Recommendations & Conclusions
24 items
2
Conclusion
Thirty-Seventh Report - Whole of Govern…
There is an apparent lack of ownership by the Treasury of the analysis and scenario planning activities necessary to manage the impact of COVID-19 on government finances. The scale of the likely increase in government borrowing to fund government’s response to COVID-19 is a significant new challenge to the Treasury’s …
Government response. 2: PAC conclusion: There is an apparent lack of ownership by the Treasury of the analysis and scenario planning activities necessary to manage the impact of COVID-19 on government finances. 2: PAC recommendation: The Treasury should write to the committee …
HM Treasury
3
Conclusion
Thirty-Seventh Report - Whole of Govern…
The WGA does not provide assurance that significant risks to the UK’s financial sustainability are well managed. A key consideration for any organisation is its financial sustainability. There are several government liabilities disclosed in the WGA that, due to their size and nature, represent significant risks to the UK finances. …
Government response. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 3.2 HM Treasury works closely with other government departments to ensure that public funds are managed effectively and sustainably, with close spending control oversight of all spending …
HM Treasury
4
Recommendation
Thirty-Seventh Report - Whole of Govern…
The financial sustainability of some local authorities presents a significant risk to government. While local authorities have autonomy over their spending, the Treasury is the ‘funder of last resort’ should a local authority become insolvent. As COVID-19 has increased the fiscal pressures many government bodies face, we expect that more …
Government response. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 4.2 The UK, unlike most other countries, has a long-established practice of setting its fiscal objectives by reference to the whole public sector. The medium term forecasts …
HM Treasury
5
Conclusion
Thirty-Seventh Report - Whole of Govern…
The Treasury has aspirations to standardise financial reporting across government but has not set out how this will make the WGA more useful or accessible. The Treasury faces difficulties when trying to categorise transactions and balances reported by over 9,000 organisations into robust categories that are useful to the user. …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 5.2 The Government Finance Function is developing a performance framework to measure progress against the strategic deliverables it set out in its 2019 strategy and to drive …
HM Treasury
6
Recommendation
Thirty-Seventh Report - Whole of Govern…
The quality of the next WGA will suffer if the Treasury does not resolve challenges in its accounts production process. In recent years, the WGA has improved in quality and the Treasury has taken steps to address our recommendations, such as improving the breakdown of the purchase of goods and …
Government response. 6.1 The government agrees with the Committee’s recommendation. Recommendation implemented 6.2 HM Treasury wrote to the Committee on 25 January 2021 setting out some of the challenges in relation to meeting a pre-summer recess publication timetable for WGA 2019-20. This …
HM Treasury
1
Conclusion
Thirty-Seventh Report - Whole of Govern…
Based on the Whole of Government Accounts (WGA) for the year ended 31 March 2019, we took evidence from HM Treasury (the Treasury) on 19 November 2020.1
Government response. Based on the Whole of Government Accounts (WGA) for the year ended 31 March 2019, the Committee took evidence, on Thursday 19 November 2020 from the HM Treasury. The Committee published its report on 22 January 2021. This is the …
HM Treasury
7
Conclusion
Thirty-Seventh Report - Whole of Govern…
The WGA 2018–19 disclosures relating to COVID-19 relied heavily on a summary of a report produced by the National Audit Office.10 The Treasury did not attempt to explain to Parliament or the user of the accounts how it was managing the fiscal risk COVID-19 poses for the economy, nor how …
Government response. 1.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 1.2 The government is committed to transparency on fiscal risks and welcomes independent scrutiny of risk exposure. Every year the Office for Budget Responsibility (OBR) publishes either …
HM Treasury
8
Conclusion
Thirty-Seventh Report - Whole of Govern…
The WGA discloses a number of significant liabilities that due to their size and nature pose unique risks to the UK’s financial sustainability and government’s ability to achieve value for money. At 31 March 2019, the UK’s liability in relation to nuclear decommissioning was some £152 billion.13 Whilst this was …
Government response. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 3.2 HM Treasury works closely with other government departments to ensure that public funds are managed effectively and sustainably, with close spending control oversight of all spending …
