As the FT notes:
Hundreds of billions of pounds of additional debt will appear on the government's books on Wednesday when the Treasury publishes accounts drawn up on the same basis as those of companies.
After years of delay, the government will give the first glimpse of what the UK's public finances would look like if the UK were a listed company such as Marks & Spencer or BT.
The continue:
The new accounting standards have required the government to consolidate information from 1,500 public bodies, and report figures using the International Financial Reporting Standards followed by big businesses.
But why should the government do this? The International Accounting Standards Board who are responsible for International Financial Reporting Standard are currently reforming their constitution. In the consultation document on this reform they say:
In carrying out the IFRS Foundation's mission as the standard-setting body, the IASB should develop financial reporting standards that provide a faithful presentation of an entity's financial position and performance. Those standards should serve investors and other market participants in their economic and resource allocation decisions. The confidence of all users of financial statements in the transparency and integrity of financial reporting is critically important to the effective functioning of capital markets, efficient capital allocation, global financial stability and sound economic growth.
I discuss this in more depth here, but the key point is a simple one: nothing in the way International Financial Reporting Standard are developed makes them suitable for use by government.
They are designed for reporting by a body whose capital is traded on a market for the use of those who undertake short term speculative trading. According to the International Accounting Standards Board they have no other purpose. But this is far, far removed from the role and structure of government. That means IFRS are wholly inappropriate for its use and will lead to but economic decision making and inappropriate allocation of resources.
It's another mistake resulting from the ethos that thinks the UK is a PLC. It isn't. And it's about time we realised that fact.
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I don’t know enough about this, but is this a political decision to reinforce the ‘need’ for budget-slashing and austerity measures?
Given that a separate, but related set of standards already exist for the Public Sector why wouldn’t they be using those as a (presumably better, more suited at least) alternative?
http://www.ipsas.org/index.htm
This is a deliberate “catagory mistake” the underlying purpose of which is to enable the extreme right wing media to make the deficit looks worse than it is and thereby justify attacking and undermining the most vulnerable people in our society.
It’s not just a “category mistake”. It’s a “category mistake on stilts”. As a currency issuer, the state only has “vertical transactions” with its currency users. Accountancy regulations designed for the “horizontal transactions” of currency users are simply irrelevant and cannot be applied to the state. This proposal should be categorized as a neo-liberal sport of category-confusion, some form of twiddle-twaddle.
“Hundreds of billions of pounds of additional debt will appear on the government’s books on Wednesday when the Treasury publishes accounts drawn up on the same basis as those of companies”
This appears to ignore the fact that the national debt is different from most other forms of debt. Sure, you get a great big frightening figure showing the government is hundreds of billions of pounds in debt. What rarely gets mentioned is this debt has never been paid off – it is simply rolled over and re-mortgaged.
In reality, a sovereign nation can produce as much money as it needs. The country is only in debt on paper. Also, our national debt happens to be amongst the lowest in the western world.
I would ask in this spirit of “all of us in it tohether” (HAH!) why the richest are not made to pay more income tax, why the richest only pay 1 per cent of NI contributions and why aren’t profits on derivatives and hedge funds not taxed?
Why is it only the poor seem to be bearing the brunt of “difficult political decisions”?
Something else to ask. Why does the single occupant of a £multi-milliion property in Kensington pay the same Council Tax as my Polish friends, both working all the hours they can on minimum wage,also paying income tax and NICs, on their pokey 2 bed flat?