69th Report - Whole of Government Accounts 2023-24

The Whole of Government Accounts (WGA) has received a disclaimed audit opinion for two consecutive years, with no clear indication that this position will improve in the near future. The Committee remains concerned that the Ministry of Housing, Communities and Local Government (MHCLG) is failing to exert sufficient pressure on local authorities and their auditors to restore assurance in the local government sector. While the statutory deadline for publishing audited accounts has helped reduce missing data, from 211 entities in 2022–23 to 201 in 2023–24, the level remains unacceptably high, and HM Treasury still projects that 145 entities will be missing from WGA 2024–25. Importantly, this improvement in underlying statutory accounts has not translated directly into timely submissions to the Whole of Government Accounts (WGA), and there is still further attention required from HM Treasury to increase WGA 3 submission rates. Moreover, the reduction in missing data has coincided with a rise in unaudited information, which undermines confidence in the consolidated accounts. The volume of unaudited data has grown significantly, from 211 entities in 2021–22 to 227 in 2022–23 and 280 in 2023–24. Missing and unaudited data (including consolidated components with a disclaimed opinion) undermines the reliability of the WGA and as a result it is likely that the C&AG will issue another disclaimer of opinion for WGA 2024–25. recommendation a. MHCLG should provide, alongside the Treasury Minute response to this report, a document setting out a clear timetable of required actions for local authorities and their auditors and explain how it will monitor and enforce accountability for these actions. b. The Treasury should consider how it can enhance transparency regarding the types of missing data by distinguishing between entities that are absent due to incapacity and those that are absent due to lack of compliance.

The timing and delivery of local government reforms remain unclear. The local government audit crisis stems from long-standing issues, including fragmented system ownership, limited audit and finance capacity, rising regulatory demands, overly complex accounts and financial reporting requirements, and the low profitability of local audit work. To address delays and improve transparency, statutory deadlines (“backstop dates”) were legislated for on 9 September 2024, requiring audited local authority accounts to be published by set dates. These deadlines aim to accelerate audit completion, reduce the backlog, and restore confidence in timely financial reporting. However, whilst the backstop is increasing the number of accounts brought to completion, it is also resulting in a higher number of disclaimed opinions, leaving an assurance gap over the data included within these accounts. Further reform followed on 18 December 2024 with the Local Audit Reform Strategy, which includes provisions in the English Devolution and Community Empowerment Bill to establish a Local Audit Office as a unified oversight body. While MHCLG aspires to eliminate qualified or disclaimed accounts by 2027–28, its reliance on vague ambitions without clear milestones makes progress difficult to assess. MHCLG officials have been over-optimistic before about how quickly audit timeliness could be improved. It will be important that the Treasury does not underestimate the impact of local government reorganisation on the Whole of Government Accounts. 4 recommendation a. MHCLG should provide, alongside the Treasury Minute response, a document which sets out: • the actions already taken to address the local audit crisis, including milestones achieved to date, • Key dates and deliverables that remain outstanding, with clear evidence of how these will be met, • Further measures the department intends to implement to ensure resolution, including how it will ensure that auditors build back assurance in a tim

The Treasury has improved long-term liability disclosures, but further work is needed to clearly convey their insights and relevance to readers. The WGA includes several large and complex liabilities, which the Committee has previously noted are difficult for readers to understand and whose values change significantly due to changes in the discount rate. The three largest liabilities include: • Nuclear Decommissioning provision: Decreased by £19.1 billion from £126.0 billion in 2022–23 to £106.9 billion in 2023–24. • Clinical Negligence provision: As of 31 March 2024, the Department of Health and Social Care (DHSC) reported clinical negligence provisions totalling £58.2 billion, a decrease from £69.3 billion at 31 March 2023. • Pension liabilities: net pension liabilities have decreased from £2,639.1 billion in 2021–22 to £1,311.9 billion at 31 March 2024. Discount rates are used to calculate the present value of future cash flows, reflecting how much a future obligation is worth today, and are closely linked to interest rates, gilt yields, and inflation. Under International Financial Reporting Standards (IFRS), HM Treasury correctly applies a real discount rate (adjusted for inflation) to value long-term obligations. However, the Committee has previously urged HM Treasury to present both discounted and undiscounted values for all major liabilities to improve transparency and accessibility for readers. We strongly believe these 5 figures should be comparable year-on-year so that it is possible to see what action is being taken by the Government to reduce these liabilities. In 2023–24 HMT produced discounted and undiscounted values for the nuclear decommissioning provision balance only. There is therefore no reason why they should not produce it for all other long-term liabilities. recommendation a. In addition to the discounted values required under IFRS, Treasury should disclose undiscounted values for: i) Nuclear Decommissioning provision, ii) Clinical Negligence

