipates that new issues may yet arise. The Treasury must demonstrate that it is now positioned to successfully manage any new issues in the normal course of business, without again impacting the overall timetable for accounts production. Recommendation: The Treasury should undertake a lessons-learnt exercise, specifically addressing but not limited to the root causes of poor design specification and testing of OSCAR II, and ensure identified improvements are implemented when applying future system changes. 6 Whole of Government Accounts 2019–20
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Government response AI summary
The Treasury has undertaken a number of lessons learned exercises, including engaging the Government Internal Audit Agency to support this work and changed its practices for project managing changes to the system.
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HM Treasury
3
Recommendation
Twentieth Report - Whole of Government …
Accepted
Failures in the local audit market in England and Wales are resulting in poorer quality data for Central Government to use in oversight, and in preparing the Whole of Government Accounts. Before the pandemic, the Local Government audit sector was already under strain, with widespread delays to statutory audits. The …
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Failures in the local audit market in England and Wales are resulting in poorer quality data for Central Government to use in oversight, and in preparing the Whole of Government Accounts. Before the pandemic, the Local Government audit sector was already under strain, with widespread delays to statutory audits. The additional demands on Local Government from COVID-19 exacerbated these problems, with only 45% of 2019–20 Local Government audits completed by the target date of 30 November 2020, compared to 57% of 2018–19 audits completed by the prior year target date of 31 July 2019. As a result, and despite delivering the 2019–20 WGA later, the Treasury’s data is increasingly incomplete and unreliable, with the WGA including unreliable data for 29 unaudited Local Authorities and excluding 23 Local Authorities altogether. This has reduced the quality of data used to oversee the Local Government sector and to prepare the WGA, and reduces the certainty of any consequent insights, conclusions or decisions. The problem is likely to escalate, with the proportion of 2020–21 audits completed by the target date of 20 September 2021 dropping again to just 9%. The Treasury has raised the component audit threshold for the 2020–21 WGA, such that just 10 Local Government returns will require auditing for 2020–21. Although this will make it easier for the Treasury to produce the WGA on time, it may have negative consequences for the quality and reliability of data unless the Treasury undertake additional assurance work to mitigate this risk. Recommendation: The Treasury should set out how it will ensure the data in OSCAR II will remain of sufficient quality, despite significantly reducing the level of auditor assurances, for producing the WGA and informing its understanding of the local government sector.
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Government response AI summary
The Treasury will centrally carry out assurance work over data submissions that are below the audit threshold (across all sectors) and is obtaining further specialist assurance advice on how to enhance the efficiency and effectiveness of the assurance procedures for WGA.
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HM Treasury
4
Recommendation
Twentieth Report - Whole of Government …
Accepted
Inconsistent presentation of data between years, and lack of reflection of current Government policies and economic context, reduce the usability of the Whole of Government Accounts. The 2019–20 WGA presented some important trend analysis within the Performance Report; an aspect of the WGA reporting that we welcome. However, in some …
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Inconsistent presentation of data between years, and lack of reflection of current Government policies and economic context, reduce the usability of the Whole of Government Accounts. The 2019–20 WGA presented some important trend analysis within the Performance Report; an aspect of the WGA reporting that we welcome. However, in some areas there has been a lack of consistency when it comes to how this information is presented. For example, analysis of liabilities had previously been presented in a pie chart but is now presented in a bar chart. Maintaining consistent presentation of data year-on-year makes it easier to compare information over time. Given the unique perspective the WGA offers across public finances, the Treasury should ensure that comparison across years and across reports is simple and unambiguous. The Performance Report could also be improved by developing its commentary to reflect developments in the public sector and financial landscapes since the reporting date, which can be significant given the timeframe for WGA publication. Issues such as the impact of inflation on budgets, spending and pay reviews, if suitably reflected, could expand the functionality of the WGA. The Treasury should also ensure commentary on key targets, such as capital receipts on property disposals, include current targets and proposals to keep the WGA current despite publication delays. Recommendation: The Treasury should ensure that analysis in the WGA supports comparability and reflects developments since the reporting date such as the impact of high inflation. Whole of Government Accounts 2019–20 7
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Government response AI summary
The government agrees to ensure that analysis in the WGA supports comparability and reflects developments since the reporting date, by building on trend data, reflecting topical interests, following best practices in data presentation, and including commentary to reflect developments in the public sector and financial …
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HM Treasury
5
Recommendation
Twentieth Report - Whole of Government …
Accepted in Part
The content of the Whole of Government Accounts has improved but does not transparently report against all key areas of government spending. The issues that are of greatest interest to users of the WGA, including the Committee, evolve over time. For example, the 2019–20 WGA includes reporting on sustainability and …
