Source · Select Committees · Public Accounts Committee
Recommendation 12
12
We were therefore interested in what analysis the Treasury had now been conducting in order...
Conclusion
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 and medium term and whether it had been working with Her Majesty’s Revenue and Customs (HMRC) to produce those projections. The Treasury responded that projection is the job of the OBR.24
Government Response
Acknowledged
HM Government
Acknowledged
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 a Fiscal Risks Report or a Fiscal Sustainability Report, providing comprehensive surveys of near-term fiscal risks and longer-term pressures on the public finances. Every other year the government publishes its response to the Fiscal Risks Report, setting out the action the government is taking to manage the fiscal risks identified. The OBR will publish its third Fiscal Risks Report in 2021. The International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD) have recognised the OBR Fiscal Risks Report as one of the most comprehensive of its kind. The OBR is the UK’s official economic forecaster and produces an 16 Economic and Fiscal Outlook twice a year. The OBR’s publications are the best sources for official forward- looking assessments of the fiscal position. 1.3 The Whole of Government Accounts (WGA) financial statements are, like any other audited set of accounts, a record of past financial performance, and give an assessment of the balance sheet at a defined point in time in the past. They do not include forward-looking assessments of the fiscal position or estimates of the government’s exposure to fiscal risk: applying the relevant accounting standards to government accounts does not generate that information. But the accompanying performance report gives us the opportunity to include a broader commentary, beyond the scope of the audited accounts, including summary information on the forward-looking position, drawing on information published by the OBR. In the WGA 2019- 20, the performance report will set out additional forward-looking information and commentary on the Treasury’s overall approach to managing the financial position and fiscal risk. It will include more information on the principal risks and uncertainties facing the economy and their potential implications for the WGA in future years. And it will include greater information on the profile of future cash flows from existing WGA liabilities and more information on expenditure on COVID-19, based on available published data sources including departmental data.