The non-coterminous reporting date of the Academies sector risks undermining comparability and weakening accountability for billions of pounds of public money. The WGA consolidation process faces persistent challenges due to the misalignment of financial reporting periods between academies and central government. Academies operate on a financial year ending 31 August, whereas the government’s year ends on 31 March, creating timing mismatches when incorporating academy accounts into the WGA. HM Treasury has previously noted that aligning the academies’ year end with the government’s would not be feasible, citing disruption to the sector’s operational cycle, costly system changes, and the administrative and audit burden of managing two-year ends, which it argues would not represent value for money. We believe this is a very weak argument and require more detailed assessment of the justifications to be convinced that the current approach remains the most appropriate. We note that unincorporated businesses were encouraged by HMRC to change their reporting dates – at considerable cost to each business. recommendation a. Treasury should outline in the Treasury Minute response the discussions held with the Department for Education to align financial year-end dates for academies. 6 b. Treasury should provide, alongside the Treasury Minute response, their value for money assessment of aligning the Academies sector.

The Whole of Government Accounts (WGA) is not sufficiently transparent on devolved spending. The WGA is designed to provide a comprehensive picture of the UK’s public sector finances and support more effective management of fiscal risks. By consolidating financial information across government, the WGA aims to improve transparency and enable better-informed decision-making on long-term obligations and fiscal sustainability. However, the Committee notes that the WGA does not currently offer sufficient evaluation of devolved governance structures or detailed examination of how devolved budgets are allocated and managed. This gap limits the ability of Parliament and the public to fully understand the financial implications of devolution and assess whether resources are being used efficiently across the UK. Furthermore, recent analysis indicates that Scotland are the second-poorest performing sector—surpassed only by the Local Authority sector—in the timely submission of returns to the WGA. The lack of data from Scottish entities is a serious impediment to scrutinise all parts of the UK public sector to provide value for money. recommendation a. Treasury should outline in their Treasury Minute response how the WGA disclosures will be updated in the 2024–25 annual report and accounts to clarify devolved spending. b. Treasury should outline in their Treasury Minute response how they will ensure Scottish entities submit audited data in the 2024–24 WGA. 7 1 Missing and unaudited data Introduction

On the basis of the Whole of Government Accounts (WGA) for the year ended 31 March 2024, we took evidence from HM Treasury (the Treasury) and from the Ministry of Housing, Communities and Local Government (MHCLG).1

WGA has the ability to illuminate long-term risks and structural pressures on public finances, offering Parliament a more strategic lens for oversight. We questioned the Treasury on how it was going to make the WGA a more integrated part of people’s financial awareness and financial thinking. The Treasury replied that it intended to streamline the performance report and present it in a more visual, accessible format. It explained that future reports will use infographics and QR-enabled features to increase online engagement, alongside HTML-based formats to offer a more interactive experience for the public.12

We asked the Treasury how many staff it allocated to consolidating this account, and officials explained that the core team responsible for preparing the WGA consists of six to seven dedicated staff, supported at key stages by colleagues across the wider Government Finance Function.13 WGA disclaimed opinion

The requirement to produce WGA is set out in the Government Resources and Accounts Act 2000 (GRAA).14 The Treasury publish annual submission guidance outlining that all entities are required to submit Cycle 1 and Cycle 2 submissions by respective deadlines. Cycle 1 is a draft data submission based on the entity’s unaudited data, while the Cycle 2 submission should agree to the entity’s final audited data and published account position. Additionally, submissions from bodies over a £2 billion threshold require sign off by their statutory auditors.15