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The content of the Whole of Government Accounts has improved but does not transparently report against all key areas of government spending. The issues that are of greatest interest to users of the WGA, including the Committee, evolve over time. For example, the 2019–20 WGA includes reporting on sustainability and net zero targets, although the information included is brief, with limited detail – the Treasury plans to build on this going forwards. Providing a more comprehensive assessment of the impact of the pandemic on the level of fraud and error against the government should be a focus going forwards, for example by including estimates of NHS procurement fraud. The Treasury currently includes data from the COVID-19 Cost Tracker produced by the NAO in the WGA. However, it should not depend on the NAO to continue reporting this information; and should develop and use its own assessment of these costs. Improvements to the transparency of information in the WGA would be achieved through more detailed narrative in certain areas. The asset and liability split reported in the WGA, in a commercial organisation, would indicate that it is insolvent, and the Treasury could better explain why this is not the case in the context of the Government’s ability to raise future funds through taxation and borrowing. Recommendation: The Treasury should continue to improve the content of the WGA, with specific reference to the following: • Spending on net zero • Government emissions • Fraud across government • Long term costs of COVID interventions • Inclusion of the equivalent of a viability statement
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Government response AI summary
HM Treasury will continue to improve the content of WGA, to ensure it brings together the best available published information on topics of interest but considers that adding too many disclosures might make reporting complex and unwieldy, therefore consideration will be given to ensuring that …
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HM Treasury
6
Recommendation
Twentieth Report - Whole of Government …
Rejected
Government has not yet set out the consequences of announced Civil Service staffing reductions. In May 2022, the government announced that it intends to cut 91,000 jobs from the civil service over the next three years. The 2021 Spending Review had already confirmed the need for savings of 5% against …
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Government has not yet set out the consequences of announced Civil Service staffing reductions. In May 2022, the government announced that it intends to cut 91,000 jobs from the civil service over the next three years. The 2021 Spending Review had already confirmed the need for savings of 5% against day-to-day central departmental budgets in 2024–25, however, these new cuts, which represent a 20% reduction in headcount, are far more significant. The Treasury acknowledges that it does not yet understand the scale or cost of redundancies that are likely to be required to achieve the desired reduction in headcount across the civil service. This scale of headcount reduction has the potential to bring about significant consequences for departmental service quality and delivery. At the time we took evidence, no work had been completed, either by the Treasury or by other affected departments, to understand the impact on delivery of public services or how to mitigate the effects for service users. One way in which cuts might be achieved while maintaining delivery levels is through increased digitisation of services. There is a risk that if a rapid reduction in headcount led to a sacrifice of resources needed to achieve digital transformations, that current progress towards digitalisation might be jeopardised; damaging the potential to reduce long-term staffing needs organically. 8 Whole of Government Accounts 2019–20 Recommendation: HM Treasury and the Cabinet Office should prepare a clearly articulated and costed plan based on proposed staffing reductions across government, and ensure that reductions represent value for money, and tell us in its Treasury Minute response when that will be published. Whole of Government Accounts 2019–20 9 1 Timeliness of the WGA and the impact of delays
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Government response AI summary
The government rejects the recommendation to prepare a costed plan based on proposed staffing reductions across government, stating that they will not be publishing a full plan to deliver the previously proposed Civil Service staffing reductions, and will instead focus on departmental efficiency and savings …
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HM Treasury
1
Conclusion
Twentieth Report - Whole of Government …
Acknowledged
Based on the Whole of Government Accounts (WGA) for the year ended 31 March 2020, we took evidence from HM Treasury (the Treasury) on 8 June 2022.1 The WGA is a unique document which provides the most complete and accurate picture available of the UK public sector finances.2 It is …
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Based on the Whole of Government Accounts (WGA) for the year ended 31 March 2020, we took evidence from HM Treasury (the Treasury) on 8 June 2022.1 The WGA is a unique document which provides the most complete and accurate picture available of the UK public sector finances.2 It is a set of financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and the Government Financial Reporting Manual (FReM).3 It brings together information on the financial performance and position of over 10,000 organisations across the UK public sector, including: central government departments; local authorities; devolved administrations; the NHS; academy schools; and public corporations such as the Bank of England.45 The Treasury published the 2019–20 WGA on 6 June 2022, 26 months after the end of the financial year.6
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Government response AI summary
The Treasury is revisiting the timetable for the 2020-21 account and future cycles and will write to the Committee setting out a long term recovery strategy to strengthen discipline within the system and investing in specialist project management support and increasing the size of the …
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HM Treasury
7
Conclusion
Twentieth Report - Whole of Government …
Acknowledged
Timeliness is essential when gathering high-quality data needed to produce useful information; delays reduce the value and transparency of information in the WGA and diminish its potential to generate valuable insights.17 The published accounts are an important source for key stakeholders including Parliament, and major fiscal bodies such as the …
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Timeliness is essential when gathering high-quality data needed to produce useful information; delays reduce the value and transparency of information in the WGA and diminish its potential to generate valuable insights.17 The published accounts are an important source for key stakeholders including Parliament, and major fiscal bodies such as the International Monetary Fund and Office for Budget Responsibility, and underlying data is used by HM Treasury to help manage the public finances. In order to fully exploit this potential, the information provided must be complete, accurate and timely.18
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Government response AI summary
The Treasury is revisiting the timetable for the 2020-21 account and future cycles in light of the causes of the delays both this year and for 2019-20, and will write to the Committee setting out a long term recovery strategy that is realistic.
