12 December 2003
All public bodies will be required to produce commercial-style accounts by 2006 under Treasury plans to improve the sector's financial transparency and service delivery.
In a statement released after the Pre-Budget Report, Chancellor Gordon Brown officially published his timetable for the introduction of fully audited resource accounting across the public sector.
The new system is known in Whitehall as whole of government accounts (WGA), because it will eliminate all significant transactions between public bodies and treat 'government' as a single entity.
Resource accounting has already been implemented in central government, with moderate success, but Brown will require all public organisations – including local authorities, NHS foundation trusts and the BBC – to produce such accounts from 2006/07. They will trial unpublished figures from 2004/05.
Ministers believe the new system will provide improved information on all public sector assets and liabilities and better comparable data against which future service targets, for example, can be set.
A Treasury source told Public Finance: 'WGA not only fits comfortably with the department's fiscal stability code, it will also provide us with better analyses of troublesome accounting figures, such as depreciation and contingent liabilities, which the current system does not cover as adequately.'
Sources at the Office of the Deputy Prime Minister said a better understanding of depreciation would, for example, provide councils with more accurate data on major assets such as transport infrastructure, and complex systems like housing repair budgets.
Local government minister Nick Raynsford said WGA would feed into the ODPM's extension of new freedoms and flexibilities to councils, such as new powers to borrow for capital spending.
PFdec2003
