ICAEW: Government accounts show need for financial discipline

THE STATE of the public purse in the latest Whole of Government Accounts report exposes the need to impose greater financial discipline, the ICAEW claims.

The report, assessing the government accounts for the year 2012/13, found the make-up of the intended £126bn of consolidation measures “is not clear”.

The Treasury plans to save some £20bn from welfare savings, £20bn from reducing the public sector workforce, £6bn from pay restraint, and £5bn from increasing pension contributions from public sector workers over the spending review period.

Currently some £250bn of over £700bn public expenditure – on state pensions, health, schools and overseas aid – is protected from spending cuts and tax receipts continue to be well below forecasts, according to the Public Accounts Committee, which published the report.

ICAEW public policy manager Sumita Shah said the report “reinforces the need for greater financial discipline in Whitehall”.

“With further cuts to the public purse coming in the next parliament, regardless of who is in charge,” she added. “It is imperative that there is someone at the cabinet table with responsibility for carrying out a rigorous balance-sheet analysis of all income and expenditure. Only then will the next government be in a position to truly fix our public finances and deliver value for money for the taxpayer.”

Public Accounts Committee chairwoman Margaret Hodge highlighted the need for greater oversight from the Treasury over some government departments’ compliance with pay restraint.

“The Treasury sets the framework for public sector pay but has been slow to exert its direct control over decisions taken by the wider public sector when setting remuneration packages,” she said.

She added off-payroll arrangements across central government still occur too often and have yet to be tackled throughout the wider public sector, with 2,214 new ‘off-payroll’ arrangements within central government in 2013/14. In 27% of those cases, no assurances were sought over the individuals’ tax arrangements.

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