Recommendations & Conclusions
33 items
2
Conclusion
16th Report - Whole of Government Accou…
Accepted
The Treasury and MHCLG have plans to try and fix the crisis in local authority audit arrangements, but it has taken too long to put these plans in place. The number of missing and unaudited bodies had increased consistently since 2019–20. The Kingman review in 2018 and the Redmond review …
Government response. The government committed to sending a letter to the Committee setting out key dates related to local authority audit arrangements and confirmed the letter was sent on 7 May 2025.
HM Treasury
3
Conclusion
16th Report - Whole of Government Accou…
Accepted
We are concerned that MHCLG does not have sufficient oversight of local government to foresee issues and intervene where appropriate. Government’s ability to effectively monitor financial pressure within local authorities is inevitably undermined while authorities are not producing audited accounts, or while their accounts are subject to disclaimed or heavily …
Government response. The government agrees with the recommendation but disagrees with the premise that it lacks oversight, stating it already uses modelling and financial information to monitor local authorities, as detailed in an accompanying letter. It does not explicitly commit to setting …
HM Treasury
4
Conclusion
16th Report - Whole of Government Accou…
Accepted
The Treasury has made some improvements to the accessibility of WGA and the information it contains, but there is still more work to do. We recognise the efforts the Treasury has made to make the WGA more accessible. These measures include additional disclosure within the annual report, a new accounting …
Government response. The government agrees and commits to designing a draft summary WGA pocketbook after the 2023-24 WGA is published, to be shared with the committee prior to publication. It will continue to assess opportunities for digitisation but prioritises completing the WGA …
HM Treasury
5
Conclusion
16th Report - Whole of Government Accou…
Accepted
The impact of discount rate changes is obscuring the ability to identify meaningful trends in large public sector financial liabilities within the WGA. The discount rate is the rate of return used to discount future cash flows when calculating a liability’s present value. The WGA includes several large liabilities which …
Government response. The government agrees and commits to publishing undiscounted data where available and including long-term trend analysis of significant assets and liabilities in the 2023-24 WGA performance report, alongside updates on liability management. It notes that accounting standards already require disclosure …
HM Treasury
6
Conclusion
16th Report - Whole of Government Accou…
Accepted
The WGA is not sufficiently focused on long–term financial risk. One purpose of the WGA is to provide a comprehensive picture of the UK’s public sector finances and inform more effective management of fiscal risks. The WGA 2022–23 includes narrative on the fiscal risks published in the OBR’s Fiscal Risks …
Government response. The government agrees and will focus on including long-term trend information, dating back to the first published WGA, in the 2023-24 WGA to improve transparency on long-term financial risks.
HM Treasury
1
Conclusion
16th Report - Whole of Government Accou…
Accepted
On the basis of the Whole of Government Accounts (WGA) for the year ended 31 March 2023, we took evidence from HM Treasury (the Treasury) and the Ministry of Housing, Communities and Local Government (MHCLG).1
Government response. The government responded by outlining several actions it has taken and will take to address missing and unaudited data for WGA, including writing to local authorities to set expectations for 2024-25 participation and expecting a reduction in missing data.
HM Treasury
7
Conclusion
16th Report - Whole of Government Accou…
Accepted
The Treasury estimated that there is approximately £133.6 billion of property, plant and equipment missing from the accounts, and approximately 104.6bn of missing public sector pension liability.16 The overall impact of missing data across the accounts is estimated to be that net liabilities are overstated by £31.7bn (1.3% of total), …
Government response. The government agrees to address missing and unaudited data by providing an update within six months, expecting a reduction in missing data for 2024-25 due to MHCLG's work, and HM Treasury communicating expectations to local authorities for WGA 2024-25 participation.
HM Treasury
8
Conclusion
16th Report - Whole of Government Accou…
Accepted
The WGA does not contain detailed analysis of the impact of unaudited data on a line by line basis, but the C&AG notes that £35.1bn of total net expenditure and £93.6bn of total net assets are reported in the WGA based on unaudited draft data.18
Government response. The government accepted the recommendation, committing to update the committee by September 2025 on actions taken to address missing and unaudited data, expecting reductions in missing data for 2024-25 due to MHCLG's work and proactive communication with local authorities.
