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The Whole of Government Accounts have gone missing

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Richard Murphy asks how the powers that be can be held to account if the Whole of Government Accounts for 2020/21 and 2021/22 have still not been filed.

20th Jul 2023
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A parliamentary question from Caroline Lucas MP, the only green MP in parliament, elicited an interesting response from John Glen MP, the Chief Secretary to the Treasury this week. 

In her question, Caroline Lucas refers to what are called the Whole of Government Accounts (WGA). These are the only consolidated accounts prepared by the government on the basis that any normal financially literate human being, or at least an accountant, might recognise as presenting what might be called a true and fair view of the government’s financial position for each year.    

An image of the question Caroline Lucas posed to the Treasury
Parliament

Essential data

Compared with the usual mumbo-jumbo accounting that is produced on a routine basis by the Treasury, the ONS and OBR, the Whole of Government Accounts are prepared on the basis of IFRS reporting as adapted for government use. As a consequence, they include some quite important data that most accountants would normally think of significance but which the government normally ignores, like a balance sheet.

What is more, that balance sheet reflects the economic substance of transactions. For example, it excludes the £800bn worth of government bonds that are routinely referred to as part of the national debt but which are actually owned by the Bank of England on behalf of HM Treasury, which cannot, therefore, be a debt on any basis that any accountant would ever recognise. 

This balance sheet also recognises the fact that the UK’s commercial banks hold an even larger sum on deposit with the Bank of England because, again, it is not debt. That money is, of course, only a liability to the extent that all bank deposit accounts are a liability when it comes to preparing the accounts of a deposit taker, which in this instance is exactly what the government is.

There are other important dimensions to these accounts, not the least being that there is a deliberate attempt made to prepare these accounts on an accruals basis. 

In addition, important data with regard to investments is also properly disclosed, as is the depreciation upon it. Even when this information is available within other government data sources you have to work pretty hard to find it, and it is then not stated within a balance sheet framework.

A need for transparency

For these and many other reasons, anyone, including government ministers, political opposition parties, journalists, and all who might want to create an informed opinion upon the governments financial management need to be in possession of this data. But, as Caroline Lucas noted in her Parliamentary question, accounts for 2020/21, and 2021/22, have still not been filed.

Staggeringly, John Glen in his role as a Treasury minister offers a glib excuse for this failure. What he suggests is that this oversight is down to IT difficulties that have prevented the production of the accounts. There is no practising accountant who will not look at that claim without offering an expression of disbelief. 

As we all know, such a claim would not provide a reasonable excuse for not submitting a tax return, a VAT return or accounts to Companies House, with penalties being applied in all those cases. In fact, if the government was a company it would be very likely that Companies House would have sought to have the government struck off, and might even have succeeded.  Despite that, John Glen seems to think that his excuse is entirely reasonable, and that further delays can be tolerated.

I disagree. The government‘s failure to file accounts is not only an indication of poor governance, dire accounting, and indifference on its part, it is also contemptuous of voters in the run-up to a general election. It is now entirely possible that we might be asked to vote on this government’s record without ever seeing a proper record of just what happened during the Covid era, and afterwards. In my opinion, that is entirely unacceptable. 

We can only hope that another government might, in the future, take its accounting responsibilities, more seriously than this one is.

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Replies (17)

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By Hugo Fair
20th Jul 2023 18:47

I'm not a historian of government finances (and their ongoing novel ways of failing any sense of accountability), but what makes this story particularly different to anything else over the last 25 years?

"1999-2000 General Report of the Comptroller and Auditor General:
The National Audit Office has qualified the audit opinion on 11 central government department accounts and reported on a further 11 over the past year."

"The first audited Whole of Government Accounts (for 2009/10) do not give a ‘true and fair’ view of what the UK public sector owns and owes, according to the chair of Public Accounts Committee."

Lengthy list of "True and Fair Qualifications" and "Regularity Qualifications" published by NAO at https://www.nao.org.uk/our-work/financial-audits-overview/

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Others with more expertise and knowledge can no doubt fill in the gaps with more and more such examples of how out of control are the countries finances (or at least accountability for them)!

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By D V Fields
20th Jul 2023 21:44

I remember back in the 1980’s reading a CIPFA Report where they had discovered something called “accruals accounting”. I think they are better off sticking with “Receipts and Payments” at least it allows them to avoid the “true and fair” view.

