Archive for the 'COINS' Category

Finally some answers

January 30, 2011

It’s an innocent enough question:

what does the government spend money on?

Now, I’m not an accountant and I’m not a statistician and personally I don’t have a political axe to grind, I just want some answers to this question that make sense.

This attitude gives me a lot of freedom: I don’t have to get bogged down in any system of understanding spending unless it really helps. But this attitude also gives me a lot of opportunity to look a right idiot, because I’m effectively feeling my way around this unfamiliar financial and political world, pushing for information that may or may not be useful in the end, asking questions that must seem really stupid to experts.

I think it’s only fair that I document my fools progress so that other people who might be on a similar mission can be helped along their way.

So, from the beginning to right now, this is what I’ve found out about government money.

I should add that public spending is making more and more sense to me these days and while I don’t have all the answers right now, I do have a vision for the future and some useful stuff to share.

In the beginning

When I first thought about government spending I had some vague idea that there would be lists of spending, one for each department or maybe one big list for all of government, showing money in and money out for each department. It would just be a matter of finding these sacred and quite possibly hidden lists. I mean someone in the department must be keeping track of the money in and out, right?

The people at Where Does My Money Go? had something that matched my idea of a list of spending. The list they found on the Treasury website showed different government departments and how much they had spent on certain types of public services. I helped to interpret this and the team went on to make this colourful interactive display.

The beauty of this display is allows drilling down into the details of the spending. This is a relatively new technology and lends itself to spending data nicely, it makes those lists accessible and it doesn’t feel like work to look through them they way it does to look into a spreadsheet.

But we quickly found that the list we had used raised more questions than it answered. We only had spending for certain departments, nothing in detail on local councils, and the only details we had were in these odd sounding categories of spending that were designed to allow comparisons between UN countries.

I had a feeling that there must be more detail that we weren’t getting, but where was it?

Therein’ I pestered the heck out of the poor folks at the Treasury about where these spending lists are stored and what else is stored there.

The short answer is that it was all stored in something aptly called COINS, which is a database for frequently revised budgets and something else that is really, really interesting and that I’ll come back to shortly.

A moment of clarity

While I was looking at this spending it slowly dawned on me that just looking at money in and out isn’t the full story of the way public money is managed. For one thing the lists of money in and out, on their own, soon become unwieldy and make it hard for people to answer questions about public spending.

For another thing, Governments don’t just receive and spend money, their wealth is also made up of the things they own like buildings, roads and also determined by the money they owe — the debts as we all know too well.

This is when I found out that accountants have elegant ways to deal with all of this financial jumble.

Let me explain accountancy in the terms I’ve come to understand it.

There are three main figures to consider.

Let’s split the finances of an organisation into either 1) something it is owed or owns and 2) something it owes to someone else. That is two of the 3 main figures explained already.

Just these two figures can give us a simple but important measure of how healthy the finances are. Hypothetically if the organisation received everything it was owed and then sold off everything it has and used that to pay off all its debts, how much would be left? What is left is our third figure. This is what all the people who invested in the organisation would be left with for their return on their investment.

For the mathematically minded this can be expressed at:

1 – 2 = 3
or
owed and owned – debts = return to investors

We should find that if we sum the amount of money that people invest and the profit the organisation makes, the result is equal to the third figure.

Just to put this into context for the case where the organisation is a council or government body, the investors are the taxpayers and the bond buyers.

Another way of looking at these three figures is that organisation is ultimately balancing the money it has for its activities and the money it receives and borrows to make its activities happen. So it balances what it owns and is owed (figure 1) with its debts and investments and profits (figures 2 and 3).

For the mathematically minded that is:

2 + 3 = 1
or
investment and profits + debts = owned and owed

just a rearrangement of first expression.

If you ever heard of double entry book-keeping then keeping this equation equal is basically it: accounting for what is produced with what is needed to produce it.

There’s lots more to accounting than this, obviously, but I hope I’ve conveyed that this way of categorising financial information is neat and yields useful information.

Here’s the killer

You might ask: wouldn’t it be ideal if each publicly funded body published their accounts under these categories so we can understand their financial health?

It turns out that the government have been producing resource accounts for every department and every local authority for years, and this is the killer: in 2001, yes, 10 years ago, they even produced a guide to interpreting these accounts so that we, the public, can extract all kinds of useful information.

You might ask: wouldn’t it be ideal if someone collected together all the public accounts? Even better if they summed the accounts into one set by eliminating all double counting where public bodies exchange money between themselves.

