Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Accepted
Another factor to consider in elevating the usability of the WGA is the way in...
Recommendation
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
Government Response 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.
Government Response
Accepted
HM Government
Accepted
4. PAC conclusion: 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. 4. PAC 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. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2023 4.2 The Treasury is committed to continuous improvement of the WGA performance report, and made several improvements to the WGA performance report in 2019-20, including additional trend data. The WGA performance report includes 5-year trend data for many accounts areas and the department will build on this to ensure comparative data is presented as effectively as possible, to enhance the useability of the accounts. WGA will continue to reflect areas of topical interest, follow best practice in the presentation of data, and include commentary to reflect developments in the public sector and financial landscapes since the reporting date. There is a balance to be struck between change and continuity, so where presentational changes are made the Treasury will provide clear prior year data to aid comparability. 4.3 The impact of inflation will be reflected in the WGA Statement of Revenue and Expenditure in the following years, insofar as it affects in-year expenditure. Projections for future expenditure are included in the performance report, by drawing upon the forecasts of the Office for Budget Responsibility. In terms of the WGA balance sheet, inflation can affect the amount that will need to be paid regarding certain liabilities, as one of a number of factors. As required by accounting standards, the financial statements disclose the sensitivity to certain risks which can include inflation and rates of salaries, depending on the nature of the specific liability. For example, WGA disclosures show the sensitivity of the clinical negligence provision to inflation, and sensitivity of unfunded pension liabilities to changes in salaries.