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By ColA
21st Jul 2023 09:42

At least the landslide in GE19 avoided the dire consequences of Corbynomics, had the eclectic predictions of some for the outturn of that year been realised.
That said the profligacy of Government in the intervening 4 years, if not the entire 13 years, is appalling.

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Replying to ColA:
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By evildrome
21st Jul 2023 10:04

Indeed! Imagine what shape we'd be in if Corbyn had built 100,000 new social rent houses every year since 2019, nationalised the energy, water & rail companies and properly funded the NHS, schools and care homes.

I would have missed out on exciting highlights like having my leccy bill triple, wading through muck in the sea, teachers, doctors & nurses strikes and near double digit inflation.

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Replying to evildrome:
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By ColA
21st Jul 2023 10:15

Likely a sooner crash of the economy than Truss/Kwarteng achieved in 2022.
Corbyn & now Conservatives do not readily share prudent economic management in the same breath.

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Replying to ColA:
John Hextall
By John Hextall
21st Jul 2023 12:58

Well, we'll never know, will we?

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Replying to ColA:
Stepurhan
By stepurhan
21st Jul 2023 13:53

ColA wrote:

At least the landslide in GE19 avoided the dire consequences of Corbynomics, had the eclectic predictions of some for the outturn of that year been realised.
That said the profligacy of Government in the intervening 4 years, if not the entire 13 years, is appalling.

I'm confused. You acknowledge the current government have been appalling, but you still prefer them. Why?

I'm not saying Corbyn would have been a fantastic leader, but you appear to be certain he would have been terrible for reasons that are most unclear. Have you uncritically accepted the slating the Tory press gave him?

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Replying to stepurhan:
By ireallyshouldknowthisbut
21st Jul 2023 17:47

Who knows what Corbyn would have done, what I can say is he would have made his mistakes with integrity and honesty, and the right wing press would have vilified him as the worst PM ever no matter what. HS2 would be seen as loony left subsidies. The bounce back loans scandalous fraud level demonstration of labours fiscal incompetence ,along with tanking the pound, huge inflation and interest rates. As for taking large sums of cash to influence elections from Russia, and elevating Russians to the HoL..clear evidence of a communist plot. When the tories do it....well Labour would be worse.

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By teginton
21st Jul 2023 09:46

Not only are the whole of government accounts not available. A large number of local authorities have not had their 2021/22 audited accounts published.

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By teginton
21st Jul 2023 09:46

Not only are the whole of government accounts not available. A large number of local authorities have not had their 2021/22 audited accounts published.

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By teginton
21st Jul 2023 09:46

Not only are the whole of government accounts not available. A large number of local authorities have not had their 2021/22 audited accounts published.

Thanks (0)
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By teginton
21st Jul 2023 09:46

Not only are the whole of government accounts not available. A large number of local authorities have not had their 2021/22 audited accounts published.

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By teginton
21st Jul 2023 09:46

Not only are the whole of government accounts not available. A large number of local authorities have not had their 2021/22 audited accounts published.

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JD Portrait
By John Downes
21st Jul 2023 10:00

When the accounts are eventually published, I wonder if they will say anything about any actuarial deficit on public sector pensions.

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By moneymanager
21st Jul 2023 11:00

It isn't WGAs that have gone missing, it is GOVERNMENT as a whole that is AWOL, there now physically (to a degree) and during "the pandemic" in dispersed form, but in no meaningful sense still functional, we have been existing under dictat, above Westminster, and dictatorships have no accountability.

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By David Gill
21st Jul 2023 14:08

They were issued yesterday.

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

Nothing new - see pages 110 to 113.

The deficiency on the balance sheet has increased from £1.986 trillion in 2016 to £3.326 trillion in 2021. in the same period, the increase in the unfunded public sector pension liability has increased by over £900 billion, accounting for just under 70% of the increase in the deficiency on the balance sheet. You can bet there won't be any questions about this by the Public Accounts Committee - too many civil servant votes at stake to bother to do something about this.

Just to put this into perspective for the last two years, public sector staff costs were approximately £488 billion of which about 70% related to central government - say £239 billion. The increase in the unfunded public sector pension liabilities (largely central government) in the same period was £437 billion. I think all of us in the private-sector would take that deal if it was being funded by those in the public sector!

It's time to look properly at the total cost of employing people in the public sector, including pension costs to be funded. Staff costs figures are meaningless in isolation.

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By Mike Warburton
21st Jul 2023 15:02

I do not always agree with you Richard , but I do on this one.
Proper and timely accounting is essential
It was one of my concerns about the EU
Mike

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