According to the Office for National Statistics, PSNW shows a deficit of “only” £605 billion, instead of the £2.5 trillion as measured by the actual amount of money we owe.
Of course, there is something to be said for looking at the overall financial position of the government instead of just debt. A private company, or indeed a household, would assess its overall balance sheet before deciding how much it could afford to spend, and more importantly how much it could afford to invest.
The Government does have assets that it could potentially realise if it needed to, or which might be sold off at a profit one day, and it makes sense to assess those to get a bigger picture of its financial position. Ultimately, it can provide us with a more accurate picture of the long-term sustainability, or otherwise, of the nation’s public finances.
Here’s the problem, however. There is surely a risk that the Labour Party might seize upon it to fund its expansive spending agenda. A future Conservative government desperate to find any way to keep the spending juggernaut going might also find it a useful measure.
Bloomberg this week reported private briefings from the Labour Party arguing that “net worth” would be a far more useful measure than plain old conventional debt. And we can expect to hear a lot more about it in the small print of its plans for taking office.
After all, used in the right way it could allow the government of the day to increase borrowing. With the right kind of statistical cover, the Office for Budget Responsibility might even give it an official seal of approval. With the wave of a single, statistical wand, it would make hundreds of billions of pounds of debt magically disappear, freeing up hundreds of billions more for extra spending.
Even better, if it claims all the money is going into “investment”, a term copyrighted by New Labour which endures today, then it can argue the “net worth” stays the same. Spending will get added to that side of the books, and governments can keep borrowing forever.
Labour’s sinister plan to cook the books will leave all of us poorer
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According to the Office for National Statistics, PSNW shows a deficit of “only” £605 billion, instead of the £2.5 trillion as measured by the actual amount of money we owe.
Of course, there is something to be said for looking at the overall financial position of the government instead of just debt. A private company, or indeed a household, would assess its overall balance sheet before deciding how much it could afford to spend, and more importantly how much it could afford to invest.
The Government does have assets that it could potentially realise if it needed to, or which might be sold off at a profit one day, and it makes sense to assess those to get a bigger picture of its financial position. Ultimately, it can provide us with a more accurate picture of the long-term sustainability, or otherwise, of the nation’s public finances.
Here’s the problem, however. There is surely a risk that the Labour Party might seize upon it to fund its expansive spending agenda. A future Conservative government desperate to find any way to keep the spending juggernaut going might also find it a useful measure.
Bloomberg this week reported private briefings from the Labour Party arguing that “net worth” would be a far more useful measure than plain old conventional debt. And we can expect to hear a lot more about it in the small print of its plans for taking office.
After all, used in the right way it could allow the government of the day to increase borrowing. With the right kind of statistical cover, the Office for Budget Responsibility might even give it an official seal of approval. With the wave of a single, statistical wand, it would make hundreds of billions of pounds of debt magically disappear, freeing up hundreds of billions more for extra spending.
Even better, if it claims all the money is going into “investment”, a term copyrighted by New Labour which endures today, then it can argue the “net worth” stays the same. Spending will get added to that side of the books, and governments can keep borrowing forever.
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