In a new Report, the Committee concludes the Whole of Government Accounts (WGA) is a vital accountability tool but there is work required to make it more useful to the Government, Parliament and public.
It concludes the WGA "needs to be published more quickly after the year-end and include more information on the reasons for significant movements on the balance sheet and on where public money is going".
The Report continues: "As we enter a period of economic uncertainty, it is essential that the Treasury can understand and get a grip on the financial risks highlighted in the WGA and be clear about the impact that the Government's decisions have on the short- and long-term financial position."
Whole of Government Accounts needs "clearer and more useful to the reader"
The Treasury published the 2014–15 WGA in May this year, bringing together the financial activities of more than 6,000 organisations across the public sector.
The Committee considers the WGA to be "world-leading in terms of its scale and coverage of a nation's public sector finances" but urges the Treasury to make further improvements.
In particular, the Committee recommends the Treasury develops "an enforceable plan to produce WGA more quickly after the year end, and to make it clearer and more useful to the reader", for example by providing a better understanding of the regional distribution of public money.
Financial planning must be more long-term and sophisticated
The Committee is concerned that a "lack of alignment" between different sources of information on the Government's financial position acts as a barrier to understanding the overall picture and calls for greater clarity over how these sources are used by government in managing public finances.
The Government's approach to financial planning must be more long-term and sophisticated, says the Committee.
It warns that significant liabilities on the Government's balance sheet "could crystallise in the event of a significant shock to the economy", and recommends that as a priority the Treasury develops contingency plans for those liabilities and guarantees most affected by an economic downturn.
Meg Hillier MP, Chair of the PAC, said:
"The state of the nation’s finances affects us all and taxpayers have a right to know how their money is being spent.
It cannot be stressed enough: Government departments are spending our money and access to clear information about what they are doing with it is fundamental to holding them to account.
While the Whole of Government Accounts provide valuable insights, there is scope to improve the speed with which they are published and their ease of use.
We are also concerned the Government is not doing enough to address risks highlighted by the WGA, for example its increasing liability for clinical negligence claims—the potential cost of which will be borne by the taxpayer.
The Treasury needs to act now to get a grip on such growing liabilities and they must not be allowed to fester on the balance sheet.
More broadly, the WGA shed light on patterns of spending by Government departments within given financial years—patterns which in some instances reflect a short-term approach to the spending of public funds.
Clearly, this is not compatible with a value-for-money approach to spending taxpayers’ money on complex projects that may run for many years.
There is still much to do before Parliament and the public can be confident long-term financial planning is properly factored into political decisions and in the coming months the Treasury must set out its plans for achieving this.
In particular it must demonstrate it is prepared for the very serious challenges of Brexit and put in place robust plans to safeguard public money from economic risks arising in the months and years ahead."
We welcome the improvements that HM Treasury (the Treasury) has made to the quality, coverage and timeliness of the Whole of Government Accounts (WGA) since the previous Committee reported in 2014.
Now in its sixth year, the WGA provides an important insight into the public finances and shines a light on significant areas of government activity such as clinical negligence.
We consider it a vital tool for holding the Treasury and the Government to account but there is more to do to make the WGA more useful to the Government as well as to Parliament and the public.
More information needed on significant movements of money
The WGA needs to be published more quickly after the year-end and include more information on the reasons for significant movements on the balance sheet and on where public money is going.
As we enter a period of economic uncertainty, it is essential that the Treasury can understand and get a grip on the financial risks highlighted in the WGA and be clear about the impact that the Government's decisions have on the short- and long-term financial position.