It seems that at the same time as the resource accounts started to emerge in the early 2000s, the Treasury started to run something called ‘Whole of Government Accounts’. It brings together, or consolidates, all the resource accounts of pretty much every public body into one set of resource accounts. What a perfect way to categorise all public spending at a high level.

Guess where Whole of Government Accounts is stored? In COINS. Disappointingly when COINS was published all of the Whole of Government Accounts was removed. The Treasury plan to publish the first ever version of Whole of Government Accounts this spring.

The vision for the future

The government is currently publishing more spending information than any of their predecessors. We have all central government spending over £25,000 and soon we’ll have all local government spending over £500.

How do we make some sense out of all this spending data?

Lots of information can be made manageable if it can be categorised well.

I’m interested in using the categorisation system in the resource accounts. According to the introduction to resource accounts, it is possible to calculate departmental costs ranging from staff wages to money spent on programmes with their own objectives, as well as lots of useful information about assets and liabilities (what I referred to as figures 1 and 2 above).

I believe using this accounting system and allowing a user to ‘drill down’, as they currently do in Where Does My Money Go?, from this high level organised system into the details of the spending will give ‘accountability’ to the accounts.

There are many difficulties in data compatibility between the resource accounts and the lists of transactions that are currently being published, but I think with some iterations of the data being published, these difficulties could be overcome.

What do you think?

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Data I would like

September 17, 2010

I’ve been thinking about data sets I know about, but they aren’t public yet. I can’t see any reason why they should be private, but they are.

Here is a list of the data sets the government won’t publish, maybe you can suggest a reason why or add to the list in the comments:

  • All the raw data behind The Whole of Government Accounts (WGA). I mean the raw data from the C-packs and L-packs at the stage that it is used for making the WGA report.
  • All of the raw data from the Revenue Forms in particular the RO and RA submissions.
  • The Best Value Accounting Code of Practice (BVACOP) from CIPFA.
  • The Centralised ONS Repository of Data (CORD) and the Central Shared Database (CSDB) from the Office of National Statistics (ONS). At least to understand more about how the ONS manage the financial data they receive.
  • Anything at all from HM Revenue and Customs about how our tax data is stored.
  • Companies House database.
    • This is not a very long list, but the data I’ve listed here will explain the financial health of our country in more detail than we, the public, have ever had access to.

Speaking at OpenTech 2010

August 15, 2010

I’m speaking at this Opentech this year.
I’m showing the results of my work on COINS for the first time.
Should be good.

Post at the Guardian

July 16, 2010

Just a quick post to link to a piece I wrote for the Guardian Data Blog. The article explains how The Whole of Government Accounts was excluded from the COINS publication and when I requested the Whole of Government Accounts I was refused.

Interesting rejection of a FOI request

July 13, 2010

The whole of government accounts (WGA) has been running every year, for 10 years, and during this time the public have seen exactly zero results from the exercise.

The WGA gives a very detailed picture of the financial health of every government funded body — so clearly would be really useful to where does my money go.

I was told by the small team at the Communities and Local Government that the WGA 2008/09 is sitting in the Treasury. I was also told that two departments failed the WGA audit (the department of health and the ministry of defense), which led to none of it being published.

So I asked for that report (minus the results for the two departments that failed the audit) in this Freedom of Information Request.

The rejection I got was unlike anything else I have received.

They have the information I requested, but the response went to on say:

“Ministers and officials need space in which to develop policy, including space for the development of policy through an interative process of testing and refining ideas. This process could be weakened if information was released prematurely or when proposals where not finalised, as this could lead to poorer decision-making”.

Any suggestions for how to proceed are most welcome.

I should also add that the WGA is stored in COINS, but none of the WGA was included in the COINS publication.

A big chunk of COINS was not published.

July 6, 2010

When I saw the COINS data that was published at the beginning of June, I suspected there was something missing. I had been reading about the Whole of Government Accounts (WGA) exercise, which I have documented in the previous post. So I was expecting local council assets and accruals data of the sort that is captured in the L-packs and central government spending as captured each year in the C-packs. But is wasn’t there.

I conducted some more investigation, speaking to the team at the Whole Of Government accounts. There team is really quite small — only two people in Communities and Local Government WGA team and five or six people in the Treasury — but they do an *amazing* job of documenting all public assets and accruals. What is more, they have been running it every year for 10 years, each year gathering a detailed picture of local authorities financial health.

Anyway, based on my existing knowledge and my conversations with the WGA team and others, I can now confidently confirm the WGA is completely absent from the COINS data that was released. This means there is no reporting of local authority’s spending in COINS. A report from the WGA is planned spring next year. But I believe this will be at a very high level of detail — the sum of the whole government’s assets and accurals, not the details of individual authorities and departments.

