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Government Losing Control Over Public Spending, Report Warns

The method used to track state expenditure is now ‘increasingly unreliable and incomplete’, reports David Hencke

Boris Johnson and Liz Truss visit GKN Aerospace. Photo: Andrew Parsons/10 Downing Street

Government Losing Control Over Public SpendingReport Warns

The method used to track state expenditure is now ‘increasingly unreliable and incomplete’, reports David Hencke

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The Government is losing control over managing and recording public expenditure in Whitehall, local government and the devolved nations, a new report reveals today.

The Commons’ Public Accounts Committee found that Boris Johnson’s plan to cut 91,000 Civil Service jobs was not based on any Whitehall plan and that the Treasury has done no work on this staff-cutting agenda – leaving the job to individual departments, which have yet to produce a single plan.

The entire Whole of Government Accounts (WGA) – which pulls together the £900 billion spent every year on public services and covers 10,000 public organisations – is a tool used by the Treasury to keep a grip on public spending. It is now described by MPs as “increasingly unreliable and incomplete”.

Their findings come as Chancellor Kwasi Kwarteng and Prime Minister Liz Truss are facing an economic crisis over their unfunded mini budget – a lack of confidence in their handling of the economy having spooked the markets.

The WGA for 2019-20, published five months late partly due to COVID, now shows that the Treasury does not have the full picture of audited public expenditure across the country.

“We still desperately need to see the big picture as the Government balances one massive intervention after another – from the pandemic response to the interrelated energy, climate, and cost-of-living crises we face now and into the future,” Labour’s Meg Hillier, chair of the Public Accounts Committee, said.

“The public also deserves a clear and transparent record of the full costs and liabilities that generations of current and future taxpayers have been committed to.”

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The report reveals that collection of data by the Treasury was delayed by yet another Whitehall computer failure – relying on a new computer system called OSCAR II but never testing it before it went live.

“The Treasury failed to anticipate a number of significant problems that arose during implementation,” the report states. “Setbacks – which included issues with data submission by component bodies, incomplete and inaccurate report outputs, and various performance issues – took the Treasury significantly longer than would be expected to understand and resolve.”

The situation was compounded through difficulties in getting auditors to check local council accounts. As a result, 45% of local government audits were not completed on time. The WGA report was ultimately published with 23 councils having no audited accounts available at all.

The report also highlights the fact that the Treasury is not tracking the huge cost of the pandemic – relying instead on the National Audit Office. MPs are critical of this.

“Providing a more comprehensive assessment of the impact of the pandemic on the level of fraud and error against the Government should be a focus going forwards, for example by including estimates of NHS procurement fraud,” the report says.

It concludes with a stark warning about the lack of information compared to the accounts expected from businesses: “The asset and liability split reported in the WGA shows total assets of £2,138.5 billion and total liabilities of £4,972.7 billion. In a commercial organisation this would indicate that it was insolvent. Although this is not the case, there is currently no narrative to explain this.”

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