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HM Treasury
8
Recommendation
Twentieth Report - Whole of Government …
Acknowledged
Throughout the course of the 2019–20 accounts preparation process, the Treasury repeatedly underestimated how long it would take to produce the WGA; missing both 11 Public Accounts Committee, Report of session: Whole of Government Accounts 2018–19, 22 January 2021 12 HM Treasury, The Whole of Government Accounts (Specified Dates) Order …
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Throughout the course of the 2019–20 accounts preparation process, the Treasury repeatedly underestimated how long it would take to produce the WGA; missing both 11 Public Accounts Committee, Report of session: Whole of Government Accounts 2018–19, 22 January 2021 12 HM Treasury, The Whole of Government Accounts (Specified Dates) Order 2010, 2010 No. 570, 31 March 2010 13 WGA 2019–20, para 9, p 211 14 WGA 2019–20, title page 3 15 HM Treasury, Whole of Government Accounts: year ended 31 March 2019, HC 500, July 2020 16 Public Accounts Committee, Oral evidence: Whole of Government Accounts, HC 31, 8 June 2022, Q 5 17 Q 12 18 WGA 2019–20, para 14, p 212 Whole of Government Accounts 2019–20 11 statutory deadlines and routinely missing self-set delivery milestones.19 In November 2020 the Treasury told the Committee that the accounts would be published in June 2021.20 However, by January 2021 the Treasury was no longer in a position to meet the 28 February statutory deadline for providing the draft accounts to the C&AG, and by July 2021 it communicated to us that it would also not be able to meet the 31 December deadline for laying the accounts. Altogether the Treasury wrote to us four times about successive delays to the delivery schedule with the most recent of these updates giving April 2022 as the target for publication.21 22 23 24 The 2019–20 WGA was eventually published on 6 June
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Government response AI summary
The Treasury is revisiting the timetable for the 2020-21 account and future cycles in light of the causes of the delays both this year and for 2019-20, and will write to the Committee setting out a long term recovery strategy that is realistic.
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HM Treasury
9
Recommendation
Twentieth Report - Whole of Government …
Acknowledged
The Treasury has laid out its aims for delivery of the 2020–21 and 2021–22 accounts, setting target dates for publication of March 2023 and November 2023 respectively. This gives the Treasury less than 10 months from publication of the 2019–20 WGA for the preparation and audit of the 2020–21 accounts, …
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The Treasury has laid out its aims for delivery of the 2020–21 and 2021–22 accounts, setting target dates for publication of March 2023 and November 2023 respectively. This gives the Treasury less than 10 months from publication of the 2019–20 WGA for the preparation and audit of the 2020–21 accounts, and only eight months subsequently for the 2021–22 accounts.26 The accounts production timetables the Treasury laid out for 2019–20 were unrealistic and it is vital that this is not repeated so that delivery plans are realistic and achievable going forwards.27 The Treasury has yet to develop a detailed delivery plan to support the high-level timetables for the 2020–21 and 2021–22 accounts.28 Implementation of OSCAR II
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Government response AI summary
The government agrees with the Committee’s recommendation, acknowledging the unlikelihood of achieving the planned March 2023 publication date and stating they are revisiting the timetable and will write to the Committee with a long term recovery strategy.
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HM Treasury
10
Recommendation
Twentieth Report - Whole of Government …
Accepted
In July 2020 the Treasury launched its new financial IT system, OSCAR II, for use in preparing the WGA. OSCAR II replaced the previous, obsolete system and was designed to support, amongst other functions: the collection and consolidation of data from component bodies into the WGA; holding, storing and updating …
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In July 2020 the Treasury launched its new financial IT system, OSCAR II, for use in preparing the WGA. OSCAR II replaced the previous, obsolete system and was designed to support, amongst other functions: the collection and consolidation of data from component bodies into the WGA; holding, storing and updating information with easy and immediate access to data; and the production of reports with use of intuitive reporting tools. According to the Treasury, the update was expected to bring significant benefits including increased efficiencies, improved data collection, enhanced financial and non-financial analysis, and to lead to advancements in the quality of information in the WGA.2930
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Government response AI summary
The government agrees to undertake a lessons-learnt exercise addressing the root causes of poor design specification and testing of OSCAR II, and ensure identified improvements are implemented when applying future system changes.
