Government as Insurer of Last Resort
This report sets out proposals for improving the management of guarantees and insurance provided by government to reduce cost and risk to taxpayers.
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Guarantees and insurance are increasingly used by government to protect citizens against unexpected risks and to support the economy. The Whole of Government Accounts estimates the amount of risk the taxpayer is exposed to is around £200bn or nearly 10% of GDP.
HM Treasury launched the Balance Sheet Review (BSR) at Autumn Budget 2017 to improve the returns on the government’s £2 trillion assets and reduce the cost and risk of its £4.6 trillion liabilities. The BSR has highlighted opportunities to further improve the management of liabilities arising from guarantees and insurance provided by government.
This report sets out a range of proposals to better manage these risks by strengthening the expertise in government to manage, quantify and price risk; improving compensation for risk taken on by the taxpayer where appropriate; and establishing stronger incentives to both reduce the probability of risk materialising and the cost when it does. The government will take forward the proposals in this report and they will be integrated into the next Spending Review.