HM Treasury
9
Conclusion
Thirty-Seventh Report - Whole of Govern…
We have recently raised concerns regarding the uncertainty of the estimated costs of decommissioning the civil nuclear estate and highlighted a shortage of skills at the Nuclear Decommissioning Authority (NDA) and a lack of oversight from the Department for Business, Energy and Industrial Strategy (BEIS) under previous models of outsourcing …
HM Treasury
10
Conclusion
Thirty-Seventh Report - Whole of Govern…
Regarding the provision for clinical negligence, the WGA shows a levelling off of new cases and explains that in the second year of its new strategy to tackle clinical negligence laid out in April 2017, NHS Resolution mediated 380 cases, or 110% more than the previous year.20 We asked the …
Government response. 3.3 The Balance Sheet Review, which concluded in November 2020, aimed to strengthen control of long-term risks and the costs of liabilities, to identify opportunities to dispose of assets that no longer serve a policy purpose and improve returns on …
HM Treasury
11
Conclusion
Thirty-Seventh Report - Whole of Govern…
The scale of the likely increase in government borrowing to fund government’s response to COVID-19 is a significant new challenge to the Treasury’s objective to place the public finances on a sustainable footing.22 In its report on Evaluating the government balance sheet: borrowing published in November 2017, the NAO noted …
Government response. 1.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 1.2 The government is committed to transparency on fiscal risks and welcomes independent scrutiny of risk exposure. Every year the Office for Budget Responsibility (OBR) publishes either …
HM Treasury
12
Conclusion
Thirty-Seventh Report - Whole of Govern…
We were therefore interested in what analysis the Treasury had now been conducting in order to give assurance that it had a handle on the fiscal risks the pandemic poses to the UK economy and fiscal sustainability. We asked what projections the Treasury had for tax receipts in the short …
Government response. 1.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 1.2 The government is committed to transparency on fiscal risks and welcomes independent scrutiny of risk exposure. Every year the Office for Budget Responsibility (OBR) publishes either …
HM Treasury
13
Conclusion
Thirty-Seventh Report - Whole of Govern…
With the UK’s debt as a proportion of GDP above 100%, any increases in interest rates would have a significant impact on the economy and government spending. When asked whether it was modelling for interest rate increases, the Treasury confirmed that it did, but deferred to the OBR as the …
Government response. 1.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 1.2 The government is committed to transparency on fiscal risks and welcomes independent scrutiny of risk exposure. Every year the Office for Budget Responsibility (OBR) publishes either …
HM Treasury
14
Conclusion
Thirty-Seventh Report - Whole of Govern…
Although at some points during our evidence session the Treasury stated that it was conducting forecasting and scenario planning, it was not clear what this entailed, how this differed from work by third parties such as the OBR, and whether this was business as usual or additional work specifically to …
Government response. 2: PAC conclusion: There is an apparent lack of ownership by the Treasury of the analysis and scenario planning activities necessary to manage the impact of COVID-19 on government finances. 2: PAC recommendation: The Treasury should write to the committee …
HM Treasury
15
Conclusion
Thirty-Seventh Report - Whole of Govern…
If debt payments increase, or tax receipts decrease, there will be a decrease in budget available for other public spending.29 We asked the Treasury whether it had identified what current projects may need to be cancelled, or what potential investments foregone, due to the ongoing impact of COVID-19 on the …
Government response. 1.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 1.2 The government is committed to transparency on fiscal risks and welcomes independent scrutiny of risk exposure. Every year the Office for Budget Responsibility (OBR) publishes either …
HM Treasury
16
Conclusion
Thirty-Seventh Report - Whole of Govern…
As the UK Government has a devolved structure, local authorities have significant autonomy over their spending and have powers to invest in commercial property. We have, over a number of years, raised concerns over the behaviour of local authorities with regards to commercial property investments, noting as far back as …
Government response. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 4.2 The UK, unlike most other countries, has a long-established practice of setting its fiscal objectives by reference to the whole public sector. The medium term forecasts …
