National Audit Office Press Releases
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HM Treasury Resource Accounts 2008-09: Report by the Comptroller and Auditor General to the House of Commons

The Comptroller and Auditor General, the head of the National Audit Office, yesterday reported to Parliament that he has qualified his audit opinion on HM Treasury’s Resource Accounts for 2008-09.  This was because, in that year, HM Treasury incurred expenditure of some £24 billion more than Parliament had authorized

This arose because of the need to provide for expected net losses arising from the operation of the Asset Protection Scheme – under which HM Treasury provides banks with protection against future credit losses on certain assets in exchange for a fee.  HM Treasury knew from the outset that the Scheme would result in a significant loss but at that stage there was not enough certainty about which banks would participate and on what terms to include a provision in the Spring Estimates.

Subsequently the participation of the Royal Bank of Scotland Group and the Lloyds Banking Group was announced and they are currently in negotiations with HM Treasury.

HM Treasury’s Balance Sheet also shows the level of assets and liabilities recorded have increased significantly compared to last year.  Total assets less total liabilities now stand at £44 billion, up from £2 billion in 2007-08.

Amyas Morse, the head of the National Audit Office, said today:

“This financial year has been an extraordinary one and has presented extraordinary challenges for HM Treasury.  The department’s huge in-year growth in its assets and liabilities illustrates the extreme nature of the problems faced and action taken.  It should be recognized that the pressure for the department to intervene by offering the Asset Protection Scheme gave it no time to seek from Parliament the additional resources needed.  The breach of the Treasury’s expenditure limits has necessitated my qualifying my opinion on its resource accounts.  This arose from the need to take action at a point when it was too late to obtain spending authority through the Parliamentary estimates process.”

 

Notes for Editors: 

  1. Parliament had authorized a limit of £21 billion to be spent on “raising the rate of sustainable growth and achieving rising prosperity and a better quality of life, with economic and employment opportunities for all”.  However, in pursuing this, HM Treasury incurred expenditure totalling some £45 billion.
  2. The amount provided in the accounts reflects the current base-case estimate of the net potential losses of the scheme, but the factors on which the Treasury rely for the assessment will evolve over the life of the scheme.

  3. Press notices and reports are available from the date of publication on the NAO website, which is at http://www.nao.org.uk/ Hard copies can be obtained from The Stationery Office on 0845 702 3474.

  4. The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 900 staff.  He and the NAO are totally independent of Government.  He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

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