Forget the “£22bn black hole” mentioned by Reeves; this financial gap might be significantly larger. Today, l consider whether we are facing substantial bills and potential insolvencies.
Looks like only 10% of local authorities in England managed to submit their audited accounts to HM Treasury for the previous year. The other 90% are probably still trying to find the missing receipts from their office couch cushions!
For the first time in history, the Auditor General has declined to approve the United Kingdom’s public accounts, raising concerns about the accuracy and transparency of government financial reporting.
This unprecedented decision raises significant concerns about financial transparency and accountability within the government. The lack of approval suggests potential discrepancies or issues in financial reporting, prompting questions about how public funds are being managed. Stakeholders, including taxpayers and policymakers, are likely to demand explanations and corrective measures. This situation underscores the importance of rigorous auditing processes to ensure that public spending is both transparent and efficient, safeguarding the public’s trust in governmental financial management. Moving forward, it will be crucial for the government to address these issues and restore confidence in its financial practices, however, to be quite honest can anyone see this incompetent government addressing this problem in any sensible way?
Did the Auditor General spill the beans or just rearrange them? What exactly did they say?
The Auditor General emphasized significant issues in financial management, particularly pointing to the growing public sector net liability, which has increased substantially over the past year. Concerns were raised about the sustainability of public finances, with specific attention to the rising costs of pensions and social care. Additionally, the report criticized the lack of transparency in certain areas of government spending and called for improved oversight and accountability measures to address these shortcomings. The findings underline the urgent need for a more strategic approach to managing the country’s financial challenges.
“I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.”
- The Comptroller and Auditor General of the National Audit Office, Gareth Davies, 22 Nov 2024
This lack of certification raises questions about transparency and accountability in financial management. It could indicate potential errors, mismanagement, or discrepancies that may affect public trust. As stakeholders, taxpayers have a right to demand clarity and assurance that their contributions are being managed responsibly and effectively.
The ‘Whole of Government Accounts’ (WGA) is supposed to consolidate the accounts of over 10,000 public sector bodies, including central and local government and public corporations such as the Bank of England, to provide the most complete and accurate picture of the UK’s public finances. This time it doesn’t.
The National Audit Office (NAO) has raised several significant concerns, which we outline below. Financial accounts cannot be reviewed or approved if critical information is missing, unaudited, or unavailable. The absence of such information raises serious questions about whether organizations managing substantial public funds have proper control over their operations. Below, I provide an overview to illustrate the scale of the issue.
The missing £194bn in the nation’s accounts
Estimated missing public expenditure for 2022/23 alone: £75bn
- 2018/19 : £0bn
- 2019/20 : £0bn
- 2020/21 : £55bn
- 2021/22 : £64bn
- 2022/23 : £75bn
Total over 3 years from 2020/21–2022/23 : £194bn
[Source: Whole of Government Accounts year ended 31 March 2023. Auditor General’s report, Nov 2024.]
England’s 426 local authorities are chiefly to blame, with their accounts in a particularly alarming state.
This lack of comprehensive data submission has raised concerns about transparency and accountability within local governance. It highlights significant gaps in reporting standards and adherence to audit requirements, which could potentially undermine efforts to assess and improve public services effectively. Addressing these issues will require stricter enforcement of reporting obligations and support for local authorities to meet these standards.
Only 10% (43 out of 426) of England’s local authorities submitted reliable data to the WGA. Among the remaining 90% that failed to comply, 46% (196 authorities) provided unaudited information, while 44% (187 authorities) failed to submit any data altogether.
- The Comptroller and Auditor General of the National Audit Office, Gareth Davies, 22 Nov 2024
The escalating issue with local authorities:
- Total number of English Local Authorities: 426
- Not audited by Local Authorities: 196 (46%)
- No data submitted: 187 (44%)
- Total English Local Authorities with no reliable data: 383 (90%)
Auditor General Condemns Lack of Public Ownership in NatWest Group
The Comptroller and Auditor General has taken a red pen to the nation’s public sector accounts, and let’s just say he’s not handing out gold stars. In his report, he’s particularly miffed about the Government conveniently “forgetting” to mention its hefty ownership stake in the NatWest Group — because apparently, owning a big chunk of a bank is just something that slips your mind!
