The Government Actuary’s Department (GAD) has worked with HM Treasury (HMT) on the Whole of Government Accounts (WGA) which were published yesterday. This work included providing additional figures for the largest government liabilities on an undiscounted basis and a National Accounts basis.
The WGA provides a view of the government’s aggregate financial position and performance. It consolidates the UK public sector in line with International Financial Reporting Standards.
Financial planning
WGA is made up of over 10,000 bodies, across the public sector including central government departments, the NHS, local authorities, devolved governments, academies and public corporations.
Accounting standards require liabilities to be shown in ‘present value’ terms, discounting future payments such that they are shown in terms of their equivalent value today. This supports decision-making and financial planning, and it is standard practice in investment appraisal and financial reporting, in both the public and private sectors.
Impact of discounting
Changes in discount rates can have a material impact on reported liabilities. The Public Accounts Committee requested that the WGA should include additional information for the largest liabilities so that readers can understand how the liabilities are changing from year to year, other than as a result of discount rate changes.
GAD worked with HM Treasury’s WGA team to improve transparency on the impact of discounting in relation to public sector pensions and clinical negligence.
Our work relating to public sector pensions meant that the individual pension schemes did not need to undertake additional calculations, enabling the analysis to be delivered efficiently. The corresponding figures on the provision for clinical negligence were produced through close collaboration with NHS Resolution and the Department of Health and Social Care.
The GAD approach to the analysis ensured consistency across the major liabilities.
Audit and scrutiny
The WGA is independently audited and the Public Accounts Committee examines the accounts each year. The WGA is also used to support longer term fiscal analysis by other organisations such as the Office for Budget Responsibility.
