Source · Select Committees · Public Accounts Committee
Recommendation 8
8
The WGA discloses a number of significant liabilities that due to their size and nature...
Conclusion
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 a fall from £263 billion in the previous year, nearly all of that decrease was due to the change in the discount rate used to calculate future liabilities, and not related to a change in the underlying nature of the UK’s liability.14 Similarly, new clinical negligence cases remained broadly flat year on year, contributing to a provision for clinical negligence of £85 billion.15
Government Response
Acknowledged
HM Government
Acknowledged
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 and balance sheet risks, to deliver the government’s policy objectives. The government also values independent analysis and commentary on the sustainability of the public finances, particularly through the biennial publication of the OBR’s Fiscal Sustainability Report. 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 retained assets. The government has put in place a number of further actions to strengthen risk management in line with its recommendations including improving the identification and mitigation of balance sheet risks and improving capability to understand and manage balance sheet risk in a strategic way. Future WGAs will continue to report on these developments in balance sheet management and set out how they support the management of risks to financial sustainability. WGA 2019-20 will also provide more information on how the key liabilities in the account are managed, how they have evolved over time, and how value for money is achieved in discharging these obligations. It will also draw on information produced by the OBR on wider spending projections, to place the accounting liabilities in a broader context.