PracticePeople In PracticePutting the wrongs to right

Putting the wrongs to right

Imagine the outrage if private sector firms were allowed to set their own accounting standards. There would be annoyance in the Square Mile.

By the same token, government should not be able to choose its own accounting principles. For example, it is accepted practice for the government to decide whether or not it should recognise liabilities. This is wrong.

So is the government’s ability to change the definition of public spending at will. In April shadow chancellor Michael Portillo set up a Shadow National Accounts Commission: a series of distinguished experts in the field of public accounting.

Chaired by Sir Bryan Carsberg, the SNAC’s remit was to examine how a future government could introduce independent and transparent criteria for the presentation of the UK’s public finances. The report was published this week, and its recommendations will form the core of our future policy.

The establishment of an independent National Accounts Committee will be one of the first acts of a new Tory government. The NAC will remove the discretion from the government to distort the national accounts in ways that it deems politically advantageous.

As well as pension liabilities, a subject for the NAC’s attention will be the status of projects under the Private Finance Initiative and Public-Private Partnerships. The NAC will also take a close look at the way the current government regards benefits such as the working family tax credit rather than social security payments.

The NAC will also provide a dose of long-termism by spelling out the financial implications of policy decisions.

Under the current government, the need for such transparency is increasingly obvious. The national accounts are year-by-year falling into disrepute.

Of course, the chancellor would still have total flexibility in policy making, but would have to take account of the commentary provided by the NAC, in a way that previous chancellors have not.

It would be a brave chancellor who consistently failed to consider the advice he was given. Especially if he then turned out to be wrong.

Oliver Letwin is shadow chief secretary in the Conservative Treasury.

Related Articles

Is inefficiency stealing your time and money?

Accounting Firms Is inefficiency stealing your time and money?

6m Emma Smith, Managing Editor
CIMA elects new president

Institutes CIMA elects new president

6m Emma Smith, Managing Editor
Transparent currency trade: How to achieve costs visibility

Governance Transparent currency trade: How to achieve costs visibility

6m Emma Smith, Managing Editor
Introduction to KPMG UK’s new leadership team

Accounting Firms Introduction to KPMG UK’s new leadership team

6m Emma Smith, Managing Editor
EY appoints head of UK Infrastructure Asset Intelligence practice

Accounting Firms EY appoints head of UK Infrastructure Asset Intelligence practice

8m Emma Smith, Managing Editor
FRP Advisory expands operation with new office, partner appointments

Accounting Firms FRP Advisory expands operation with new office, partner appointments

10m Emma Smith, Managing Editor
Magma Group announces merger, partner promotions

Accounting Firms Magma Group announces merger, partner promotions

10m Emma Smith, Managing Editor
MHA MacIntyre Hudson advises on management buy-out

Accounting Firms MHA MacIntyre Hudson advises on management buy-out

10m Emma Smith, Managing Editor