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HM Treasury
11
Recommendation
Twentieth Report - Whole of Government …
Accepted
However, during the implementation of OSCAR II, a number of significant problems arose. The problems, which were not localised but were encountered across the system’s different functionalities, included: issues faced by component bodies when attempting to submit their data to the system, in some cases requiring system changes to be …
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However, during the implementation of OSCAR II, a number of significant problems arose. The problems, which were not localised but were encountered across the system’s different functionalities, included: issues faced by component bodies when attempting to submit their data to the system, in some cases requiring system changes to be made, and 19 WGA 2019–20, para 14, p 212 20 Public Accounts Committee, Oral evidence: Whole of Government Accounts, HC 655, 19 November 2020, Q 117 21 Public Accounts Committee, Correspondence re Whole of Government Accounts (WGA) 2019–20, 25 January 2021 22 Public Accounts Committee, Correspondence re Whole of Government Accounts (WGA) 2019–20, 15 July 2021 23 Public Accounts Committee, Correspondence re Whole of Government Accounts (WGA) 2019–20, 23 October 2021 24 Public Accounts Committee, Correspondence re Whole of Government Accounts (WGA) 2019–20, 11 January 2022 25 Public Accounts Committee, Oral evidence: Whole of Government Accounts, HC 31, 8 June 2022, Q 83 26 Q 17 27 WGA 2019–20, paras 13–14, pp 211–212 28 WGA 2019–20, para 17b, p 213 29 Public Accounts Committee, Correspondence re Information on the OSCAR II system, 28 October 2020 30 PAC report – WGA 2018–19, para 21, part 2 12 Whole of Government Accounts 2019–20 taking up to a year to resolve; some reports produced by the system were incomplete and inaccurate, including the reports used by component auditors to validate data entry as well as some reports provided to the NAO for audit; and performance issues with the reporting module, which delayed the production of the accounts.31 We questioned the Treasury on why these issues had not been anticipated; although they had carried out preliminary user acceptance testing, they nonetheless failed to identify or resolve these issues before the system went live.32 The Treasury told us that the initial system specification was not sufficient and that not all data collection requirements had been anticipated.33 The Treasury estima
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Government response AI summary
The Treasury has undertaken a number of lessons learned exercises, including engaging the Government Internal Audit Agency to support this work, and is applying the lessons learned in deciding on the future support and development arrangements for the system.
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HM Treasury
12
Recommendation
Twentieth Report - Whole of Government …
Accepted
The Treasury has told us that that all known issues with OSCAR II have now been resolved as they move onto the production of the 2020–21 WGA. However, the Treasury informed us that it anticipates that there are likely to be some new issues that will yet arise. The system …
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The Treasury has told us that that all known issues with OSCAR II have now been resolved as they move onto the production of the 2020–21 WGA. However, the Treasury informed us that it anticipates that there are likely to be some new issues that will yet arise. The system is supported by a service desk and the Treasury hopes that any new issues can be dealt with in the usual course of businesses without adding to the production delay; whether this will be the case is yet to be seen.35 The Treasury must demonstrate that it is now positioned to successfully manage additional problems that surface by working with its IT contractor to more clearly understand the timescales involved with resolving possible issues and making necessary system changes.36 Sustainability of the Local Government audit sector
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Government response AI summary
The Treasury has changed its practices for project managing changes to the OSCAR II system and is negotiating a new plan with Deloitte. They are applying lessons learned in deciding on future support arrangements, with the existing contract due to end in November 2023.
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HM Treasury
13
Recommendation
Twentieth Report - Whole of Government …
Accepted
The Local Government audit sector in England and Wales has been under significant strain for a number of years. There is a shortage of auditors with the knowledge and experience to deliver, within the expected timeframes, the high-quality audits required for the increasingly complex structures and transactions within these accounts. …
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The Local Government audit sector in England and Wales has been under significant strain for a number of years. There is a shortage of auditors with the knowledge and experience to deliver, within the expected timeframes, the high-quality audits required for the increasingly complex structures and transactions within these accounts. These already widespread delays to statutory audits were only exacerbated with the onset of the COVID-19 pandemic and the additional pressures on Local Government that followed. The target audit completion date for 2018–19 audits was 31 July 2019 however this was met by only 57% of Local Government bodies. This dropped to 45% for 2019–20 audits successfully completed by the target date of 30 November 2020; in October 2021, nearly 12 months after the target date, 70 of the 2019–20 accounts were outstanding.3738 Despite the fact that the 2019–20 WGA did not publish until 26 months after year end, the Treasury included data in the accounts from 29 Local Authorities whose statutory audit had not been certified, and excluded data altogether from a further 23 Local Authorities.3940
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Government response AI summary
The Treasury will centrally carry out assurance work over WGA data submissions that are below the audit threshold and is obtaining further specialist assurance advice on how to enhance the efficiency and effectiveness of the assurance procedures for WGA.
