Innovative approach to the UK’s fiscal framework is a gamechanger and puts finance at the heart of government decision making
The UK Budget has announced a new approach to the fiscal framework, taking a public sector balance sheet approach for the first time.
ACCA (the Association of Chartered Certified Accountants) has advocated for this development, most recently in a report called Sustainable public finances through Covid-19 published in June 2020.
In adopting this approach, the government will benefit from:
Alex Metcalfe, head of public sector at ACCA says: ‘This is an important and innovative development. The central recommendation of our June 2020 report called for governments to use accounting data and take a balance-sheet approach to effectively manage their finances through the COVID-19 crisis. We are delighted the Treasury has taken up this recommendation and announced a balance sheet approach today.
‘We also welcome the creation of the new Contingent Liability Central Capability, which will analyse and advise on ways to strengthen contingent liability expertise across government.’
Alex Metcalfe concludes: ‘The government is to be applauded for turning their attention to public sector balance sheets to manage their finances properly through this ongoing COVID-19 crisis. Balance sheet information can improve decision making, and it can act as the benchmark for new fiscal targets. It can also support governments in using sufficient fiscal firepower to rebuild their economies for a more inclusive, sustainable and greener future.’
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