“HM Treasury’s accounting policy regarding the basis of consolidation has not been applied consistently in the WGA. Significant bodies, including NatWest Group plc, have not been included in the accounts, even though they are classified by the Office for National Statistics as being in the public sector. I consider that these bodies should be included in the accounts in line with applicable accounting standards.”
This exclusion raises significant questions about transparency and accountability in government reporting. It’s like HM Treasury is playing hide-and-seek with the truth, but forgot to tell everyone else they’re playing. By omitting such a substantial financial interest, they might as well be trying to convince us that the banking sector is just a small piggy bank in the corner of the room. Critics argue that this lack of disclosure prevents a full understanding of the government’s financial commitments — because apparently, we’re supposed to guess how much taxpayers are on the hook for like it’s a round of financial charades. Furthermore, it highlights the need for clearer guidelines on what qualifies as material information in public accounts — because if billions in assets don’t count, what does? The public deserves a comprehensive view of how their money is managed, especially when it involves high-stakes investments like NatWest Group. After all, it’s our money; we’re not just funding a government-sponsored mystery novel.
During the time period under examination by the National Audit Office, the NatWest Group became embroiled in a serious controversy involving allegations of de-banking Nigel Farage, the leader of the Reform UK party. This incident raised significant concerns about the treatment of political figures by banking institutions and sparked widespread public debate regarding financial practices. As a result of the backlash, Dame Alison Rose, the CEO of NatWest at the time, resigned from her position amid growing scrutiny and calls for accountability.
Furthermore, it is important to note that Mr. Farage may find it particularly noteworthy that the National Audit Office, which is responsible for ensuring the proper use of public funds, had excluded any oversight regarding the NatWest Group’s ongoing part-public ownership during this troubling affair. This exclusion raises important questions about the transparency of financial institutions that are partially owned by the government and the implications for public accountability.
The Auditor General has raised critical concerns about HM Treasury’s accounts that cannot be overlooked. Here are key criticisms that demand immediate attention:
1. Inconsistent application of accounting policies.
2. Underlying qualifications within statutory audits.
3. Consolidation of components with non-coterminous year ends.
These issues, while technical, have far-reaching consequences. One pressing example is the alarming trend of councils investing heavily in property and utility portfolios, only to face significant financial losses. This is clearly a scandal that warrants urgent scrutiny, and as further information comes to light, it will become even more evident. The Auditor General asserts that “the impact is known to be material,” with infrastructure assets held by local authorities standing out as a particularly concerning example.
The British public contributes a significant portion of their earnings through taxes and local authority bills, all aimed at sustaining essential public services. They rightfully anticipate that these hard-earned funds will be allocated judiciously and that there will be complete transparency and accountability regarding how their money is spent.
What we have uncovered is, frankly, a national scandal of alarming proportions.
The audit report from the HM Comptroller and Auditor General reveals serious and troubling issues that demand immediate attention. In a striking move, he has been compelled to deny certification of the UK’s public sector accounts. This decision, based on documents submitted by HM Treasury to the National Audit Office, suggests that the accounts do not provide an accurate or fair reflection of the nation’s financial health.
This situation should raise red flags for everyone, considering it involves the staggering sum of over £1.2 trillion of public money being managed by the government in the most recent fiscal year. Adding to the concern is the C&AG’s forewarning that he sees little likelihood of improvement in the coming year, which could result in yet another unfavourable assessment. It is noteworthy that this situation marks an unprecedented moment in history — the first instance where the National Audit Office has been unable to endorse the public sector accounts of the country.
Are we teetering on the edge of fiscal mismanagement similar to that seen in the European Union?
For years, the EU’s financial statements have received a “qualified opinion,” despite the EU Commission’s attempts to project an image of fiscal soundness. As I have highlighted in previous discussions, this portrayal is misleading at best. The last thing British citizens should have to endure is a situation where their public sector accounts are mired in inconsistencies and lack the rigorous scrutiny they deserve.
