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ICAEW welcomes the publication today of the Whole of Government Accounts 2017-18, the UK government’s annual financial report for the year ended 31 March 2018.

Whole of government accounts 2017-18

On 23 May 2019, the UK Government published its 9th Whole of Government Accounts (WGA). The WGA provides a comprehensive financial report on the UK public sector for the 2017-18 financial year:

  • Similar to a listed company annual report – with audited financial statements accompanied by a detailed financial commentary, governance statements, a remuneration report and reports from the Comptroller & Auditor General.
  • Consolidates the financial results of over 8,000 organisations across the public sector, including central government departments and agencies, devolved administrations, local authorities and public corporations, and entities that they control.
  • Provides a significantly more comprehensive analysis of the public finances than that presented using the official fiscal numbers in the statistically-based National Accounts.
  • Prepared in accordance with International Financial Reporting Standards (IFRS), with a balance sheet that sets out the government’s assets and liabilities, including long-term liabilities not included in the fiscal numbers.
  • Supported by extensive accounting notes, providing detailed analyses on revenue, expenditure, assets and liabilities, together with information on accounting policies and accounting judgements.


  • Revenue £761bn (35% of GDP) - up £40bn.
  • Expenditures on public services £815bn (38% of GDP) – up £54bn.
  • Other expenditure £158bn (7% of GDP) – up £100bn (including a £94bn provision charge).
  • Accounting loss of £212bn (10% of GDP) – up £114bn.
  • Total assets £2.0tn (93% of GDP) – up £111bn.
  • Total liabilities £4.6tn (211% of GDP) – up £255bn.
  • Net liabilities £2.6tn (118% of GDP) – up £144bn.
  • True and fair audit opinion, subject to several audit qualifications and two matters of emphasis.

Financial results

The continued shortfall in revenues compared with expenditures resulted in an accounting loss in the WGA of £212bn in 2017-18, up £114bn from the previous year.

Revenue was £761bn, an increase of £40bn:

  • £34bn from higher tax revenues, with £22bn in additional income tax and national insurance contributions, £4bn more from VAT, £3bn from corporation tax, £3bn from council tax and business rates, and £2bn from other taxes; and
  • £6bn more from other income.

Expenditure on public services was £815bn, up £54bn from the year before:

  • £25bn from higher employee costs, of which £2bn was for higher salaries and wages and £23bn was for higher pension charges;
  • £18bn relating to asset write-downs, including a one-off £8bn charge to remove land and buildings of academy schools which are actually owned by non-government bodies, and an increase of £10bn in other impairment charges;
  • £5bn from higher interest charges on government debt; and
  • £6bn in other net changes in expenditure from the previous year.

Other expenditure was £158bn, an increase of £100bn from the year before:

  • reflects a £94bn charge arising from a change in the discount rate used to convert expected future cash outflows into ‘today’s money’.

Total assets were £2,014bn, an increase of £111bn:

  • £42bn related to fixed assets, but £38bn of this was from upward asset revaluations, mean that net investment into fixed assets was only £6bn over the course of the year;
  • £64bn from an increase in non-current financial assets, principally driven by £72bn in additional Bank of England Term Funding Scheme loans as part of its monetary stimulus operations; and
  • a £6bn increase in cash balances, with a £1bn net decrease from other movements.

Total liabilities increased by £255bn:

  • £119bn related to debt and other financial liabilities, reflecting government borrowing to fund public spending, and the Bank of England printing electronic money to finance the Term Funding Scheme;
  • £100bn related to long-term liabilities for nuclear decommissioning, clinical negligence and other provisions, of which £94bn arose from a change in the discount rate used to convert expected future cash outflows into ‘today’s money’;
  • £30bn related to net public sector pension obligations, with additional liabilities recorded of £111bn exceeding the £42bn paid out in unfunded benefits, combined with a £39bn downward actuarial revision; and
  • a £6bn increase in payables and other liabilities.

Net liabilities increased by £141bn to £2,565bn. This reflects the accounting loss of £212bn and other movements of £10bn, less upward asset revaluations of £39bn and a downward revision in pension obligations of £39bn.

The WGA does not record a value for the Hinkley Point C contract for difference, a derivative financial instrument entered into in the previous financial year in connection with the construction of a new nuclear power station. According to the WGA, its fair value (estimated to be £37bn) was not recorded on the balance sheet partly due to the uncertainty of estimating wholesale energy prices to the end of the contract in 2060.

Audit qualifications

The Comptroller & Auditor-General has issued a ‘true and fair’ audit opinion on the financial statements, however he has qualified his opinion with respect to the following matters:

  • not all government-controlled entities have been included within the WGA, most significantly The Royal Bank of Scotland (RBS), where the government currently owns a controlling stake;
  • there are significant inconsistencies between central and local government accounting policies, principally relating to the valuation of infrastructure assets, such as the local road network (valued by local authorities at depreciated historical cost rather than the depreciated replacement cost approach adopted by central government);
  • the Ministry of Defence not fully accounting for assets it leases through outsourced contracts; and
  • numbers used for academy school are for the year ended 31 August 2017, instead of the year ended 31 March 2018 numbers reported for the rest of the public sector.

There are also two matters of emphasis highlighted in the audit report:

  • the inherent uncertainties in valuing nuclear decommissioning obligations; and
  • the difficulties in evaluating the disclosed value for the Hinckley Point C contract for difference.


The further improvements in the quality of the WGA this year are welcome, with the WGA providing the most comprehensive picture of the public finances that is available.
It remains disappointing that it takes in excess of a year for the WGA to be produced, and it is to be hoped that plans to reduce the time taken further are successful. However, even if this is achieved the WGA will still take significantly longer than the two to three months taken to prepare the annual reports of comparable private sector organisations. Unfortunately, there does not yet appear to be sufficient appetite within government for the reforms to financial processes, systems and culture that would be necessary to bring the public sector closer to standards of best practice for financial reporting and management.

Despite the lack of timeliness, the WGA is one of the most important documents that the government will produce this year. With total liabilities of 211% of GDP and net liabilities of 118%, the WGA provides a sobering picture of the public finances that needs attention – from within government, from parliamentarians, and from the wider public on whose behalf the WGA is prepared.

Summary Whole of Government Accounts 2017-18

Balance sheet £bn
Revenue and expenditure £bn
Assets 2,014
Expenditure on public services

Other expenditure
Net liabilities
Accounting loss for the year
Operating cash inflow
75 Accounting loss for the year
Investing cash outflow 
Pension revaluations
Interest and similar outflows
Asset revaluations
Financing cash inflow
48 Other movements
Change in cash balances
6 Change in financial position

Better Government Series

Our Better Government Series is a series of thought leadership, policy insights, toolkits and best practice special reports on topical public sector financial management issues.

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ICAEW's analysis

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Read ICAEW's analysis of the Whole of Government Accounts 2017-18.