The government published its 9th Whole of Government Accounts (WGA) last week, covering the financial year ended 31 March 2018. The WGA provides a comprehensive financial report on the UK public sector, consolidating the financial results of over 8,000 organisations across the public sector, including central government departments and agencies, devolved administrations and local authorities.
The WGA is prepared in accordance with International Financial Reporting Standards (IFRS) and is similar to a listed company annual report – unlike the fiscal numbers used in the Budget that are based on a different set of rules.
Although revenue was up by £40bn, expenditure on public services was up by £54bn and other expenditure by £100bn, leading to an accounting loss of £212bn, £114bn more than in the previous year. This was partly driven an additional £78bn for nuclear decommissioning and £11bn more for clinical negligence, which together have contributed to the £255bn increase in public sector liabilities over the course of the year.
The good news is that the UK is one of a select few countries that prepare comprehensive financial statements in accordance with accounting standards. The government is to be commended for its transparency in publishing the WGA each year, albeit at 14 months after the year-end there is still a lot to do to meet its target to bring this down to 9 months within the next two years.
The bad news is the picture of the public finances presented in the WGA, with public sector assets of £2.0tn significantly outweighed by liabilities of £4.6tn, over £165,000 for each household in the UK. This illustrates the long-term financial context that constrains the government as it attempts to deal with near-term economic uncertainty and more immediate pressures on public spending.
For ICAEW’s analysis of the WGA 2017-18, click here.