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HM Treasury
14
Recommendation
Twentieth Report - Whole of Government …
Accepted
The Treasury explained that the decision was made to prepare the WGA using unaudited data from these bodies as a trade-off between timeliness and completeness. The Treasury told us that it waited for the audits of all the largest bodies that feed into the WGA to be complete but decided …
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The Treasury explained that the decision was made to prepare the WGA using unaudited data from these bodies as a trade-off between timeliness and completeness. The Treasury told us that it waited for the audits of all the largest bodies that feed into the WGA to be complete but decided that it was of higher priority to reach publication than to 31 WGA 2019–20, para 11, p 211 32 Q 8 33 Q 9 34 Q 6 35 Q 10 36 WGA 2019–20, para 17c, p 217 37 Public Sector Audit Appointments, News release: 2020/21 audited accounts – PSAA, 12 October 2021 38 Q 25 39 WGA 2019–20, para 8, p 210–11 40 HM Treasury, Annex 2: Entities that are not consolidated in the WGA, 6 June 2022 Whole of Government Accounts 2019–20 13 wait for all smaller bodies to submit audited data. The Treasury also stated that it felt it was preferable to include the unverified data rather than exclude those Local Authorities whose audits were incomplete so as to produce a set of accounts which contained comparable information year on year, rather than a fluctuating set depending on the completion of audits.41 As a result, however, this data, used to reflect the Local Government sector and to prepare the WGA, has become increasingly unreliable. This consequently lowers the quality of data and reduces the certainty of any consequent insights, conclusions or decisions taken from the accounts.42
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Government response AI summary
The government agrees to ensure the data in OSCAR II will remain of sufficient quality by centrally carrying out assurance work over data submissions that are below the audit threshold and by obtaining further specialist assurance advice on how to enhance the efficiency and effectiveness …
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HM Treasury
15
Conclusion
Twentieth Report - Whole of Government …
Accepted
This problem is expected to escalate further as the Treasury look towards the 2020– 21 WGA. The proportion of 2020–21 Local Government audits that had been completed by the target date of 20 September 2021 dropped again from 45% in 2019–20 to just 9%.43 In advance of the 2020–21 WGA …
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This problem is expected to escalate further as the Treasury look towards the 2020– 21 WGA. The proportion of 2020–21 Local Government audits that had been completed by the target date of 20 September 2021 dropped again from 45% in 2019–20 to just 9%.43 In advance of the 2020–21 WGA the Treasury told us that it has lifted the audit threshold for Local Government to match the Central Government threshold. It informed us that, as a result, only 10 Local Authorities will sit above this threshold which demands their accounts be subject to a statutory audit.44 Although this will make it easier for the Treasury to produce the WGA on time, it may have negative consequences for the quality and reliability of data unless the Treasury undertake additional assurance work to mitigate this risk.45 41 Q 16 42 WGA 2019–20, para 14, p 212 43 PSAA, News Release: 2020/21 audited accounts 44 Q 17 45 WGA 2019–20, para 14, p 212 14 Whole of Government Accounts 2019–20 2 Quality and consistency of data and reporting Usability of the WGA
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Government response AI summary
The government agrees with the recommendation to ensure the data in OSCAR II will remain of sufficient quality. They state WGA data submissions are prepared based on component entity’s audited accounts where published, and entities above a certain size are also required to have their …
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HM Treasury
16
Recommendation
Twentieth Report - Whole of Government …
Accepted
There are several factors that contribute to maximising the usability of the WGA for the public and other stakeholders. We discussed with the Treasury how creating successive sets of accounts which are presented in a consistent and comparable way enables users to analyse data and trends across several years. This …
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There are several factors that contribute to maximising the usability of the WGA for the public and other stakeholders. We discussed with the Treasury how creating successive sets of accounts which are presented in a consistent and comparable way enables users to analyse data and trends across several years. This is one of the most valuable functions of the WGA—which has provided the best available overview of UK public finances for the last 11 years—and so it is important that consistency of data presentation and usability are strictly considered.46
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Government response AI summary
The government agrees to ensure that analysis in the WGA supports comparability and reflects developments since the reporting date such as the impact of high inflation. They will build on the existing 5-year trend data and ensure comparative data is presented as effectively as possible, …
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HM Treasury
17
Recommendation
Twentieth Report - Whole of Government …
Accepted
In the 2019–20 WGA, the Treasury presented some important trend analysis within the Performance Report on income and expenditure, as well as assets and liabilities.47 This is an aspect of the WGA reporting that we welcome as an incredibly useful aspect of what the WGA is geared towards. However, we …
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In the 2019–20 WGA, the Treasury presented some important trend analysis within the Performance Report on income and expenditure, as well as assets and liabilities.47 This is an aspect of the WGA reporting that we welcome as an incredibly useful aspect of what the WGA is geared towards. However, we raised with the Treasury how in some areas there has been a lack of consistency when it comes to how this information is presented. For example, the analysis of liabilities contains data which has, in previous reports, been presented as a pie chart but is now presented as a bar chart. The Treasury agreed that maintaining consistent presentation of data year-on-year makes it easier to compare information over time. The less consistent the presentation, the less accessible the WGA becomes. Given the unique perspective the WGA offers across public finances, the Treasury should ensure that comparison across years and across reports is simple and unambiguous.48
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Government response AI summary
The Treasury will build on the WGA performance report to ensure comparative data is presented as effectively as possible, to enhance the useability of the accounts, and provide clear prior year data to aid comparability where presentational changes are made.
