Accounting for Democracy Revisited: The Government Response and Proposed Review Contents

1Accounting for Democracy

Our Report

1.In May 2017, our predecessor Committee published a report called Accounting for democracy: making sure Parliament, the people and ministers know how and why public money is spent. It took oral evidence from Sir Ian Cheshire and Amy Stirling, non-executive directors at the Cabinet Office, Will Moy from the fact checking organisation Full Fact, Professor Malcolm Prowle and Professor Sheila Ellwood, the Comptroller and Auditor General, Kate Mathers, Director of Financial Audit Practice and Quality at the National Audit Office, John Pugh MP, Craig MacKinlay MP, David Gauke MP the then Chief Secretary to the Treasury and Treasury officials. Our predecessor Committee received written submissions from a further 27 organisations or individuals. The Report also took account of recent scholarship on the use and importance of Government accounting.

2.The Report covered both the published departmental annual reports and accounts and the unpublished management accounts. In the latter case, we focussed on the Single Departmental Plans. The Committee’s Report did not cover the Whole of Government Accounts or the Estimates and we worked closely together with the Procedure Committee in its inquiry into the Estimates process.1

3.The Report argued that financial information within government had four purposes:

a)“To maintain and ensure the House of Commons’ control of Government spending, enabling, in particular, the House of Commons to hold the Government accountable for its spending;

b)To enable the public and researchers (both in civil society and Parliament) to understand and consider the value for money offered by public spending, so that they can make decisions about the effectiveness, efficiency and economy of particular policies or programmes;

c)To provide a credible and accurate record which can be relied upon;

d)To provide managers inside Departments (including both Ministers and civil servants) with the information that they require to run the Departments and its agencies efficiently and effectively”.2

4.The Committee made several recommendations to achieve these aims. The rest of this chapter sets out how our predecessor Committee learned how the accounts, currently published, could be strengthened to ensure that they more adequately met the ambitions defined in its Report.

5.Our predecessor Committee made a series of recommendations to improve the accountability to Parliament through the accounts. Departments should “continue to report on spending against the estimates” and should be “adjusted to reflect any changes” to those estimates.3 They should also reconcile their current spending against that envisaged in the most recent Spending Review.4 The accounts should enable Parliament to scrutinise “how actual spending and activity compared to financial commitments announced to Parliament, in press releases or through the media to spend on or cut particular programmes or policy priorities”.5 This would involve an “audited statement reconciling… the financial commitments made with what eventually happened.”6

6.Our predecessor Committee’s 2017 recommendations would improve the ability of Parliament and the public to scrutinise the value for money of government policies. The 2017 report said that Departments should “report not just by organisational unit but by policy area” with “both performance and financial data” included.7 This principle should also be extended to significant programmes and projects within departments.8 Departments should report “the full public sector unit costs (on a consistent basis) for key services”.9 They should also publish “time series and trend analysis” of “income, assets, liabilities and expenditure” over a “rolling five years past”.

7.The Committee said that this analysis should also include “projections of future spending… [for] the remainder of the Spending Review period”.10 The Committee recommended that accounts be made more useful for analysis by making the Financial Reporting Advisory Board (FRAB) “more representative of the consumers of accounts and more attuned to user requirements”.11 The Committee encouraged Departments to consult Select Committees and consult “specialist think-tanks and researchers” about the contents of the accounts.12

8.The Committee recommended improvements in accessibility to support its recommendations about value for money and Parliament accountability. They argued that the National Audit Office and the Scrutiny Unit (a unit within the Committee office which offers specialist advice to select committees especially, but not exclusively, on financial matters) should “offer training” to Members of Parliament and those who support them in scrutinising these documents.13 The Committee recommended that accounts follow best statistical practice and name a contact who would be able to explain their contents.14 Departments should also improve the electronic accessibility of the documents, by making them machine readable, making use where possible of “modern technology” and writing the accompanying narrative to the accounts in “plain English”.15

9.The Committee argued that the accounts can only be useful if they are credible. The Committee endorsed the current audit arrangements but called for more disclosure about the number of accounts that had been qualified each year and the level of materiality used by the National Audit Office to perform their audits.16 The Committee found that there was considerable distrust in the presentation of information in the annual report (amongst academics, the Government’s auditors and other commentators), especially the performance data included. The Committee therefore recommended that accounting information be brought under the UK statistical code and that “the performance data and commentary in the accounts” should be subjected to “an authoritative audit” to ensure that the public can trust it.17

10.The Committee noted that management information in the public sector had been “poor for a number of years” and that this “has consequences… for the success of individual policies and the success of any overall fiscal policy”.18 The Committee called on the Government to ensure that the commitment of senior leaders to good management information should be “included in the appraisal of the work of Permanent Secretaries and Executive Departmental Board members”.19

11.The Committee welcomed the recent commitments by the Cabinet Office and Treasury to use Single Departmental Plans to strengthen the Government’s capability to plan.20 The Committee encouraged the Cabinet Office and Treasury to move forward with their Financial Management Review plan, including “better information on the costs of public services and… realistic forecasting”.21 The Committee called for the publication of the unpublished Single Departmental Plans so that “Parliament is informed of Departmental progress”.22 The Committee also called for Annual Reports to report back more consistently on Single Departmental Plans.23


1 Procedure Committee Authorising Government expenditure: steps to more effective scrutiny Fifth Report of Session 2016–17 HC 190 (April 2017). The Government responded to this report in January 2018. Government Response to the Procedure Committee’s 5th Report of Session 2016–17: Authorising Government expenditure: steps to more effective scrutiny Session 2017–19 HC 739

2 Public Administration and Constitutional Affairs Accounting for democracy: making sure Parliament, the people and ministers know how and why public money is spent Fourteenth Report of Session 2016–17 HC 95 (April 2017) p. 4

3 Public Administration and Constitutional Affairs Accounting for democracy: making sure Parliament, the people and ministers know how and why public money is spent Fourteenth Report of Session 2016–17 HC 95 (April 2017. p. 31`

4 ibid. p. 33

5 Ibid. p. 33

6 ibid. p. 34

7 ibid. p. 19

8 ibid. p. 20

9 ibid. p. 21

10 Public Administration and Constitutional Affairs Accounting for democracy: making sure Parliament, the people and ministers know how and why public money is spent Fourteenth Report of Session 2016–17 HC 95 (April 2017) p. 21

11 FRAB is a body which advises the Treasury on the implementation of accounting standards in the public sector. Public Administration and Constitutional Affairs Accounting for democracy: making sure Parliament, the people and ministers know how and why public money is spent Fourteenth Report of Session 2016–17 HC 95 (April 2017) p. 26

12 ibid. p. 26

13 ibid. p. 36

14 ibid. p. 36

15 Public Administration and Constitutional Affairs Accounting for democracy: making sure Parliament, the people and ministers know how and why public money is spent Fourteenth Report of Session 2016–17 HC 95 (April 2017). p. 24

16 Ibid. p. 40, 42

17 ibid. pp. 44–5

18 ibid. p. 48

19 Public Administration and Constitutional Affairs Accounting for democracy: making sure Parliament, the people and ministers know how and why public money is spent Fourteenth Report of Session 2016–17 HC 95 (April 2017) pp. 49–50

20 ibid. p. 51

21 Ibid. p. 53

22 ibid. p. 57

23 ibid. p. 58




Published: 27 June 2018