Anyway, I can now confidently confirm the WGA is completely absent from the COINS data released. I have requested the 2008/2009 WGA data, with the Department of Health and the Department of Defence data removed, as these two departments failed the Audit.

Now I’ll wait to see what happens.

UPDATE: See the reply to the request for the Whole of Government Accounts 2008/09.

The whole of government accounts: an exercise in elimination

June 25, 2010

When the large sample of COINS data was published on the 4th June it was accompanied by a guide to the data. The guide is very useful, but one thing it doesn’t explain in very much detail is where the COINS data comes from. The guide lists the inputs:

COINS – the Combined On-line Information System – is used by the Treasury to collect financial data from across the public sector to support fiscal management, the production of Parliamentary Supply Estimates and public expenditure statistics, the preparation of Whole of Government Accounts (WGA) and to meet data requirements of the Office for National Statistics (ONS).

But in what form are each of these different types of financial data  entered into COINS? To answer this question for the Whole Of Government Accounts (WGA) data, I’ve been looking more closely at the data gathered for this exercise.

After reading the WGA materials on the Treasury and the Communities and Local Government web pages, and chatting to some very helpful members of the WGA team, my understanding of the WGA exercise is that it identifies exchanges of funds between public bodies. These exchanges include the flow of funds from Central Government bodies down to Local Authorities and all the exchanges of funds between departments. When the transactions between public bodies are identified, the WGA exercise makes some adjustments to avoid double counting the money. So, if body A gives money to body B, then WGA would be responsible for subtracting the amount body B received from body A’s total.

As we know the COINS data is made up of spending or income records for each department. In these department records there is a Counter Party ID (CPID),  if that identifies another government department that means that some funds have been exchanged between the two departments.

There are scripts used on the COINS data to look for  eliminations using the CPID code.  which has the code in every department’s spending, if money of the public body money was exchanged with and the WGA team perform lots of checks on this. You can see this process happening in the adjustments table in COINS.

There are two guides to the WGA, one for  local authorities and the other for central government departments.

Central Government Accounts

The process of WGA for Central Government departments is simply that each central government department is required to fill in a C-Pack once a year, which is a spreadsheet constructed by the WGA team.

Point2.4. of the Guide for the C-Pack (PDF) says:

The key deliverable is the C-Pack, and the upload of Resource Accounts data and CPID data into COINS.

Local Authority Accounts

The WGA process for Local Authorities is a slightly different exercise. The Local Authority is asked by WGA to fill in an L-Pack once a year.  If you follow that link to the L-Pack excel spreadsheet that the Communities and Local Government branch of WGA prepare, they you will see that it is quite a complex looking creature. I’m going on a training course to understand it better, but I do know that the results of every local authority filling out this form amounts to quite a significant documentation of public spending and income.

In fact the WAG guide for local authorities states:

Local government controls over 50% of public sector fixed assets, accounts for about 25% of net public expenditure and represents 10% of UK GDP.

Now, here is the interesting part. The Local Authority spending and income that is recorded in the L-Pack is not in the COINS data that was published recently.

Now, I thought this missing detail in COINS might be because the WGA would be published separately.

There is a WGA report expected in spring 2011, but on further investigation it transpires that the level of detail will be the same as company accounts. We will get some extra details in this report, for example spending on PFIs will be included for the first time. But essentially we will miss out on all the lovely detail from the L-packs and C-packs.

Conclusion

The WAG is an exercise in eliminating excess data that clouds the picture of public spending and income.  The WAG team’s work seem to keep process of reporting spending and income more manageable. This is completely understandable. But on the other hand it would be great to have this detail of exchanges of funds so we can understand public spending as it really is.

UPDATE: I now understand the auditing going on it Whole Of Government Accounts better.

Auditing, I believe, means matching up buyers and providers:

A perfect match is:
Barnet Council purchases £5.5 m from Enfield Council.
Enfield Concil sales £5.5 m to Barnet Council.

The COINS scripts would eliminate this to zero as perfect match.

Another example:
Barnet Council purchases £5.0 m from Enfield Council.
Enfield Council sales £5.5 m to Barnet Council.
COINS would eliminate 5.0m and and put 0.5M into suspense.
The the suspense needs to be investigated more to see where the mistake is.
This investigation is the job of the Whole of Government’s Account team.
You can set a tolerance in COINS, which is the extent of the difference between two accounts it will put into suspense. The tolerance was set to 5.0m for 2008/09 accounts. I will be set to 1.0m for
2009/10 accounts.