Britain's hidden debt

[muriel_volestrangler]

The government must recognise the true scale of public debt and bring in some much-needed transparency

The British government often congratulates itself on its efforts to keep public finances on a stable and sustainable level. Yesterday Gordon Brown even claimed: "Debt is considerably lower than a decade ago". However, Britain's public debt is actually £1,866 billion, equivalent to 125.5% of GDP, nearly three times larger than the government's published figure of £645 billion and 43.4% of GDP. This measures out as a debt of £76,475 per British household.

While figures recently released on the scale of the government's public spending bonanza point to government borrowing leaping to a record £8.1 billion in September, this is only the tip of the iceberg. Opaque off-balance sheet measures have, until revealed in The Price of Irresponsibility published by the Centre for Policy Studies, kept hidden the full cost of projects financed through the Private Finance Initiative, the extent of unfunded public sector pension liabilities, the debt incurred by Network Rail and the recent nationalisation of Bradford & Bingley.

Yet, the figure may be much worse. While the exact impact on the public finances of the government's recent bail-out of the banking sector is as yet unknown, it could imply an addition of as much as £500 billion to the balance sheet. This would increase public debt to a massive £2,366 billion, which is 159.1% of GDP, or over £96,967 per British household.

Hiding substantial liabilities off the government balance sheet has enabled it to circumvent Gordon Brown's much-lauded "Golden Rule" and "Sustainable Investment Rule". Political expediency appears to have won out over the need to plan prudently for the country's future.

http://www.guardian.co.uk/commentisfree/2008/oct/21/economy-creditcrunch

The next generation is going to end up saying "what the fuck did you think you were doing?" to us (or New Labour, anyway) when PFI is looked back on.