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HM Treasury

Great Britain: Parliament: House of Commons: Committee of Public Accounts

Published: 2013-02-15

Total Pages: 46


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The Treasury acts as both the finance ministry and economic ministry but it appears to neglect its role as finance ministry. Its own accounts are impenetrable and there are many instances of poor decision making by departments, which the Treasury could and should have prevented. While staff turnover fell in 2011-12, it is still very high. Furthermore, the Treasury remains committed to cutting its headcount by a third and there are still very few women at senior levels. The support provided to banks in the last crisis helped prevent the banking system from collapse. The Treasury has successfully withdrawn nearly all of the taxpayer guarantees to banks but the taxpayer still owns some £66 billion of shares in RBS and Lloyds, a sum which is yet to be recovered. The Treasury has not convinced that it understands either the risks it has taken on by indemnifying the Bank of England against losses on Quantitative Easing or the expected economic benefits. Some £375 billion has so far been injected into the economy as an 'experiment' but the Department could not explain what the effect has been on the whole economy or on different parts of society. The National Loans Guarantee Scheme achieved just 15 per cent of its intended take-up and has now been superseded by a more generous Bank of England scheme. The Treasury needs to be clear what it wants this Bank of England scheme to achieve, and how it intends to monitor it.
The Treasury should re-establish the annual Budget as the main focus of fiscal and economic policy making. The Autumn Statement is not, nor should it be, a second Budget. An additional budget can create uncertainty and carries an economic cost. Treasury and business managers also need to ensure that there is adequate Parliamentary time to allow proper scrutiny of the Finance Bill. About half of general government expenditure is to be protected from the new spending cuts but the complete protection of ring-fenced departmental budgets will be difficult to sustain while other departments are substantially affected. The Committee also intends to question the future Governor of the Bank of England, Dr Mark Carney, on possible alternatives to the inflation targeting that currently underpins the work of the Monetary Policy Committee of the Bank. The Treasury and to some extent the Bank were at fault for failing to coordinate the announcement of the Asset Purchase Facility transfer with that of the November MPC press release. It is vital that the MPC fulfils its duty to demonstrate its independence. There is concern at reports that the Funding for Lending Scheme may be biased in favouring lending for mortgages rather than lending to SMEs. The sums expected from the sale of the 4G spectrum and Swiss tax repatriation represent the majority of the additional receipts the Treasury intends to offset against the tax reductions and investment but both are uncertain. The Chancellor must also use the 2013 Budget to set out a clearer strategy for fuel duty over at least the medium term