The UK’s public sector debt could be £1.13 trillion higher than headline figures suggest, according to research.
A study by the Institute of Chartered Accountants in England and Wales (ICAEW) and the Centre for Economics and Business Research (CEBR) has revealed that there could be a further £1.13 trillion of liabilities above the current estimate that puts public sector net debt at £932bn.
Researchers said their figure incorporated liabilities that are currently considered to be “off-balance sheet” or not covered in the official national debt measure, such as public private partnerships or private finance initiatives and public sector pensions.
The researchers said that their report illustrated the need for transparency in the public finances and called on the Office for Budget Responsibility to raise awareness of why contingent liabilities are currently not considered part of public sector debt assessments.
Michael Izza, ICAEW chief executive, said: “While there are important debates to be had about specific spending cuts, I believe that meaningful reform is necessary to underpin sustainable public finances over the long term and create a culture of fiscal responsibility.”
Charles Davis, managing economist for CEBR, said that public sector pension liabilities were by far the biggest consideration. The Treasury has estimated the public sector pension liabilities to be £770bn.
“Our research draws upon existing publicly available data and previously undertaken analysis to illustrate that the liabilities that are not included in the official public sector net debt figure are large but, in many cases, uncertain,” he added.
By Rachel Cooper
Published: 12:01AM BST 12 Jul 2010
Source: The Telegraph