By Tash Shifrin
21 July 2009
The National Audit Office has refused to sign off the Treasury’s 2008/09 resource accounts in full because Parliament had not authorised £24bn of expenditure as part of the banking bail-out package.
It is the first time the Treasury’s accounts have been qualified in a decade.
Parliament had authorised £21bn of expenditure aimed at ‘raising the rate of sustainable growth and achieving rising prosperity’. But the Treasury overshot this limit, incurring expenditure of more than £45bn.
The unauthorised £24bn was allocated to cover expected net losses from the Asset Protection Scheme, the Treasury’s programme to steady the banks by insuring them against future losses.
The spending watchdog said the Treasury had known the scheme would result in a significant loss. But when the Spring Estimates were put to Parliament for approval, the department was not sure which banks would participate or what sums of money this would involve.
In-principle agreements were later signed with the Royal Bank of Scotland and Lloyds Banking Group.
Liberal Democrat Treasury spokesman Vince Cable said the Asset Protection Scheme was ‘quite simply a massive fraud on the taxpayer - providing insurance for “bad” loans but with a huge, open-ended risk’.
But a Treasury spokesman said the accounts had been qualified on a purely technical issue of process. The NAO had ‘acknowledged that the need to act by introducing the Asset Protection Scheme did not allow time to seek parliamentary approval for the accounting consequences’, he said.
‘They have not expressed concern about the figures for the costs of interventions to support financial stability included in the accounts, which are consistent with the range of £20bn to £50bn set out in the Budget.’
NAO head Amyas Morse said the past financial year had ‘presented extraordinary challenges’ for the Treasury.
21 July 2009
The National Audit Office has refused to sign off the Treasury’s 2008/09 resource accounts in full because Parliament had not authorised £24bn of expenditure as part of the banking bail-out package.
It is the first time the Treasury’s accounts have been qualified in a decade.
Parliament had authorised £21bn of expenditure aimed at ‘raising the rate of sustainable growth and achieving rising prosperity’. But the Treasury overshot this limit, incurring expenditure of more than £45bn.
The unauthorised £24bn was allocated to cover expected net losses from the Asset Protection Scheme, the Treasury’s programme to steady the banks by insuring them against future losses.
The spending watchdog said the Treasury had known the scheme would result in a significant loss. But when the Spring Estimates were put to Parliament for approval, the department was not sure which banks would participate or what sums of money this would involve.
In-principle agreements were later signed with the Royal Bank of Scotland and Lloyds Banking Group.
Liberal Democrat Treasury spokesman Vince Cable said the Asset Protection Scheme was ‘quite simply a massive fraud on the taxpayer - providing insurance for “bad” loans but with a huge, open-ended risk’.
But a Treasury spokesman said the accounts had been qualified on a purely technical issue of process. The NAO had ‘acknowledged that the need to act by introducing the Asset Protection Scheme did not allow time to seek parliamentary approval for the accounting consequences’, he said.
‘They have not expressed concern about the figures for the costs of interventions to support financial stability included in the accounts, which are consistent with the range of £20bn to £50bn set out in the Budget.’
NAO head Amyas Morse said the past financial year had ‘presented extraordinary challenges’ for the Treasury.
