The Whole of Government Accounts have gone missingby
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.
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.
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.