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Tens of Billions in Government and Council Pandemic Spending Unaccounted For as Local Authority Auditing Scandal Worsens

A new report by the Public Accounts Committee lambasts the Treasury for being ‘too passive’ in chasing up the cash, resulting in inaccurate figures

Chancellor Jeremy Hunt. Photo: PA/Alamy

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Some £55 billion spent by the Government and local councils during the pandemic year remains unaudited and unaccounted for two years later, a new report by MPs has revealed.

The House of Commons’ Public Accounts Committee lambasts the Treasury for being “too passive” in chasing up the cash which is resulting in inaccurate figures being published by Whitehall and making it difficult for ministers to plan future spending. 

The Treasury’s report on the latest Whole of Government Accounts for 2020-21 – an annual report comprehensively listing all public expenditure for each financial year – was published 27 months late and is incomplete, inaccurate and too long delayed, according to the committee.

It also raises the question of whether the Government will ever be able to account for the £372 billion spent by ministers on the pandemic because the Treasury plans to end monitoring of Coronavirus spending next year.

This will particularly affect money loaned to private industry – such as through the Bounce Back loan scheme – and money loaned to the Cultural Recovery Scheme worth £1.57 billion to save theatres entertainment venues and national heritage organisations from bankruptcy because of the lockdown. All these low-interest loans did not have to start to be repaid until this year and are due to be completely paid off by 2040.

The report reveals that the number of public bodies providing no data is rising, making future reports even more inaccurate unless action is taken.

The previous year, 137 bodies did not submit data – the number has now risen to 155. For the first time, two large public pensions schemes – the Scottish NHS and Scottish Teachers – did not submit any data. They have liabilities of more than £135 billion between them. The Local Government Pension Scheme was late in submitting accounts.

Failure to audit local authorities – already highlighted as a growing scandal by Byline Times – forms a large part of the problem.

Half of all Local Authorities in England at Risk of Going Bust Next Year

MPs have warned Michael Gove that large numbers of councils could soon be in severe financial distress

The previous year, 630 authorities – some dating back to 2015-16 – did not submit accounts that had been independently audited. Some have now submitted a combined account for two years which may not be accurate.

The committee warns that the system of local auditing – which is close to breaking point – is resulting in poorer quality data for central government and that this risks spreading to other sectors.

Just five of 467 local government entities met the statutory deadline for publication of their 2022-23 audit opinions. This week, after it was revealed that councils were £98 billion in debt, the Government provided a £500 million bail-out to help them survive.

Labour’s Dame Meg Hillier MP, the committee’s chair, said:  “If the Whole of Government Accounts didn’t exist, we would have to invent it. A high-level overview providing an overall snapshot of the nation’s finances, if produced accurately and reliably, could be both an essential resource for decision-makers and for scrutiny from Parliament and the public. The Treasury had made great progress on delivering this in a timely fashion but the delays in this report take us back years. 

“The Treasury needs to be far more front-footed in curating the WGA and following up with public bodies where data is missing. But this report further underlines our committee’s continued warnings of the crisis in local government finance, and the risks it poses to central government and other bodies.

“Performance in this area had continued to deteriorate at the time of our report, and a credible plan must be urgently implemented if we are to prevent the rot continuing to spread.”  

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