Amyas Morse, the comptroller and auditor general removed two qualifications relating to third and fourth generation mobile phone licensing income and the accuracy of the reflection of schools assets since the 2013/14 accounts.
According to the National Audit Office’ report on the Treasury’s latest accounts, the quality and accuracy of the WGA is continuing to improve but the government could still make better use of the WGA for understanding the public finances.
Although the 2014/15 version of the WGA is the most complete picture of the public finances available with inclusion of Network Rail and the Pension Protection Fund, showing a broader range of the public sectors activities than ever before, Morse, has continued to qualify his opinion on the accounts owing to the scope of the WGA.
He highlighted that significant bodies such as the Royal Bank of Scotland are not included in the accounts, and the valuation of infrastructure assets such as the local authority road network and the rail network is yet to be aligned with the rest of the government’s assets.
The set of accounts show that the net expenditure deficit in 2014/15 increased by £6.3bn, to £152.0bn. This is a result of an £8.4bn increase in the estimated costs of provisions, which mainly relates to an increase in the liabilities for nuclear and oil and gas field decommissioning; a £7.5bn increase in net interest on pension scheme liabilities; and the impact of the triple lock policy on state pensions of £3.6bn.
However, these costs are offset by an increase in overall revenues from £652.9bn to £659.3bn, which, according to the NAO report, is largely due to an increase in VAT.
Within net expenditure, wages and salaries are broadly stable at £148.3bn compared to £148.2bn, due to staff numbers falling by 20,346.
According to the report, public sector net liabilities increased to £2,103.2bn in 2014/15, up 14.3% from £1,840.6bn in 2013/14.
This has mainly been due to increases in pension liabilities of £190.2bn and government borrowing of £78.4bn.
The report added that the Treasury is addressing the remaining qualifications and that there is a path to the removal of most of these qualifications in the coming years.
“The Treasury is improving the quality of the WGA, the completeness of information within it and its accuracy. As a result, I have been able to reduce the scale of my qualifications of the accounts this year,” Morse said.
“The WGA could, however, be a more powerful tool for understanding the public finances. It provides a unique perspective because of its reach and approach to measuring the government’s financial performance and position. Better analysis by the Treasury of the nature of the assets across the government’s portfolio, the extent and sources of liabilities and the financial risks it is exposed to, will help Parliament and the public to understand better the full range of the government’s financial commitments and its approach to managing them.”
The Treasury’s process for producing the 2014/15 accounts was affected by delays to the Department for Education’s financial statements this year. While improvements in the timeliness of the accounts will be crucial to the WGA’s development as a management tool, the Treasury is managing and controlling the process better.