We challenged Treasury on the acceptability of the WGA disclaimed opinion due to missing or unaudited data from local authorities and the Treasury acknowledged that the situation is unsatisfactory. It reported, however, that it expects the number of missing entities to fall from 201 in 2023–24 to approximately 145 in WGA 2024–25.16 The Treasury and MHCLG indicated that any future reduction in missing data is expected to result from the backstop mechanism.17 Backstop dates force the publication of local 11 Bradley, L., Heald, D., and Hodges, R, The under-realized potential usefulness of the UK Whole of Government Accounts, Public Money and Management, 45(6), 17 December 2023 12 Q 39 13 Q 55 14 Government Resources and Accounts Act 2000 15 HMT, Whole of Government Accounts 2023 to 2024: guidance for preparers, accessed 18 February 2026 16 Q 3 17 Q 30 10 authority accounts even if audits are incomplete. If the local authority audit has not been completed at the date of the backstop, then the auditor will issue a disclaimed audit opinion.

When a local authority’s accounts are disclaimed, the appointed local authority auditor is subsequently required to undertake substantial additional work over multiple years to restore the level of assurance necessary to issue a non-disclaimed opinion. Re-establishing this assurance is inherently complex and resource-intensive, and MHCLG reported that the volume of required recovery work has significantly exceeded their earlier expectations. MHCLG continued that, as a result, their previous ambition to achieve a marked reduction in disclaimers by January 2027, in respect of the 2025–26 audit year, will not be realised.18 The Treasury acknowledged that they expect the WGA disclaimed status to continue as the number of local authorities with missing data become local authorities consolidated into WGA based on disclaimed data.19 18 Q 8 19 Q 4 11 2 Local Government reform Local Government reform

In December 2024, the Government published its strategy for overhauling the local audit system in England. It identified three systemic challenges in the existing system: capacity (a severe lack of auditors operating in the sector), co-ordination (fragmented roles with no clear ownership) and complexity (financial reporting and audit requirements disproportionately complex for local authority arrangements).20 MHCLG observed that the underlying issue stems from the fragmented distribution of responsibilities. It explained that regulatory and system leadership sits with the FRC; the Code of Practice is owned by the NAO; procurement oversight lies with PSAA; and audit quality and enforcement functions are again located within the FRC.21

We challenged MHCLG on progress in addressing the local audit backlog.22 MHCLG explained that the statutory backstop is operating as intended and that rising audit fees are bringing more money into the system – fees are up 150% on the last procurement that the public sector audit authority has done.23 It noted that accounts have already been simplified for 2025–26, with further simplifications planned by CIPFA for 2026–27. MHCLG also highlighted that forthcoming legislation would remove the requirement for accounts to be signed off by a key audit partner—a role held by only around 100 people nationwide—which it argued has contributed to the backlog, and said that removing this requirement should help reduce delays.24

In November 2025, MHCLG published its Transition Plan for moving to a new system of oversight for local audit. The English Devolution and Community Empowerment Bill, laid in Parliament on 10 July 2025, includes the proposed legislation needed to implement this strategy. The establishment of a new single body, the Local Audit Office (LAO), is central to progress. The LAO is intended to streamline and simplify the system. It will assume the functions of appointing and contracting auditors for local authorities and it will 20 MHCLG, Local audit reform: a strategy for overhauling the local audit system in England, December 2024 21 Q 11 22 Q 14 23 Q 24 24 Q 14 12 adopt ownership of the Code of Audit Practice and have powers to interpret and apply ISA requirements for the local audit context. Once established, the LAO will also take on oversight from MHCLG of the remainder of the backstop programme.25

We asked MHCLG if it anticipated any issues with the programme of local government reform. It replied that it is pursuing an ambitious programme of reform and change and considers the current pace to be as fast as parliamentary time allows.26 MHCLG also reiterated its aspiration from the PAC session in January 2025, concerning the 2022–23 WGA, to ensure that no local authority accounts are qualified or disclaimed by 2027–28.27 However, it acknowledged that this remains an aspiration rather than a firm commitment.28

