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.

[fedsron2us]

1. The Centre For Policy Studies is a Thatcherite Think Tank

dedicated to rolling back the state so we know what axe they are grinding.

http://en.wikipedia.org/wiki/Centre_for_Policy_Studies

Those slime balls are always whining about unfunded Public Sector Pension Liabilities (as if it was the employees fault that their pension contributions were not being properly invested by their employers). They seem to have failed to notice that their chums in the City and on Wall Street are falling over themselves for government bailouts now the shit has hit the fan. They are fucking hypocrites of the worst sort issuing Neo Liberal propaganda only suited for use as arse wipe

The only area where they have a point is PFI. Britain is about to experience a 'Come to Jesus' moment on this issue, as our US cousins might say. Anyone who has read Larry Elliot and Dan Atkinson's book 'Fantasy Island' or 'Plundering the Public Sector' by David Craig know that Brown engaged in the same sort of off balance sheet gerrymandering at the Treasury as the banks were doing in the City. Now that the credit markets have imploded PFI is a busted strategy since the private sector does not have the capital to fund these schemes. Since the government has always been able to raise money on the markets more cheaply than the corporations the PFI never made any sense economically. At best it was a political scam. At worst it was a gross misuse of public money that encouraged an unhealthy relationship between civil servants and private companies.

[LeftishBrit]

2. Very good points; but as you say they are right on PFI..

even if only because Thatcher didn't think of it first. It certainly seems to me to fit well into basic Thatcherite ideology - which is now exploding in everyone's face.