News and Views‎ > ‎

"Devolution of tax and spending requires structural changes in how those finances are managed"

posted 24 Jan 2016, 06:35 by Peter Webb   [ updated 18 Mar 2016, 03:13 ]

1 Those leading UK government have been  handicapped without a financial system with bad consequences. Now "Devolution of tax and spending requires structural changes in how those finances are managed".  And an instructive impasse is encountered with Surrey County Council on a fundamental and related FOI question of democratic accountability.

 2 Change of the kind required, 'unsung' but hopefully in hand, will have many widely rippling implications in such areas as Freedom of Information practicalities, tax simplification and even european inter-governmental channelling. But the subject's absence from political and even official governance discourse suggests insufficient appreciation.

 3 On 12th November 2008 Ashley Mote MEP(Independent) said in a published letter "The concept of "shared management" which leaves accountability in the hands of recipients of public funds, is not widely understood. Yet it is the primary cause of failure of the court (of auditors) to sign off the (European) accounts for the past 14 years. They never will until this is addressed". This followed Matthew's Elliott's (TaxPayers Alliance) pan-european letter of protest. The National Audit Office in a letter of 13th January 2009 effectively confirmed to me the similar UK position and the small step (my italics) represented by the then forthcoming leisurely installation of  Whole of Government consolidated Accounting.

 4 Surrey CC  fails the FOI question: "to whom, for what and how is the Council accountable ?". Paraphrasing, they say  at length: 'accountability  is to the public for all activity by providing access to the Constitution, all operating documentation and meeting records' (in lieu of formal Report aligned with elections). And they fail to realise that completion of the WGA pack is accounting to the Centre which on past evidence such as PAC minutes doesn't seem to recognise that either (The new CEO and CFO can presumably be excluded from that criticism). The widespread politicians' ignorance shows in a Guardian report on 16th December and the Scottish auditor general's call for consolidation and control. In their first budget with new powers they produce a debt on course to reach £50bn

 5 Echoing Ashley Mote I conclude that the Institution that is UK  government  uniquely and weakly leaves all centrally voted intentions to be carried out and resources deployed with no feedback loop for management or democratic discharge and renewal process. There are well-tried systems for that

Postscript, from STAG UPDATE of 15th March 2016 sent out on the eve of the Chancellor's BUDGET.

The Government Accounts are very late:  in this age of 'just-in-time' supply chains and 'amazonian' next day delivery it takes financially illiterate government twelve months to make up its accounts (WGA - Whole of Government consolidated Accounts). That is useless for  running the public finances. It is  grossly out of phase with "the Budget" (tax-raising). Each day of delay diminishes the actionable value of this 'scoreboard'. Why is the Treasury tolerated ? Not only that but a top to bottom and back financial system requires the WGA to incorporate the WGB (income and expenditure budgets). Eight years ago The NAO told me that WGA would commence for 2009, and budgets in 2010. They didn't and in any case a 12 month lead time readiness for 1st April makes no sense. Modern industrial etc usage is for the plan (budget), warts and all, to be the comparative yardstick once it has been approved for execution. I have questioned the Treasury and destroyed its defensive excuse with 'how to do it' tips (as attached)

The government "deficit" is only the  difference between cash receipts and payments excluding such as 'bought not paid for'.  The annually accumulating net expenditure deficit exceeds that net cash outflow.

That bad situation is compounded: The law that has been passed to "balance the books" ( a zero cash receipts and payments deficit in government speak) by 2021 and thereafter in "normal times"  is meaninless,  and doomed. Think about it: take devolution, decentralisation, "northern powerhouses", Local Enterprise Partnerships and so on  -  unconsolidated devolved and decentralised 'overdrafts' put UK plc finances out of control. "   The Scottish 'overdraft' in 2014-15 is reported as £15bn. Investment, and borrowing for that, also needs attention. Overdrafts are OK given pre-arrangement and a repayment schedule but only if consolidated in a potentially solvent master plan. Relativity of debt to GDP is for statisticians and economists. And therein lies the terrifying government flaw.