BusinessCompany NewsNew accounts for spending review

New accounts for spending review

Gordon Brown's three-year government spending review, announced yesterday, was the first set of spending plans to be produced using the resource accounting method.

This method is designed to ensure the full economic costs of government activity are measured in a way similar to the private sector by including non-cash costs and measuring the full cost of holding and using assets.

It the first time the presentation of government figures has changed since the 19th century.

Previously government spending was tallied up using the more traditional cash accounting method. The benefit of resource accounting is that it puts the government on a more even keel with commercial practice and ensures that assets are more equitably devalued over their lifetimes.

Most recently parliament switched to resource accounting. In its recent resource accounting report, the Public Accounts Committee said ‘sufficient progress’ had been made ‘in the implementation of resource accounting’.

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