Peter Webb On Tax

WHO WILL MEND UK GOVERNMENT ? (2)

GOVERNMENT ACCOUNTING   

Imagine: May 2013 LOCAL ELECTION RESULTS TO BE PUBLISHED ON 2^nd March 2015

That is the time it takes to produce the UK Whole of Government Accounts (WGAs) !

These, now in to their second year, are “a giant leap forward when compared with what was there before” and are “in the forefront internationally”. The Chief Executive of CIPFA commenting on the appalling PAC report (The redoubtable Margaret Hodge’s Public Accounts Committee) is being kind to the Treasury. WGA failed to get a mention in the budget 2013 documentation. Conventional consolidated accounts have been the norm in groups of companies since  time began. Yet the same Treasury defensively claims academic interest rather than operational integration, the true purpose.

The facts portrayed should be integral to the decision-action-feedback-decision loop which elsewhere is moving feedback inexorably in to real-time. As well as the discharge of accountability for performance their timeliness and quality is of the essence as data input to decisions for the future. For its forecasts and evaluations the OBR(Office of Budget Responsibility) depends on factual input for course correction. It was kept waiting 18 months for draft-only accounts. 4 months later still the Auditor General qualified his report. Normally the quality of forecasts depends on the analysis of variations between the  forecast to be updated and rolled forward, and ‘actuals’ fed back. ‘Actuals’ mean as just now, not in the dim and distant past since when much has changed.

It is not generally realised that there is a fundamental flaw at the heart of government management accounting and reporting. We have publicly protested at Brussels-led spending  whose accounts have still after 18 years not satisfied the court of Auditors. On 10^th November 2008 Matthew Elliott for the TaxPayers Alliance joined 8 of his European counterparts in signing a published letter protesting at inaccurate and audit-failed EU Accounts over 14 years (now 18). On the day following, MEP Ashley Mote’s answering letter explained that satisfactory assurance would never be attained because of “the concept of “shared management” which leaves accountability in the hands of recipients of public funds”. This immediately suggested to the undersigned that the UK hadn’t even started on its 14 year audit failure because, put another way,  ‘governments vote funds and then walk away’. Correspondence with the Comptroller and Auditor General (NAO) confirmed this and general fears about national government financial disciplines. While good intentions and improvements were stated in reply there unexpectedly came the news that it was intended for the first time to produce Whole of Government Accounts(WGAs), followed by budgets (WGBs). Called for by Parliament in 1995 the WGAs did not arrive, incredibly, until those for 2009-10 15 years later, and then only after 22 months delay in publication.   WGBs never materialised !

It has been suggested that other countries are more advanced. That seems to mean having, but not getting beyond, such as multiple area income taxes instead of simply just one. For the UK local funding theory destroys the link between local tax and local policy spending because muddled with equalisation (redistribution through grants), confiscation and precept.  

“Walking away” sets the tone for tax and spend.  Down in local government taxpayers are disregarded and disenfranchised. Nationally it is relied on that something will turn up in the form of increased economic activity. GDP at all costs is the cry notwithstanding that that includes non-productive government activity, the black economy, even crime. The cumulative circulation of money is spoken of as an unmitigated good even to the point of destruction of it’s exchange value. It all adds up to a net accumulated deficit of £1.1tn and rising currently by more than £120bn each year. Oh, look everybody. Where did that  come from ? It came from not keeping the score properly and because grandiose politics negligently trumps thrifty forward planning and sound management.

Care is required on urgently necessary decentralisation which is currently only talked about ad nauseam in such as the H o C Constitution Committee  or the debt and deficit  will become even more threatening and unmanageable. In 2005 Sir Michael Lyons was given, face to face,  a scheme for local government funding which provided for both macro control and decentralisation. It was disregarded. As to “shared management”  MPs (The Business, Innovation and Skills Committee) criticise the government’s “hands-off” approach to monitoring the performance of LEPs (Lord Heseltine’s local Enterprise Partnerships) “despite the fact that they are being given taxpayers’ money and are responsible for key areas such as local infrastructure, planning and job creation”

Surely the archaically titled Treasury should BE the OBR;  its OTS (Office of Tax simplification) should BE integral and deploy rather more than the present 6 people; should SET THE STANDARD and BE THE EXAMPLE for the discharge of accountability and management reporting at all levels; should SET THE STANDARD for government managerial infrastructure and deployment: only now are senior Civil Servants receiving training in project management; it is 50 years out of date. Why are Ministers powerless in the face of the Manderinate ? Why is the Cabinet Office, with eg its component the Major Projects Authority,  uneasily trying to fill the vacuum ? Is it not understood from experience-based thought experiment what domestic government is supposed to be about ? It is not now about fighting and paying for wars, or running an empire (with a few District Commissioners), but professionally managing its own responsibilities in the domestic sphere where an increasingly interventionist stance requires modern industrial systems and attititudes to cope with the progressive sub-division of labour in modern society.

Note: reference has been made to “gobbledegook” in the WGAs. Over time the art of communication has been lost in ever-more legalistic and jargon-filled detailing of the accounting simplicities of book-balancing, assets and liabilities and factual disclosure. That this has continued is itself damning evidence of Treasury failure. And where is CIPFA and the NAO in all this ?