We questioned the Treasury on the use of the terms “aspiration” and “ambition” in relation to local audit reform measures.29 The Treasury stated that it has implemented all relevant legislation within its remit, but that it cannot undertake the responsibilities of local government on their behalf.30 MHCLG also clarified that no formal sanctions exist, but that a three-stage, communication-focused approach is being used to encourage compliance among local authorities.31

We also challenged MHCLG on how reorganisation in local government will affect WGA.32 The Local Government Reorganisation ambition is to simplify local government by ending the two-tier system and establishing new single-tier unitary councils.33 MHCLG confirmed that accounts for areas currently operating under the two-tier system will continue to be prepared in the usual manner up to and including the 2027–28 financial year and from 2028–29 onwards, a single consolidated set of accounts is expected for each new unitary authority.34 While acknowledging the inherent complexity of this transition, MHCLG emphasised that reorganisation will not constitute a justification for delays. MHCLG confirmed that it considers the associated risks manageable.35 25 MHCLG, Implementing the new local audit system – a Transition Plan, November 2025; English Devolution and Community Empowerment Bill 26 Q 23 27 HC 367, Q 55 28 Q 23 29 Q 28 30 Q 29 31 Q 20 32 Q 25 33 MHCLG, Local government reorganisation: Policy and programme updates, accessed 18 February 2026 34 Q 25 35 Qq 26-27 13 3 Maximising WGA insights Disclosures of long-term liabilities

The WGA includes several large and complex long-term liabilities that the previous Committee identified as difficult for readers to interpret owing to their significant sensitivity to movements in the discount rate.36

The three largest liabilities are: the nuclear decommissioning provision which fell by £19.1 billion, from £126.0 billion at 31 March 2023 to £106.9 billion at 31 March 2024; the clinical negligence provision which decreased from £69.3 billion at 31 March 2023 to £58.2 billion at 31 March 2024; and net pension liabilities which also declined substantially, from £1,415 billion at 31 March 2023 to £1,311.9 billion at 31 March 2024, having already fallen from £2,639.1 billion at 31 March 2022.37

Under IFRS, the Treasury uses a real (inflation-adjusted) discount rate to value long-term obligations such as provisions and pensions. While appropriate under accounting rules, this means annual movements in liabilities can reflect economic shifts rather than changes in policy or risk. To aid transparency and comparability between years, we have previously urged HM Treasury to publish both discounted and undiscounted values for all major long-term liabilities.38 HM Treasury produced discounted and undiscounted values only for the nuclear decommissioning provision in 2023–24.39

We asked the Treasury to explain why undiscounted information had not been provided for all major liabilities in the WGA 2023–24 despite being asked to. The Treasury stated that it is considering extending this approach to pensions and clinical negligence however noted that the methodology is more complex, particularly for pension liabilities, but confirmed that it was consulting with the Government Actuary’s Department on the most appropriate approach to discounting future liabilities for inflation.40 36 Letter to HM Treasury, 24 May 2024 37 HMT, Whole of Government Accounts: year ended 31 March 2023, HC 289, 26 November 2024; HMT, Whole of Government Accounts: year ended 31 March 2024, HC 917, 17 July 2025 38 Committee of Public Accounts, Whole of Government Accounts 2022–23, Sixteenth Report of Session 2024–25, HC 367, 19 March 2025, Recommendation 5a 39 HMT, Whole of Government Accounts: year ended 31 March 2024, HC 917, 17 July 2025, p 78 40 Q 40 14

We questioned how 2023–24 pension disclosures appeared to show a reduction in public sector pension liabilities and raised that this was counter intuitive. We raised concern that this disclosure created presents a false picture of the underlying fiscal reality when the number of scheme members continues to risk and life expectancy trends increase long-term obligations.41 The Treasury acknowledged the Committee’s concern and suggested that the most meaningful long-term indicator of pension affordability is pension spending as a share of GDP. It commented that pensions were currently about 1.9% of GDP and expected to fall to about 1.4% over the next 50 years. The Treasury agreed with the general point about being transparent about different ways of measurement in order to support debate.42

We pressed the Treasury on whether the Government should be exploring alternative ways of paying for or funding public service pension liabilities. The Treasury responded that public service pensions remain unfunded, pay-as-you-go schemes as this is consistent with Government’s overall approach to managing the balance sheet.43 And that therefore this was not something the Government were actively looking at changing. It also pointed out that the pension liability is paid for from tax revenue, but [future] tax is not recognised as an asset.44 Non-coterminous reporting dates