HM Treasury
17
Conclusion
Thirty-Seventh Report - Whole of Govern…
In September 2020, Sir Tony Redmond published his report Independent Review into the Oversight of Local Audit and the Transparency of Local Authority Financial Reporting (Redmond Review), noting that the local audit market is very fragile.33 He concluded that current local audit arrangements fail to deliver, in full, policy objectives …
Government response. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 4.2 The UK, unlike most other countries, has a long-established practice of setting its fiscal objectives by reference to the whole public sector. The medium term forecasts …
HM Treasury
18
Conclusion
Thirty-Seventh Report - Whole of Govern…
The Treasury confirmed to us that it ultimately bears the financial risk for local authorities. We expressed concerns about the level of oversight and control that the Treasury is exercising and whether it has a sufficient handle on this issue. The Treasury responded that it is working very closely with …
Government response. 4: PAC conclusion: The financial sustainability of some local authorities presents a significant risk to government. 4: PAC recommendation: The Treasury should work with the Ministry of Housing, Communities and Local Government to ensure government’s response to the Redmond review …
HM Treasury
19
Conclusion
Thirty-Seventh Report - Whole of Govern…
We have previously recommended that financial reporting within the WGA should be improved by providing more detailed disclosures to ensure that users of the account have the comprehensive information needed to understand the public finances.39 WGA is increasingly important to ensuring accountability for public spending on key areas of public …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 5.2 The Government Finance Function is developing a performance framework to measure progress against the strategic deliverables it set out in its 2019 strategy and to drive …
HM Treasury
20
Conclusion
Thirty-Seventh Report - Whole of Govern…
For the WGA to record the impact of COVID-19, government bodies will need to record costs in a manner that allows the increase in spending due to COVID-19 to be identifiable from any other changes in spending.42 The Treasury outlined that it was asking Departments to track and record how …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 5.2 The Government Finance Function is developing a performance framework to measure progress against the strategic deliverables it set out in its 2019 strategy and to drive …
HM Treasury
21
Conclusion
Thirty-Seventh Report - Whole of Govern…
Previously the Treasury has expressed dissatisfaction at the level of expenditure across all types of government spending that is classified as miscellaneous or other by WGA bodies, as it prevents the WGA providing more granular information. The Treasury stated that the implementation of the new OSCAR II IT system should …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 5.2 The Government Finance Function is developing a performance framework to measure progress against the strategic deliverables it set out in its 2019 strategy and to drive …
HM Treasury
22
Conclusion
Thirty-Seventh Report - Whole of Govern…
We see WGA as a valuable and important document for both providing transparency and holding the government to account. In recent years, the Treasury has improved the quality of the WGA and has taken steps to address our recommendations, such as working towards improving the breakdown of the purchase of …
HM Treasury
23
Conclusion
Thirty-Seventh Report - Whole of Govern…
The NAO highlighted in the C&AG Report for the WGA for the year ended 31 March 2019that the failure to complete local government audits in a timely fashion led to both an increasing number of bodies whose financial information is not included in the WGA and an increase in the …
Government response. 4.3 The WGA 2019-20 performance report will include additional information showing how fiscal risks are monitored and managed in the local government sector and bring in wider information on finances in the sector into the performance report. In future years, …
HM Treasury
24
Conclusion
Thirty-Seventh Report - Whole of Govern…
We expect the COVID-19 pandemic to exacerbate these challenges to the timely production of the WGA in future. The Treasury accepted that it can only start to produce the account once it receives a critical mass of audited returns from bodies and that COVID-19 and issues in the local audit …
Government response. 4.3 The WGA 2019-20 performance report will include additional information showing how fiscal risks are monitored and managed in the local government sector and bring in wider information on finances in the sector into the performance report. In future years, …
HM Treasury