Recommendation 4

HM Government Response Pending

The government agrees with the Committee’s recommendation. long‑term liabilities reported in the WGA. The Treasury is working closely with the Government Actuary’s Department (GAD) to support the inclusion of this information in relation to the Nuclear Decommissioning provision, Clinical Negligence provision, and Pensions liabilities in future WGA publications. This includes separately identifying the impact of the discount rate to enable a clear distinction between changes arising from discounting and those attributable to “other factors”. The Treasury will expand the section on undiscounted liabilities in the 2024-25 WGA by presenting provisions on a fully undiscounted basis, as requested by the Committee. In addition, the Treasury will provide an alternative presentation using a flat 2% discount rate applied on a net-of-CPI basis (that is. expressed in real terms, after removing the effect of inflation). The purpose of presenting the 0% and 2% position is to illustrate the impact of discount rates, rather than to support the use of undiscounted figures for decision-making. The Treasury will include clear, detailed disclosures outlining the limitations of the undiscounted measures and use it to help explain the purpose of discount rates. The Treasury will clearly explain this approach in the accompanying narrative, including the rationale for using a flat 2% rate and illustrating the impact compared with applying the discount rate used for the relevant financial year. The accompanying narrative in the WGA will also continue to set out the key drivers of movements in these liabilities, alongside relevant accounting adjustments, consistent with the disclosures presented in the notes to the financial statements (specifically Note 23). This approach is intended to improve clarity for users and enhance transparency over the factors influencing changes in the government’s long‑term obligations. The government agrees with the Committee’s recommendation. decommissioning through the Nuclear Decommissioning Authority (NDA). The recent spending review settlement provided £13.9 billion of capital investment for the NDA to deliver on its priorities, hazard and risk reduction across the estate, consolidate waste at regional stores, and dispose of nuclear materials through the Plutonium Immobilisation and Geological Disposal Facility programmes. The liability is a single point estimate within a broad range of outcomes built on a series of assumptions, due to inherent uncertainty over the next century. The government actively challenges and monitors NDA’s plans and progress through robust governance, with spend subject to value for money assessments. NHS Resolution (NHSR) continues its work to manage clinical negligence and other claims against the NHS in England. NHSR is committed to helping the NHS learn from claims. It is working directly with providers of healthcare services, alongside other national and local bodies working on patient safety, to share learning and best practice across the NHS to drive safety improvement. In addition, DHSC and NHSE continue to prioritise patient safety and learning across the NHS so that harmful patient events are significantly reduced. This includes ongoing work to progress key measures under the NHS Patient Safety Strategy, which sets out how the NHS would improve patient safety continuously. The coalition government introduced new public service schemes from 2014 to 2015. The main changes were to increase the scheme normal retirement ages to the state pension age (except for the police, firefighters, and the armed forces who have a normal retirement age of 60), increase member contributions, and move from a final salary to a career average design. Separately, the indexation of public service pensions was changed from RPI to CPI. The government also maintains the Cost Control Mechanism, which provides for automatic adjustments to scheme design if certain costs move outside of a set corridor. The government’s preferred measure of the cost of the schemes remains the OBR’s long-term projection of spending on pension benefits as a share of GDP, rather than the figure of accrued liabilities, including due to the difficulties in interpreting the liability figure previously noted by the PAC.