The academies sector prepares a separate sector account (the Sector Annual Report and Accounts, or SARA), aligned to the academic cycle year end of 31 August.45 The Department for Education and WGA report to 31 March.46 The consolidation of SARA data within WGA creates a non- coterminous year end misalignment and has resulted in a qualification in WGA since 2016–17.47

The reporting framework for academy trusts was established on a temporary basis through agreement between ministers of the Department for Education (DfE) and the Treasury.48 This arrangement reflected the significant practical challenges and financial costs associated with collecting timely and accurate data on the financial performance of more than 9,000 academy schools at a time when the academy sector was 41 Q 43 42 Q 43 43 Q 46 44 Q 47 45 DfE, Academies sector annual reports and accounts, accessed 18 February 2026 46 DfE, DfE annual reports and accounts, accessed 18 February 2026 47 HMT, Whole of Government Accounts: year ended 31 March 2024, HC 917, 17 July 2025, p 297 48 ESFA, Academies accounts direction 2023 to 2024, 27 March 2024 15 undergoing rapid and sustained expansion. It was agreed with Parliament that this regime would be reviewed to determine when it is feasible for a more standard reporting regime to be implemented.49 We have repeatedly raised concerns about the non-coterminous year ends of academy trusts at recent Public Accounts Committee sessions. In January 2025, as part of the Whole of Government Accounts 2022–23 session, Treasury responded that forcing 9,000 schools to run two sets of accounts every year would create a disproportionate and ongoing administrative burden at only marginal benefit to the Whole of Government Accounts.50 The Treasury confirmed at our Whole of Government Accounts 2023–24 session that its position remains unchanged.51 Devolved spending

The Whole of Government Accounts (WGA) is intended to present an integrated assessment of the United Kingdom’s public sector finances, enabling clearer oversight of fiscal exposures and long-term financial commitments. By drawing together financial information from across the UK it should allow Parliament to evaluate the financial consequences of devolution and determine whether public funds are being deployed effectively and consistently across the UK.52

We challenged the Treasury on how the WGA presents the spending of devolved nations and the lack of clarity regarding how devolved budgets are allocated and managed.53 The Treasury responded that it will not separate the financial statements by devolved administration but will consider adding greater transparency in future performance reports to outline spending and outcomes across the UK nations.54

We also expressed concern on the lack of data from Scottish entities which poses a serious impediment to scrutinise all parts of the UK public sector to provide value for money.55 Of the 34 Scottish Central Government entities, 19 (56%) submitted audited data, 10 (29%) submitted unaudited data and 5 (15%) were part of missing data. Of the 35 Scottish Local Government entities, 13 (37%) submitted audited data, 10 (29%) submitted unaudited 49 HMT, Whole of Government Accounts: year ended 31 March 2024, HC 917, 17 July 2025, p 129 50 HC 367, Q 59 51 Q 62 52 Q 71 53 Qq 70-71 54 Q 73 55 Q 72 16 data and 12 (34%) were missing.56 We received written evidence claiming that Scottish local authorities would have had published accounts available but chose not to submit.57

The Treasury highlighted that Scottish entities do not have a legal requirement to submit a WGA return.58 Under the Government Resources and Accounts Act 2000 HM Treasury may designate a body for inclusion in WGA unless its activities relate entirely to Scotland.59 Therefore, Scottish entities are not included in the Whole of Government Accounts (Designation of Bodies) Order 2024 – the statutory instrument relevant to WGA 2023–24.60 The Scottish Government makes separate administrative arrangements for bodies in Scotland to provide data.61 56 HMT, Whole of Government Accounts: year ended 31 March 2024, HC 917, 17 July 2025 57 Professor David Heald (WGA0002) 58 Q 72 59 Government Resources and Accounts Act 2000, Section 10 (6) 60 The Whole of Government Accounts (Designation of Bodies) Order 2024 61 HMT, Whole of Government Accounts: year ended 31 March 2024, HC 917, 17 July 2025, p 17 17