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HM Treasury
18
Recommendation
Twentieth Report - Whole of Government …
Accepted
Another factor to consider in elevating the usability of the WGA is the way in which current Government policies and economic context are reflected in its reporting; currently such context is lacking. The Treasury has invited our thoughts on how value could be added to the WGA and the Performance …
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Another factor to consider in elevating the usability of the WGA is the way in which current Government policies and economic context are reflected in its reporting; currently such context is lacking. The Treasury has invited our thoughts on how value could be added to the WGA and the Performance Report could be greatly improved by developing the commentary to reflect developments in the public sector and financial landscapes since the reporting date.49 50 This is especially relevant given the significant gap between the year-end and the time of publication for the WGA. Even if the Treasury succeed with plans to recover some of the delays experienced in 2019–20, this gap will still be around two years for the 2020–21 WGA.51 For example, we asked the Treasury how it is considering the impacts of inflation, which permeate across all sectors, issues, projects and Departments, and how these inflationary pressures will be managed.52 The Treasury told us it is in constant touch with departmental finance teams to discuss the impact of inflation on their programmes and how they are seeking to manage these whilst continuing to observe departmental budgets. The Treasury explained how non- staff expenditure is often governed through committed contracts and that it works closely with supply chains to mitigate and manage cost pressures. Staff costs are often directed by 46 WGA 2019–20, para 1, p 209 47 WGA 2019–20, pp 40–75 48 Qq 37–39 49 Q 75 50 Q 79 51 Q 17 52 Q 42 Whole of Government Accounts 2019–20 15 recommendations from independent pay review bodies; how inflation will be considered in these recommendations will be seen in the upcoming reviews.53 The impact of inflation on budgets, spending, and pay reviews is not currently reported in the WGA.54 Similarly, the commentary on key targets does not include all current updates and proposals. For example, the 2015–2020 target for capital receipts on property disposals is reported but the Treasury were not clear on current targ
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Government response AI summary
The Treasury will build on the WGA performance report to ensure comparative data is presented as effectively as possible, to enhance the useability of the accounts, and provide clear prior year data to aid comparability where presentational changes are made.
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HM Treasury
19
Recommendation
Twentieth Report - Whole of Government …
Accepted
The Treasury explained to us how the WGA plays a crucial role in enhancing the fiscal transparency of the public sector, giving a more complete and overarching view of government spending and the public financial structure that exists elsewhere. This in turn allows, over the years, for identification of major …
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The Treasury explained to us how the WGA plays a crucial role in enhancing the fiscal transparency of the public sector, giving a more complete and overarching view of government spending and the public financial structure that exists elsewhere. This in turn allows, over the years, for identification of major economic trends and better fiscal management. The content and quality of the reporting in the WGA, beyond the financial statements themselves, is what controls the level of transparency achieved.57 The Treasury has succeeded in advancing the content of its reporting in 2019–20 to include valuable overviews of the wider government impacts and actions surrounding both the COVID-19 pandemic and EU Exit.58 The Treasury highlighted how information on sustainability and net zero targets has also been included in the WGA for the first time, although they acknowledged that the information reported is brief, with limited detail. Advancements in reporting on areas such as this would work to heighten the transparency of reporting and provide a more comprehensive financial backdrop for fiscal management. We are pleased that the Treasury sees this as only the beginning of its reporting on these issues and intends to build upon this in future publications.59
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Government response AI summary
The government agrees to continue improving the content of the WGA, including spending on net zero, government emissions, fraud across government, long term costs of COVID interventions and inclusion of the equivalent of a viability statement, with a target implementation date of July 2023.
