The influential Commons Treasury Committee has criticised the Office of National Statistics and the comptroller and auditor general for causing confusion over the accounting treatment of Network Rail's £21bn loan.
Link: Bourn: Network Rail loan should be in accounts
A special report followed the disagreement between the ONS and Sir John Bourn, head of the National Audit Office, resulting in NR being included in the private sector – for statistical purposes – in the National Accounts, but in the public sector for accounting purposes,
The MPs said this was ‘confusing to the public’ and made it clear that the Whole of Government Accounts, not due to be published until next year (2003/2004) must ‘provide greater transparency by bringing information currently available in different places together to form a picture of the government’s financial accounts as a whole’.
They ruled: ‘We support the proposal that contingent liabilities, such as the £21bn of support to Network Rail, be disclosed in these accounts.’
The MPs did express concern that there was ‘the perception of a conflict of interest’ in ONS relying on advice from accountants within a department in reaching their conclusion on whether government guarantees in a particular case were actual liabilities to be included in the National Accounts or contingent liabilities and excluded.
They said that in future this advice should be made subject to NAO confirmation.
The committee said the extent of contingent liabilities is now of such a significance to the state of public finances that they recommended that the existence of all contingent liabilities should be stated in the Treasury’s Red Book with an estimate of the proportion which may mature.
The report follows one issued by the Treasury Committee, on the date of chancellor Gordon Brown’s pre-Budget Report in which a leading accountancy academic urged greater transparency over the extent of national liabilities.
The committee warned in that report that the way the economy is being run could threaten future growth and prosperity.