Background
The financial environment for devolved nations is changing with devolved new tax and borrowing powers bringing about increasing autonomy with a commensurate need to strengthen accountability. This devolution of powers has created a situation where there are likely to be multiple sources of tax revenue and government spending statistics. Already there is a range of publications available from different government departments, which may be confusing to some users. There is a clear need for coherence in these existing statistics alongside the new statistics which will be introduced.
At the UK level we have in the Whole of Government Accounts (WGA), widely regarded as a world-leading development in public sector financial reporting. WGA has provided a step change in the ability of the government to understand and manage its financial position. The improved transparency provided by the WGA has helped the UK Parliament to scrutinise the effects of government policy better, aiding the work of the Public Accounts Committee and other parliamentary committees in holding the UK government to account.
At the devolved nations levels users do not have access to similar insights into the public finances that the WGA provides for the UK. We believe that devolved administrations need to be aware of, and manage, the net financial position. This is the difference between the assets they use to deliver vital public services such as healthcare and education, and the liabilities that purchasing or building assets create. The net difference between assets and liabilities (the net financial position) is a useful indicator of the overall financial position. Such a measure alongside informed commentary allows the key issues and risks arising from public sector assets and liabilities to be understood and managed. An investment statement is now a vital tool for holding modern fiscally responsible governments to account
What we plan to do and why
We will conduct extensive desk research looking at:
- The existing published devolved public finance statistics
- Existing data on the results of the Block Grant Adjustments to the Barnett formula and the consequences on devolved funding
- Comment in the public domain about the strengths and limitations of current statistics and data on devolved government funding
- Modern investment statements from advanced small nations such as New Zealand providing commentary accessible to the citizen in the street
We will engage with statisticians in both HM Treasury and in the nations and regions where there are significant devolved budgets and revenue raising capabilities such as London. Our purpose will be:
- to establish the plans that administrations have made to address people’s key questions and provide them with the insights about national and regional funding that will help them.
- Clarify administrations’ plans to help users easily find the statistics that they are looking for, and how they will be guided to go to the statistics that are most likely to answer their questions.
- Pursue with the HM Treasury their intentions for the regular publication of statistics about the workings of the Barnett formula in a single, coherent and consistent publication and the possible voluntary application of the Code of Practice for Statistics to these statistics as recommended by a House of Lords Select Committee
We will explore the appetite for Statements issued by the respective Devolved Administrations from time to time describing and stating the current value of the State’s assets and liabilities, as well as changes since the last statement and foreseeable changes in the medium term.
We will investigate with stakeholders what statistics might exist to produce the first national Investment statements and what statistics might need to be developed over time to meet people’s expectations. The kinds of stakeholders we wish to engage with include:
- Official independent forecasters such as the Scottish Fiscal Commission
- policy-makers in Devolved and Central Governments
- long-range infrastructure planners
- Economic consultants, researchers and academics
- Audit bodies both nationally and in devolved nations
- National investment bodies
- Regional and Devolved Nation based think tanks
- Media
- Business Bodies
- Parliamentarians and their research and library bodies
- Citizens with an interest in inter-generational equity and fiscal responsibility
We want to do this because transparent government accounts are a vital mechanism through which Parliaments, Assemblies and people can hold the government to account for the money it spends and the services it provides. The details on how devolved budgets are determined are already described as too opaque, which undermines accountability.
Despite the need for greater insight, historically the Treasury and the devolved nations published limited official statistics about devolved public spending. This is not to say that data has not been put into the public domain, however there is sometimes a fine line between increased transparency and ‘data dumping’. The latter can be inimical to transparency and good government. It is the task of government statisticians to produce official statistics which are intelligible, readily accessible, with objective and impartial commentary.
It is difficult to establish comparable levels of spending in England for devolved functions as they are different in each part of the United Kingdom. Clear, thorough and readily accessible data on public spending across the United Kingdom are not being provided.
What we want to happen as a result?
We intend to enhance the coherence and transparency of devolved statistics on public finances with a view to improving the statistics to help people make better decisions.
Further, we seek to improve the transparency and accountability over the investment taxpayers have made in the balance sheets of the devolved nations.
Timing
- Before the end of 2018 we will write to Chief Statisticians in the relevant jurisdictions. Our letters will set out the broad results of our review of coherence and transparency of their statistics on Government funding. We will also make any appropriate recommendations for improving the statistics to help people make better decisions.
- By the end of March 2019, we will publish our findings on ways to improve the transparency and accountability over the investment taxpayers have made in the future wellbeing of the people of the devolved nations.
If you are interested in contributing to our work or would like to receive an alert as more information becomes available, please get in touch.
Contact for more information: email Iain Russell or telephone 01329 447704
Related Links:
Systemic Review: The Public Value of Devolved Public Finance Statistics (May 2019)