Even cash, a government lifeblood, can, as critics say, be distorted by numerous devices such as leasing and other off balance sheet wheezes.
These achieve the Treasury’s perennial aim of keeping down what used to be called the public sector borrowing requirement to create a so-called ‘war chest’ for tax cuts.
Now all this is to change, or is it? Two approaches are on the table. The first is the Treasury’s own resource accounting, starting with central government accounts and then whole of government accounts. This will result in, what is promised to be accounting to proper private sector accounting standards ‘adapted where necessary for government’, whatever this means.
The other approach, less clear so far, is what is being pushed by the Tories, again reaching towards adherence to commercial style accounting standards.
The question is what’s it all for? Promoting transparency and honesty in accounts of any kind has to be a proper aim.
So does the provision of information which helps towards better decision.
And so does the concept of consistency and external audit over time so that while, as with all accounts, there is no such thing as a single right answer, at least we can rely on the numbers and see the direction of march. It ought to be right.
But it must be done right. After all a good deal of modern accounting does go on already in agencies, health trusts and so on. And to good standards.
The question is whether ‘consolidation’ at high level can be made genuinely useful, and not just an elegant accounting conceit. This is not so clear at the moment.
Sovereign states are just not like commercial companies; outputs and objectives are multi faceted and enormously complicated.
What is being looked for is an almost impossible marriage, on a credible and consistent basis, of accountancy, economics and politics. It’s not been explained to us that either of the present approaches will achieve this. More thought, or at least certainly more explanation, is needed.
This is not an ideological issue; it ought to be one of which a wide consensus can be reached.
The Treasury should take on board other peoples’ ideas and do more to explain what the whole exercise is about and what it is going to achieve.
- Sir Peter Kemp is a former senior civil servant and a member of the ICAEW.
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