Whole of Government Accounts show increasing liabilities, says CIPFA

30 Mar 15

The latest set of Whole of Government Accounts show that the public sector’s net liabilities have increased by £624bn over the past five years, an analysis by CIPFA has revealed.

In its examination of the WGA for 2013/14, which were published by the Treasury on Thursday and audited by the National Audit Office, the institute said the rate at which public sector liabilities were increasing was concerning.

The accounts showed that the UK's public sector net liabilities, the gap between what the country owns and what it owes, increased by £224bn in 2013/14 to £1.85 trillion. The yearly increase alone would equate to an additional £8,389 liability for each household in Britain, while the total net public sector liability is equivalent to £69,363 for every household in the country.

CIPFA chief executive Rob Whiteman welcomed the publication of the latest WGA, which he said was the most up-to-date, true and fair record of the financial state of the UK government and public sector.

‘The analysis of the data contained in CIPFA’s briefing on the Whole of Government Accounts starkly illustrate that while our net expenditure is now on a downward trend net liabilities continue to increase,’ he said.

‘These increasing net liabilities forcefully underline the need for any future government to pay close attention to managing the UK’s balance sheet risk particularly in the area of public service pensions where there remains a serious concern about longer term sustainability even given the recent reforms.’

Whiteman also called for the next government to look urgently at how it can make better use of the WGA to improve fiscal planning in the UK.

The WGA is the most comprehensive set of audited consolidated government accounts, covering all 5,500 public sector bodies, from government departments and quangos to councils, NHS organisations and the Bank of England.

Setting out his qualified opinion on the accounts, auditor general Amyas Morse said he was strongly supportive of the way the Treasury was improving the WGA, which were first published for the 2009/10 financial year.

‘The department is improving the content of the WGA and the document has been produced faster than ever. This is welcome and represents a significant step forward for the WGA.

‘However, there are opportunities to exploit the WGA’s potential more fully and to improve the WGA to enable me to remove my qualifications. The Treasury also needs to work with the bodies that provide data to improve the timeliness and accuracy of the information that it receives. Furthermore, better analysis by the department of trends in government's assets and liabilities will help to demonstrate the full financial impact of changes in the delivery of public service in the next Parliament.’

Morse highlighted continuing issues with the quality and consistency of the data included, which meant his audit opinion for 2013/14 was similar to that of previous years.

However, he noted the Treasury has plans in place to resolve most of the underlying issues leading to qualification, which could make it possible to remove a number of qualifications in the next three years.

In particular, the Treasury has made significant progress in improving the quality of the data within the WGA through its management of transactions within government.

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