While the UK is an international leader in providing transparent macro-fiscal information, there is room for improvement regarding the quality of information it provides on detailed public spending. In this article, Joachim Wehner describes what the government can do to improve.
The launch of the 2015 Open Budget Survey confirms that the UK is among the world’s most fiscally transparent nations. Out of 100 countries, only seven achieve a higher score than the UK on the Open Budget Index (OBI), which assesses the quantity and quality of public finance information. The UK has made great strides in recent years to improve transparency, including efforts to produce comprehensive accounts, the release of more detailed in-year data, and the creation of the Office for Budget Responsibility, which has quickly gained international recognition as a leading fiscal watchdog.
In four previous rounds of the OBI, going back to 2006, the UK consistently ranked in the global top three. The country’s 2015 OBI score is 75 out of a possible 100, down from 88 in 2012. The slip in the rankings occurs largely because the 2015 survey placed much greater emphasis on the content of specific documents rather than the mere existence of a particular piece of information. Hence, the drop does not indicate a deterioration of public finance practices. The International Budget Partnership, which runs the survey, discusses these methodological issues in its main report and provides an alternative time series to enable consistent comparison across years.
Yet, the results do highlight shortcomings, and these are familiar from previous rounds of the survey. While the UK generally performs very strongly in terms of macro-fiscal information, the quality of information on detailed public spending is much more patchy. For instance, the quality of the Estimates provided to Parliament is poor, without medium-term figures at the level of clearly defined programmes. As a result, MPs and the public lack the granular information that is required to fully assess departmental spending.
The UK also does not comply with international standards that tax and revenue plans be tabled for legislative approval at a minimum three months prior to the start of the fiscal year. Moreover, performance information is poorly integrated with budgets, which makes it difficult to judge what departments intend to achieve with available funds, and how they perform against their objectives.
These gaps are of particular concern in the context of the upcoming spending review settlement. Under the coalition government, spending cuts were difficult enough, but there were some low-hanging fruit: containing pay rises in the public sector, for example. Another round of consolidation will require an even more fundamental rethink of departmental activities. Without detailed spending plans for each department, subjected to careful parliamentary scrutiny and public debate, it will be difficult to safeguard the quality of expenditure over the coming years. The UK has a strong record in macro-fiscal transparency, but there is no room for complacency.
 For example, the 2012 score for question 39, on the disclosure of financial assets, was “a”. The 2015 score is “d”, despite no substantive changes in relevant practices, since the relevant information is not contained in the executive’s budget proposal, as required by the survey, but instead as part of annual reports and accounts. Other examples where information is provided but not in the specific document required are questions 19, 22, 23, 36, 40, 49, 50, 51, 62, 63 and 87.