Westminster Public Accounts Committee report shows Treasury figures cannot be trusted

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   By a Newsnet reporter 
 
The Public Accounts Committee of the House of Commons has published its report into the coalition’s whole government accounting programme into the management and reporting of public finances, Stewart Hosie, the SNP’s Treasury spokesman, has said the figures cannot be trusted after the report’s accuracy was criticised by MPs on the Public Accounts Committee which wrote it.
 
The report found that the UK Treasury has no clear plan for turning the Whole Government Accounting Programme (WGA) from an elaborate accounting exercise into a more meaningful document that helps shape the management, direction and reporting of the public finances, and said that in many instances the Treasury’s statistics were out of date and unreliable.

The WGA shows that the annual deficit was £94.4 billion in 2010-11, a reduction of £68.3 billion from the £162.7 billion deficit in 2009-10. However, the 2010-11 accounts include a gain of £126 billion from an assumed reduction in the public sector pension liability as a result of the Government’s decision to change the measure of inflation used to uprate payments to pensioners from the Retail Price Index to the Consumer Price Index with effect from 1 April 2011. Without this change, the deficit for 2010-11 would have been £220.4 billion.
 
The report says that the methodology employed by the UK Treasury in collecting figures to be presented to the Committee were in some instances “prepared on a basis that is at odds with normal financial accounting rules”.
 
Speaking to the BBC, Sajid Javid, Economic Secretary to the Treasury, defended the Government’s figures, and said:
 
“These accounts represent everything the government owes, owns, spends and receives. It’s a huge step in transparency taken by this government when the first set of accounts were published in 2011.”
 
However Committee chair Margaret Hodge MP disagreed, telling the BBC she thought the WGA was an important document but it was also “pretty impenetrable”. She urged the Treasury to “set about trying to simplify it”, suggesting that the government was trying to hide something by creating a document “in a way that people don’t understand”.
 
Ms Hodge contradicted Mr Javid, and said the accounts were not complete because Network Rail was not included, although it was a public asset and the government underwrites its debt. The publicly owned banks – Royal Bank of Scotland and Lloyds – are not included either.
 
The report calls on the Treasury to use the WGA to inform spending decisions; improve its layout for ‘lay readers’ to be able to comprehend the information; and comply with normal accounting rules so all government bodies, including those over which government exerts control, are consolidated within the WGA.
 
The report also criticised the amount of time it took to produce the consolidated figures. The accounts were published 19 months after (October 2012) the accounting period being reported on ended.
 
Commenting on the findings, Stewart Hosie MP SNP Treasury spokesman said :
 
“When a committee with a majority of coalition MPs says the Treasury can’t be trusted, then there are real questions about the accuracy of all the information we are given. With the Treasury supposedly publishing a paper opposing independence next week it’s only fair to ask how trustworthy it will be and how close politicians’ fingerprints will have got to the final figures.
 
“We already know that a Treasury paper had to be rewritten because its case against independence was based on the UK’s triple-A credit status.
 
“Today’s committee report calls the whole UK government accounting system into disrepute. It lays out in clear terms that the public finances are not being managed effectively. Having examined the way Treasury accounts are presented it comes to the conclusion that the government’s financial books are ‘an elaborate accounting exercise’, that figures provided are not ‘a meaningful tool’ and that government accounting is not transparent, and when eventually presented still has to be qualified and revised.
 
“The words of the Public Accounts Committee should be ringing in our ears next week. It is even more clear after this report that only by voting Yes in September 2014 can we have responsible management of Scotland’s economy.”