National Audit Office Releases UK “Whole of Government Accounts” – Scary Big Numbers Abound

The UK’s National Audit Office recently published the annual (2014/15) “Whole of Government Accounts”. This 219-page document looks to capture all the financial information about the totality of the UK public sector, in the same sort of way that a private corporation would publish its annual report. It lacks a commentary on the “business” side of things though; this very much sticks to the numbers.

That’s not to say it isn’t fascinating for anyone interested in government, how the state spends “our” money, or other related issues. The first figure we looked at of course was the “Purchase of Goods and services” line on the “Revenue and expenditure summary”. That is £191.7 billion, up only £1 billion on the previous year, which looks like pretty impressive cost control. It has grown from £186.7 Billion in 2010-11, but that is only some 3% over five years. So we now have an answer when someone asks, “what is the total government procurement spend”?

Staff costs at £149.5 million, excluding pension costs, are actually £3.5 million lower than in 2010/11, an indication that “austerity” has bitten to some extent, although despite what you might think, benefits are actually £13 billion or 6% up over 5 years at £218 billion. Most of that increase has been driven by pensions because of the politically expedient but unfair triple-locked annual increases.

Other fascinating – and worrying data – covers, the net public sector pension liability for instance. That now stands at £1,493. That's not £1493.3 million – it is £1,493.3 BILLION. So that is equivalent to pretty much to the entire annual GDP of the country, or more than seven times as much as the entire public sector annual “procurement” spend.  It’s increased by £190 billion in the last year, more than twice as much as the 14/15 government deficit. Whilst you might consider some of the calculation of liability as somewhat technical, based on actuarial valuations, discount rates and so on, this is unfunded liability that will have to be met from current income in the future. Or pensioners will be disappointed at some point.

That raises another question about Francis Maude’s “achievements” in his time as Cabinet Office Minister, as he led a restructuring of government pensions. To be fair, he achieved some improvement, but it clear he failed to really sort out a fundamental and huge issue here.

We’re also facing total future obligations under PFI schemes (private finance initiative) of some £149.9 billion. That’s another fairly scary number, and just one of the reasons why the NHS is struggling to balance its books these days. The good news is that is at least declining, unlike pension liabilities, as contracts progress and annual service charges are paid, and not many new deals are signed.

Anyway, there is a lot more information on any and every aspect of government finances you can imagine. There must be a huge amount of work goes into this document, and no doubt it will be an invaluable source of information and reference for many.

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