HM Treasury
9
Conclusion
16th Report - Whole of Government Accou…
Accepted
We challenged the Treasury about the impact of the missing data and the poor quality of a some of the data being consolidated into the WGA. The Treasury acknowledged that the accounts being disclaimed on the basis of such issues is “hugely sub–optimal”.19 However, officials did express their belief that …
Government response. The government agrees and commits to several specific actions to address missing and unaudited data, including reporting updates, expecting reductions in missing data, and engaging with local authorities for WGA 2024-25.
HM Treasury
10
Conclusion
16th Report - Whole of Government Accou…
Accepted
The Local Government Association (LGA) provided us with written evidence and commented that the high number of missing audit submissions to WGA from English local government is due to widespread systemic issues with local audit and not due to failings of governance in local authorities. It stated that the disclaimed …
Government response. The government commits to providing an update to the committee within six months (September 2025) on actions taken to address missing and unaudited data, acknowledging the systemic issues highlighted by the LGA.
HM Treasury
11
Conclusion
16th Report - Whole of Government Accou…
Accepted
The government legislated on 9 September 2024 to implement a series of statutory deadlines, or backstop dates, by which the audits of English Local Authority accounts must be complete. The first backstop date to complete audits of accounts relating to the 2022–23 financial year was set at 13 December 2024 …
Government response. The government states that the recommendation is implemented (May 2025) and clarifies it does not agree with the committee's assessment regarding the time taken to implement these plans, outlining actions already taken through legislation and strategies.
HM Treasury
12
Conclusion
16th Report - Whole of Government Accou…
Accepted
We asked the Treasury what its plan was for achieving timeliness as well as removing of the disclaimer opinion from the WGA’s accounts, and how it would achieve both at once. The Treasury told us that there was a rapid rise in missing bodies from 2019 to last year, where …
Government response. The government commits to providing an update to the committee within six months (September 2025) on actions taken to address missing and unaudited data, anticipating a reduction in missing data for 2024-25.
HM Treasury
13
Conclusion
16th Report - Whole of Government Accou…
The Treasury told us that it was providing £45 million of funding to MHCLG to support local authorities in purchasing audit services. It confirmed that such funding was to address where audit costs have risen faster than fees paid.27 We challenged the Treasury and MHCLG about whether it would need …
HM Treasury
14
Conclusion
16th Report - Whole of Government Accou…
The Treasury and MHCLG also described other measures that they think will resolve the local authority audit issues. Beyond the backstop and additional funding, MHCLG said it is working to simplify the financial reporting requirements for local authorities, as the current level of complexity is, in MHCLG’s view, a barrier …
HM Treasury
15
Conclusion
16th Report - Whole of Government Accou…
Accepted
MHCLG has announced its intention to create a Local Audit Office (LAO) that will support with the interpretation of international standards for local authority audits.30 The proposed remit of the LAO was included in MHCLG’s strategy published in December 2024 that outlines how it will overhaul the local audit system …
Government response. The government stated that the recommendation is already implemented as of May 2025, detailing actions taken by MHCLG to establish the Local Audit Office and address the local audit backlog, disagreeing that it has taken too long.
HM Treasury
16
Conclusion
16th Report - Whole of Government Accou…
Rejected
We questioned MHCLG as to whether it has sufficient oversight over local government to foresee financial issues and intervene where appropriate. The lack of audited accounts being published leads to a lack of transparency over local authority matters during a time of worsening financial health for those same local authorities …
Government response. The government disagrees that MHCLG lacks sufficient oversight of local government, stating that MHCLG uses existing modelling and financial information to understand the sector's resilience.
HM Treasury
17
Conclusion
16th Report - Whole of Government Accou…
Rejected
The Treasury believes that it and MHCLG do know what is going on in the local authority area, and that there are other ways, beyond audited accounts, for them to check the financial health of a local authority.37 MHCLG added that, while accounts are important, they are not the only …
Government response. The government disagrees with the premise that MHCLG lacks sufficient oversight of local government, stating that MHCLG uses modelling and other financial information to understand the sector's resilience.