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HM Treasury
20
Recommendation
Twentieth Report - Whole of Government …
Accepted
The Treasury expressed its understanding of how the issues that are of greatest interest to users of the WGA, including the Committee, evolve over time. The Treasury told us that where users of the WGA continue to rely on the document as a key source of information on an issue, …
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The Treasury expressed its understanding of how the issues that are of greatest interest to users of the WGA, including the Committee, evolve over time. The Treasury told us that where users of the WGA continue to rely on the document as a key source of information on an issue, then it will continue to highlight that area. However, it contended that committing to a particular timeframe for reporting on a given issue is not in the interest of this ambition to deliver adaptable reporting which focusses on the highest current priorities.60 Whist the 2019–20 WGA included commentary on COVID-19, as the Treasury moves onto preparing the 2020–21 WGA it must build upon this work with a view to greater transparency. As with any major event with far-reaching economic impacts, the WGA is positioned to provide a record of what happened across and beyond the pandemic which could become a blueprint for future government action.61 The Treasury does not yet know how much money in total has been lost to fraud and error across the Government’s response to COVID-19.62 However, the Treasury agreed that reporting on fraud and error as a result of COVID-19 should be a focus for the foreseeable future.63 Estimates 53 Q 42 54 WGA 2019–20 55 WGA 2019–20, para 1.115, p 44 56 Q 68 57 Q 15 58 WGA 2019–20, para 15, p 212 59 Q 77 60 Q 31 61 Q 32 62 Q 48 63 Q 75 16 Whole of Government Accounts 2019–20 of fraud (committed against the government, such as NHS procurement fraud) and error (resulting from internal government mistakes and undetected inaccuracies made by external participants) should be included along with narrative around government counter action.64 65
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Government response AI summary
The government agrees to continue improving the content of the WGA, including spending on net zero, government emissions, fraud across government, long term costs of COVID interventions and inclusion of the equivalent of a viability statement, with a target implementation date of July 2023.
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HM Treasury
21
Recommendation
Twentieth Report - Whole of Government …
Accepted
The Treasury currently uses the NAO’s COVID-19 Cost Tracker to provide data for its reporting on COVID-19 in the WGA. However, the NAO is set to cease publishing this information in the near future and it is therefore important that the Treasury should not depend solely on the NAO but …
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The Treasury currently uses the NAO’s COVID-19 Cost Tracker to provide data for its reporting on COVID-19 in the WGA. However, the NAO is set to cease publishing this information in the near future and it is therefore important that the Treasury should not depend solely on the NAO but instead develop and use its own assessment of these costs. The Treasury has confirmed to us its public commitment to continuing this work for the next two years.66 The Treasury said that it would consider how it might separately identify COVID liabilities in the WGA so that these are distinct to the users of the accounts.67
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Government response AI summary
HM Treasury will continue to improve the content of WGA, to ensure it brings together the best available published information on topics of interest, incorporating public updates into the WGA performance report.
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HM Treasury
22
Recommendation
Twentieth Report - Whole of Government …
Accepted
Improvements to the transparency of information in the WGA would also be achieved through more detailed narrative in certain areas. The asset and liability split reported in the WGA shows total assets of £2,138.5 billion and total liabilities of £4,972.7 billion.68 In a commercial organisation this would indicate that it …
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Improvements to the transparency of information in the WGA would also be achieved through more detailed narrative in certain areas. The asset and liability split reported in the WGA shows total assets of £2,138.5 billion and total liabilities of £4,972.7 billion.68 In a commercial organisation this would indicate that it was insolvent. Although this is not the case, there is currently no narrative to explain this. The Treasury explained that the Government’s ability to raise future funds through taxation and borrowing is a very important asset which is not currently captured in the WGA and is outside the scope of the accounts.69 64 Q 79 65 Q 48 66 Qq 28–29 67 Q 31 68 WGA 2019–20, para 1.3, p 3 69 Q 13 Whole of Government Accounts 2019–20 17 3 Quality and consistency of data and reporting
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Government response AI summary
HM Treasury will continue to improve the content of WGA, to ensure it brings together the best available published information on topics of interest, incorporating public updates into the WGA performance report.
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HM Treasury
23
Recommendation
Twentieth Report - Whole of Government …
Rejected
In May 2022, the government announced its intention to cut 91,000 jobs from the civil service over the next three years, with the aim of returning to 2016 staffing levels.70 The 2021 Spending Review had already confirmed the need for savings of 5% against day- to-day central departmental budgets in …
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In May 2022, the government announced its intention to cut 91,000 jobs from the civil service over the next three years, with the aim of returning to 2016 staffing levels.70 The 2021 Spending Review had already confirmed the need for savings of 5% against day- to-day central departmental budgets in 2024–25, however, these new cuts, which represent a 20% reduction in headcount, are far more significant.71 72
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Government response AI summary
The government disagrees with the recommendation to prepare a clearly articulated and costed plan based on proposed staffing reductions across government, because they have moved away from top-down headcount reduction targets.
