Archive for the 'Local Authorities Finances' 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.

Meeting Cambridge County Council

July 9, 2010

I met a couple of people from the finance team at Cambridge City Council (CCC) this week.

This meeting makes me want to beam a message out to all councils saying:

if you publish your data in machine readable form, you pretty much don’t have to worry about presenting this data — there is already a community who will do it all for you for FREE. Everyone wins!

The outcomes of the meeting where:

  • They’re going to give me a copy of their accounts in a spreadsheet.
  • They refused to give me an export of their Oracle “Balance Sheet” report.
  • All council budgets are published in excel
  • They’re going to report their £500 + spending before the Jan 2010.
  • When they publish they’re going to make sure their data meets the open data standards defined by Chris Taggart.

Here is some more detail about the meeting for those interested.

Background:
I’ve been asking to meet with the finance team in CCC for months. The first thing I did was write to them to request a meeting to explain ‘where does my money go?‘ and get some idea of their finance data. I didn’t hear back so I asked again. Nothing back. So I sent a freedom of information request for the database type, schema and training notes all of which I duly received.

Then I asked for the data, and one of the councilors at CCC saw my request on What Do They Know? and helped me by giving the exact tables that I needed and he also suggested a report to ask for. I asked for all of this and added that I would like to meet as I appreciate it is a big ask.

I didn’t get the data but I did get a meeting.

The meeting:
I explained the ‘where does my money go?‘ project.

They explained about their current work reporting all spending above £500.

They said that the vast majority of their spending data is below £500, but even so this still is more data than they have every shared before.

They plan to share their data before the Jan 2010 deadline and they are concerned about if the public will be able to interpret it and also how to physically host this large amount data.

I pointed out the open data standards from Chris Taggart and co and how there is a community of people eager to do the work of communicating the spending to the public, and making the data useable will allow them to do this.

They said they would send me a copy of their online accounts in a spreadsheet as this is what they have to convert into a pdf before they put it on their website.

They refused to give any exports of their reports of which there are a number describing in the training notes.

I offered our support for publishing their spending data and they agreed that keeping the lines of communication open with OKFN would be useful to us
both.

They were keen to look up Chris’ blog post and the open data standards and said they would make sure they published their data following those guidelines.

Reports on local authority finances.

July 9, 2010

Each local authority has a database to store its finances. OK, sometimes it is more complex than that; sometimes authorities share a database and there is often sharing of data between databases. But for the purposes of this blog post, it is fair to say authorities store their finances in a database. I believe that this database has the most detailed data that exists about the authority’s accounts.

I’ve been plugging away to getting a local authority to publish their finances database, with reasonable redactions of personal details and individual payment details, of course. But so far the resistance to such a publication is high — as you would probably expect — mostly because of the work involved. But I’m asking for this information because authorities will be required to publish spending above £500 by January 2011, so if they are going to publish over £500 then why not go the whole way and do it all? Optimistic, hey?

As things aren’t moving so fast with that line of enquiry, I’ve been looking into all the different requirements for Local Authorities to report their finances. The conclusion is that there is a lot of reporting going on, and I haven’t found out about what CIPFA require or reached a point where I know all the requirements clearly. But here’s what I’ve found out so far:

The acronyms stand for:

As you can see, local authority finances are quite something, and there’s a fair bit of work to be done to figure out what it all means in a way your average man on the street will appreciate. But I hope it is a start for people skilled in communicating complex ideas in a meaningful way, to investigate more, and maybe to ask for the raw data from these reports before it is aggregated and published.