This guidance introduces a new process the Treasury is implementing to systematise the management of contingent liabilities through a standardised checklist.
The Treasury has among its core objectives the scrutiny of public finances and holding government departments to account for their decisions on spending. Contingent liabilities recognise that future spending may arise if certain events happen or particular conditions are met. Given that contingent liabilities may affect future spending rather than current spending, they may affect the sustainability of public finances.
The contingent liability approval framework has been designed in order to ensure that policies giving rise to contingent liabilities are consistent with the Treasury’s objective of safeguarding the sustainability of public finances. The Treasury believes the introduction of the checklist and the wider process surrounding contingent liabilities now strike the right balance between guidance, control and oversight. This will support the Treasury in meeting its core objective of placing the public finances on a sustainable footing.
This guidance is to be an aid to the interpretation and application of the contingent liability checklist and sets out an overview of the process for the scrutiny and approval of contingent liabilities. This will ensure good practice is applied consistently across government.