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HM Treasury
24
Recommendation
Twentieth Report - Whole of Government …
Rejected
Staff cuts will inevitably involve a quantity of associated costs, including redundancy costs, that the government will have to pay out. We questioned the Treasury as to what the total cost of these payments was likely to be, and although it explained that the number of required redundancies could be …
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Staff cuts will inevitably involve a quantity of associated costs, including redundancy costs, that the government will have to pay out. We questioned the Treasury as to what the total cost of these payments was likely to be, and although it explained that the number of required redundancies could be minimised by the large number of people who leave the civil service or retire each year, it told us that it did not know what the expected level of exit costs was likely to be at this stage.73 The Treasury also acknowledged that it did not have an understanding of how redundancies would be allocated, or if they would be targeted towards staff for whom lower exit costs would be involved.74
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Government response AI summary
The government disagrees with the recommendation to prepare a clearly articulated and costed plan based on proposed staffing reductions across government, because departments should look for the most effective ways to secure value and maximise efficiency within budgets.
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HM Treasury
25
Conclusion
Twentieth Report - Whole of Government …
Rejected
This scale of these proposed cuts has the potential to bring about significant consequences for service delivery, both in regard to the quality and efficiency of delivery and the range of services it will be possible to provide. At the time we took evidence, the Treasury said that no work …
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This scale of these proposed cuts has the potential to bring about significant consequences for service delivery, both in regard to the quality and efficiency of delivery and the range of services it will be possible to provide. At the time we took evidence, the Treasury said that no work had been completed, either by the Treasury or by other affected departments, to understand the impact on delivery of public services or how the effects for service users might be mitigated.75
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Government response AI summary
The government disagrees with the committee's recommendation. The Prime Minister has confirmed that, rather than a top-down headcount reduction target, departments should look for the most effective ways to secure value and maximise efficiency within budgets. They will not be publishing a full plan to …
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HM Treasury
26
Conclusion
Twentieth Report - Whole of Government …
Rejected
The Treasury told us that at this stage the challenge of how best to achieve these reductions is in the hands of individual departments. It explained that each department is itself best placed to understand the resourcing requirements needed to deliver its service programmes and objectives. It told us that …
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The Treasury told us that at this stage the challenge of how best to achieve these reductions is in the hands of individual departments. It explained that each department is itself best placed to understand the resourcing requirements needed to deliver its service programmes and objectives. It told us that the decision around how these headcount reductions will be achieved whilst continuing to deliver vital public services and maintaining an appropriate skill base is, therefore, up to each department to decide. The Treasury confirmed that it will not have a top-down, centralised view until the necessary information is gathered from departments over the summer.76
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Government response AI summary
The government disagrees with the premise, stating the Prime Minister has confirmed that departments should look for the most effective ways to secure value and maximise efficiency within budgets, rather than top-down headcount reduction targets.
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HM Treasury
27
Conclusion
Twentieth Report - Whole of Government …
Rejected
We discussed with the Treasury that one way in which headcount reductions might be accomplished whilst at the same time maintaining the scope and standard of service delivery, is by way of increased digitisation. By digitalising services, the required level of staffing is reduced, and cuts can be made in …
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We discussed with the Treasury that one way in which headcount reductions might be accomplished whilst at the same time maintaining the scope and standard of service delivery, is by way of increased digitisation. By digitalising services, the required level of staffing is reduced, and cuts can be made in areas where resources are no longer needed. The Treasury acknowledged the risk that if a rapid reduction in headcount resulted in the loss of the skills and capacity needed to achieve transformation, current progress towards digitalisation might be lost. The Treasury told us that it is eager to understand the 70 Prime Minister’s Housing Speech, 9 June 2022 71 Q 21 72 HM Treasury, Autumn Budget and Spending Review 2021, 27 October 2021, para 8, p 2 73 Q 21 74 Q 23 75 Q 44 76 Q 23 18 Whole of Government Accounts 2019–20 consequences of these cuts on delivering transformation and vital public services.77 The Treasury affirmed its responsibility, together with the Cabinet Office, to ensure that it is incentivising, prioritising and enabling digital transformation.78 77 Q 24 78 Q 44 Whole of Government Accounts 2019–20 19
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Government response AI summary
The government disagrees with the committee's recommendation. The Prime Minister has confirmed that, rather than a top-down headcount reduction target, departments should look for the most effective ways to secure value and maximise efficiency within budgets. They will not be publishing a full plan to …
Read full response →
HM Treasury