Financial accountability is central to British democracy. Parliament’s ultimate authority rests, in part, upon its power to refuse the executive money and to hold the Government to account for its use of that money. Parliament therefore needs to know whether the executive has used public money for its intended purpose, and how effectively the Executive has spent the money Parliament assigned to it. To do this, Parliament needs credible and accessible information. Internally, the Government also needs to understand how effectively it spends and prioritises its spending.
In 2017, our predecessor Committee published a comprehensive Report about the information provided to Parliament in Government accounts and the information that the Government itself uses for its internal management. Our predecessor Committee found that the information provided to Parliament through government annual accounts does not enable effective Parliamentary scrutiny and, within government, management information is not adequately used.
The Government’s Response to our 2017 Report is almost a year late, and announces a government review. This unusual response underlines how much needs to change in respect of government accounting. We regret the Government’s failure to respond on time and in detail.
Our predecessor Committee’s central recommendation was that financial information in Government had four purposes: to maintain and ensure the House of Commons’ power over the Government, to enable the public and Parliament to assess the value for money of the delivery of public policy, to provide a credible record that can be relied upon externally and internally to provide ministers and officials with the information they need to run departments. For example, to improve the scrutiny of the value for money of the delivery of public policy, it recommended that the annual accounts should include the costs of policies, programmes and projects (rather than only by organisational unit, which is so much less meaningful). It recommended that the Government continue to focus on improving its management information and that its use should be integrated into departmental decision-making. These recommendations remain radical. Government accounts would be compiled on the basis of the interests of potential users—such as of citizens and Parliamentarians—rather than just to satisfy accountants; and the Civil Service would have to adopt a more data-led approach to managing the public sector using management accounts. These changes are necessary for both the democratic government and meaningful accountability of spending and programmes, as well as for more efficient management of public services.
However, PACAC welcomes the Government’s endorsement of several of the 2017 recommendations about the key purposes of accounts. The Treasury needs to transform their general endorsement of our 2017 findings into concrete guidance to departments.
We also welcome the Government’s decision to conduct a review of government accounts based on our 2017 Report.
We have set out in this Report our expectations for that review, including its timescale, membership and some of the subjects we believe it should address. We await the Treasury’s acceptance of these conditions and we expect the review to lead to fundamental change to the way that accounts both inside and outside Government are and can be used. This review needs to show that the Government is rethinking its approach, or it will be failing to take account of the evidence which backs PACAC’s 2017 report. Also, the Government has rejected recommendations that accounts explain whether government promises were met; that performance data in annual reports should be independently checked; and for the publication of more useful financial data with Single Departmental Plans, more clearly showing each department’s main priorities. This should be reconsidered by the review.
Published: 27 June 2018