HM Treasury
18
Conclusion
16th Report - Whole of Government Accou…
Accepted
As such, MHCLG told us that it had a good understanding of the financial pressures facing particular local authorities and that it was confident in knowing where the issues were.39 MHCLG did note though that quirks can occur, referencing Barnet Council issuing a s114 notice where the council made unlawful …
Government response. The government rejects the committee's implied criticism of MHCLG's oversight, asserting that MHCLG already uses modelling and various financial information to understand local authority financial resilience, and states the recommendation is implemented.
HM Treasury
19
Recommendation
16th Report - Whole of Government Accou…
Not Addressed
We also expressed concern as to whether MHCLG has the tools necessary to ensure local authorities produce audited accounts in future in line with the various backstop deadlines. MHCLG replied that, though backstop requirements are statutory, in the event a local authority does not meet that statutory requirement, it would …
Government response. The government's response states it disagrees that MHCLG lacks sufficient oversight but does not address the specific recommendation for MHCLG to always ask for explanations regarding late local authority accounts.
HM Treasury
20
Conclusion
16th Report - Whole of Government Accou…
Accepted
In the 2022–23 WGA, the Treasury has added new sections to the performance report, improving the quality and accessibility of reporting in the accounts.45 These include new accounting spotlight sections that address key areas such as consolidation, new accounting standards and discount rates.46 Another section added this year is the …
Government response. The government acknowledges the committee's observation of WGA improvements and commits to designing a draft WGA pocketbook after the 2023-24 WGA is published (Autumn 2025) and sharing it with the committee.
HM Treasury
21
Recommendation
16th Report - Whole of Government Accou…
Accepted
We asked the Treasury how it would resolve information on given topics, such as pensions, being dispersed across the accounts. It replied that, whilst the notes and accounts are prepared in line with International Financial Reporting Standards (IFRS) and therefore have a prescribed format, it can bring information together in …
Government response. The government accepted the recommendation, agreeing to bring information together in the WGA performance report by July 2025, specifically by publishing undiscounted data and long-term trend analysis in the 2023-24 WGA and reviewing linkages.
HM Treasury
22
Conclusion
16th Report - Whole of Government Accou…
Accepted
We queried what the Treasury was doing to help MPs better understand and make use of the WGA. In response, the Treasury told us that it has previously offered WGA sessions for new MPs as part of their induction programme. It also said it was willing to run future teach–ins …
Government response. The government agrees to design and share a draft WGA pocketbook after the 2023-24 WGA publication (Autumn 2025) and reiterates its openness to provide briefings to MPs on WGA upon request.
HM Treasury
23
Conclusion
16th Report - Whole of Government Accou…
Accepted
In response to our questions on how the Treasury will improve the format of the WGA in future, the Treasury told us that it plans to improve the quality of reporting in the WGA in future publications, after it has restored the timeliness of production of the accounts to a …
Government response. The government agrees and confirms its plan to focus the 2023-24 WGA on including long-term trend information back to the first published WGA, with a target implementation date of July 2025.
HM Treasury
24
Conclusion
16th Report - Whole of Government Accou…
Accepted
The WGA includes several large provisions which change substantially from year to year. For example, the provision for future decommissioning of nuclear facilities has decreased by £126.2 billion from £273.1 billion in 2021–22 to £146.9 billion in 2022–23, with the discount rate decreasing the provision by £131.8 billion.53 We subsequently …
Government response. The government agrees to improve the 2023-24 WGA performance report by publishing undiscounted data, including long-term trend analysis of significant assets and liabilities, and reviewing the presentation of discount rate information (July 2025).
HM Treasury
25
Conclusion
16th Report - Whole of Government Accou…
Accepted
The net public sector pension liability also reduced, from £2,639 billion at the end of 2021–22, to £1,415 billion at 31 March 2023 due to changes in underlying actuarial assumptions, including the changes to the discount rate.56 However, it is not possible to separately see the impact of the discount …
Government response. The government agrees to improve the 2023-24 WGA performance report by publishing undiscounted data, including long-term trend analysis of significant assets and liabilities, and reviewing the presentation of discount rate information (July 2025).
