Treasury doesn’t function as modern finance ministry, claims ICAEW

HM TEASURY is in need of reform and restructuring if it is to effectively tackle the deficit, be more efficient in spending taxpayers’ money and empower political decision making, according to the ICAEW.

In 2015/16 the government expects to spend £756bn of public money to meet the delivery of public services, its financial obligations and invest in equipment and infrastructure.

In its report, Modern Finance Ministry, the ICAEW says good financial management and incorporating best practice from business is pivotal to managing expenditure on this scale and delivering value for money. In comparison to business, the institute suggests the Treasury does not currently have the same levels of financial management expertise.

The ICAEW also argues that it would help parliament in its scrutiny and oversight role if it there was a clearer set of criteria in forming and implementing policy against which the Treasury could be held accountable.

Among the institute’s suggestions is a much greater focus on what value the government gets for public money and whether policy outcomes are being achieved, giving the recent sale of the government’s stake in Royal Mail and Eurostar as instances where great oversight may have been warranted.

ICAEW director of public finance Ross Campbell said: “The chancellor recently warned of a ‘cocktail’ of serious threats facing the UK economy. It is therefore crucial that Whitehall and in particular, HM Treasury, is equipped with the tools to weather any storm which might be on the horizon. Getting the best outcome for the public finances in challenging times, means being supported by modern financial management.

“This government was elected on the promise to get public finances under control, reduce the deficit and chart a path to stronger finances. There is value in a debate about whether the government’s financial architecture can help deliver this outcome in the face of a number of challenges.”