Government Debt Accounts (Hansard, 1 May 2003)

§ Lord McIntosh of Haringey
Yes, my Lords. In his general report for 2001–02, the Comptroller and Auditor General noted that he had been able to give a unqualified audit opinion on the Government's debt accounts—that is, the National Loans Fund and the debt management account.

§ Baroness Wilcox
My Lords, I thank the Minister for that Answer. I am still concerned about the issue of disclosure of contingent liabilities. Why are they still not listed following the recommendation of the House of Commons Treasury Committee which stated: in the interest of greater transparency, that the existence of all contingent liabilities be stated in the Red Book"?

§ Lord McIntosh of Haringey
My Lords, I return to the view of the Comptroller and Auditor General, which is what the Question is about. The Comptroller and Auditor General said in his general report for 2001–02, in relation to financial auditing and reporting, that he has not yet had to qualify his audit opinion on departmental resource accounts as he would do so only should departments fail to reflect correctly in their financial statements liabilities resulting from financing arrangements under PFI deals. The answer is the same whether it refers to off or on balance sheet or to debt accounts.

§ Lord Sheldon
My Lords, can my noble friend confirm that the decision by the Chancellor of the Exchequer to ask the National Audit Office to report on the fiscal assumptions within the Budget was a major step towards openness? It is difficult to envisage any financial judgment which would carry any more weight and distinction than that of Sir John Bourn, who, during his 15 years as the Comptroller and Auditor General, has been an outstanding holder of that office.

§ Lord McIntosh of Haringey
My Lords, I agree entirely with my noble friend.

§ Viscount Goschen
My Lords, is the Comptroller and Auditor General, Sir John Bourn, fully content with the Government's decision to take the over £20 billion worth of Network Rail borrowing off the Government's balance sheet?

§ Lord McIntosh of Haringey
Yes, my Lords. Sir John Bourn has said that the Network Rail obligations should be in the accounts of the Strategic Rail Authority, and they are. If he does not know already, the noble Viscount, Lord Goschen, may be interested to learn that from 2003–04 we are introducing whole-of-government accounts. Those whole-of-government accounts will consolidate the accounts not only of central government, but also of executive agencies and non-departmental public bodies, including the Strategic Rail Authority.

§ Lord Newby
My Lords, does the Minister agree that the full potential impact of the Government's contingent liabilities can be understood only if a proper risk assessment of the guarantees given by the Government is undertaken? Does he further agree that the appropriate body to undertake such a risk assessment might he the National Audit Office?

§ Lord McIntosh of Haringey
Yes, my Lords, but in the first instance the evidence has to be available. That evidence is available in the supplementary statements to the Consolidated Fund and National Loans Fund accounts which I am holding in my hand. Table B.14 of those accounts, which are published every year, sets out all the departmental contingent liabilities, including an assessment of the risk. Perhaps I may add that in the whole-of-government accounts, in line with Financial Reporting Standard 12, we shall report all contingent liabilities which fall within the definitions of United Kingdom generally accepted accounting practices. Furthermore, we shall also be reporting on more remote liabilities.

§ Lord Saatchi
My Lords, perhaps I may help the Minister to understand why my noble friends persist in asking him such uncomfortable questions about the Government's accounting treatment for debt. Can I take him back to 10th December last when, in response to a question not dissimilar to that tabled today by my noble friend Lady Wilcox, he said that our suggestions were. "wholly unfounded"? He has also said that, in the Red Book … all contingent liabilities over £100,000 are declared".—[Official Report, 27/11/02; col. 781.] 846 We persisted and on 16th December the Minister underlined that answer by saying, in case there is any misunderstanding, the aggregate of contingent liabilities is contained in the Red Book".—[Official Report, 16/12/02; col. 451.] On 18th December we visited the subject again. On that occasion the noble Lord wrote to me to say that his previous answer had been "mistaken", and that in fact the figures are not contained in the Red Book and are included only in the largely unknown document to which he has referred.
Does that help the Minister to understand why, when he responds to questions in this way, my noble friends do not automatically accept that his answers are as clear-cut as he might like?

§ Lord McIntosh of Haringey
My Lords, any discomfort is in the minds of the Opposition, not in my mind. The difference between the Red Book—which is constantly criticised by the noble Lord, Lord Saatchi, for being too long and complicated—and the supplementary statements, which are published just as freely as the Red Book, is nothing like as significant as the failure of the Opposition to justify and give details of its constant asseveration—it is no more than that—that there is a £100 billion hole in the Government's accounts. When the Opposition can come forward with some justification for that, which can be answered as I responded to the points made by the noble Lord, Lord Saatchi, on 10th December, I will be a happy man.

§ Lord Desai
My Lords, is it not worth making the point that, whatever the numbers may be, overall the debt position of the Government is very sound indeed? It is far better than the position that we inherited.

§ Lord McIntosh of Haringey
Yes, my Lords. Not only is the position sound, but it is sound in a way that the debt position of the previous government was not. There has been a very significant reduction in public sector debt during the period of this Government.

§ Baroness Noakes
My Lords, is the Minister aware that many private sector companies involved in PFI transactions record them as financial transactions; that is, as loans to the Government? Can the Minister therefore explain why the Government persist in asserting that the substance of these transactions is not loans to the Government in the Government accounts?

§ Lord McIntosh of Haringey
My Lords, I am not responsible for what private sector companies put in their accounts. Almost uniquely among developed countries, the Government adhere to generally accepted accounting practice in the presentation of their own accounts. I should have thought that, of all people, the noble Baroness, Lady Noakes, would appreciate the value of that.