HM Treasury
26
Recommendation
16th Report - Whole of Government Accou…
Accepted
We challenged the Treasury over the difficulty that an ordinary reader would have understand the actual movement in large liabilities from year to year.58 Written evidence received from Professor David Heald also noted that the recent volatility of the discount rate used in the valuation of assets and liabilities had …
Government response. The government accepted the recommendation, committing to publishing undiscounted data and long-term trend analysis in the 2023-24 WGA performance report by July 2025, and reviewing linkages to streamline content.
HM Treasury
27
Conclusion
16th Report - Whole of Government Accou…
Accepted
We received written evidence from the ICAEW which states that the significant reduction in pensions liabilities presented within the 2022–23 WGA is the most significant change in the balance sheet for the government, and is primarily due to actuarial assumptions, particularly discount rates. It stressed that such a reduction does …
Government response. The government agrees to improve the 2023-24 WGA performance report by publishing undiscounted data, including long-term trend analysis of significant assets and liabilities, and reviewing the presentation of discount rate information (July 2025).
HM Treasury
28
Recommendation
16th Report - Whole of Government Accou…
Accepted
We questioned the Treasury about the clarity of reporting within the WGA on the impact of actuarial assumptions on the unfunded pension liability figure reported.62 It replied that the WGA disclosure of such factors had improved from previous years, but acknowledged that further improvement could be made.63 Long term sustainability
Government response. The government accepted the recommendation, committing to publishing undiscounted data and long-term trend analysis in the 2023-24 WGA performance report by July 2025, and reviewing linkages to streamline content.
HM Treasury
29
Conclusion
16th Report - Whole of Government Accou…
Accepted
The WGA highlights the succession of economic shocks that the UK has been affected by in recent years, straining public finances.64 The accounts detail several specific risks to the UK’s public finances going forward. These include costs of resolving, mitigating and adapting for climate change damage, including flooding and coastal …
Government response. The government agrees and plans to include long-term trend information back to the first published WGA in the 2023-24 WGA, with a target implementation date of July 2025.
HM Treasury
30
Conclusion
16th Report - Whole of Government Accou…
Accepted
The WGA gives a big picture view of the financial position of the UK government.66 We questioned the Treasury on the financial sustainability of public spending, to which it responded that the OBR forecast that accompanied the autumn budget, rather than WGA, would be the better source for looking at …
Government response. The government agrees and plans to include long-term trend information back to the first published WGA in the 2023-24 WGA, with a target implementation date of July 2025.
HM Treasury
31
Conclusion
16th Report - Whole of Government Accou…
Accepted
We challenged the Treasury on how seriously it is taking the sustainability of government finances, to which it stated that it was taking the matter very seriously. It commented that the OBR’s fiscal sustainability report includes a 50–year forecast and looks at what happens if everything stays the same. Based …
Government response. The government agrees with the committee and plans to include long-term trend information from the first published WGA in the 2023-24 WGA, with a target implementation date of July 2025.
HM Treasury
32
Conclusion
16th Report - Whole of Government Accou…
Accepted
We asked the Treasury to explain the actions needed to address the issues that are putting pressure on public finances and risking the sustainability of spending in the long term. The Treasury noted that work was needed on adult social care, driven by the aging population of the UK and …
Government response. The government commits to improving the 2023-24 WGA by including long-term trend information (July 2025) to provide useful data on the evolution of key balances, acknowledging the importance of understanding fiscal sustainability and long-term spending pressures.
HM Treasury
33
Conclusion
16th Report - Whole of Government Accou…
Accepted
Written evidence we received from the ICAEW stressed that, in the absence of discount rates noted in earlier sections, the UK government had a deficit of £200 billion in 2022–23. The ICAEW noted that this deficit is more than 20% of the revenue the UK government received in 2022–23 (£975 …
Government response. The government agrees with the committee and plans to include long-term trend information back to the first published WGA in the 2023-24 WGA, with a target implementation date of July 2025.
HM Treasury