In her comments, Dame Meg reflected on challenges arising from short-term thinking and issues in local audit. She also discussed how figures are presented and the challenge in scrutinising big-ticket spending items.
The event, on Wednesday 15 November, brought together delegates from ICAEW, the National Audit Office, Parliamentary Scrutiny Unit, Institute for Government, Resolution Foundation, Reform, GS1 UK and top accounting firms, as well as Cllr Chris White FCA, Leader of St Albans Council.
Attendees discussed how the UK’s public finances can be made sustainable and resilient in the longer term, against the backdrop of a quadrupling of public debt since 2008 and public spending predicted to consume half of GDP in 50 years’ time. [1] [2]
Martin Wheatcroft FCA, author of Simply UK Government Finances and external advisor to ICAEW on the public finances, warned participants of the UK’s looming fiscal challenges. He explained these included the difference between the anticipated 27% rise in pensioners over the next 20 years compared to a 3% rise in the working-age population. He also called for a long-term fiscal strategy to change how public finances are managed.
Delegates emphasised the importance of ensuring that the public finances are properly understood by the public and policymakers, including improving how government communicates financial information. There was agreement that timely, useful and high-quality financial reports are crucial to ensuring value for money, and that accountancy and governance processes work effectively.
Dame Meg Hillier MP said:
“As Chair of the Public Accounts Committee for the past eight years, I have seen how our national financial situation has continued to deteriorate over that time, with all that means for the quality of our public services and outcomes for the people we serve.
“ICAEW is right to focus on improving understanding of the public finances, as well as the need for long-term thinking, if we are going to be able to deliver sustainable and resilient public finances in the future.”
Alison Ring OBE FCA, ICAEW Director for Public Sector, said:
“There was a consensus around the table that despite significant progress, such as the introduction of Whole of Government Accounts, there is a real need for change in how the UK’s public finances are managed, both nationally and locally. This is not a matter of picking a new fiscal rule and all will be well – more fundamental reform is needed to the way government and Parliament deal with financial decisions.
“Understanding the challenges that we face is only the first step. We need a strategic approach that moves beyond a rigid focus on short-term fiscal rules to put investment and long-term value at the heart of decision making.”
ENDS
Notes to editors:
CONTACT: ICAEW media office stephen.froome@icaew.com or 07970 402 073
- Public sector net debt was £0.6 trillion in March 2008 and was predicted to be £2.7 trillion in March 2024.
- The OBR’s latest long-term projections are for public spending excluding debt interest to reach 50% of GDP in 2072/73, with the debt interest reaching 12.7%. This compares to 42.5% public spending and 3.7% debt interest in 2023/24.