The true scale of Britain's national indebtedness was laid bare by the Office for National Statistics yesterday: almost £4 trillion, or £4,000bn, about four times higher than previously acknowledged.It quantifies the burden that will be placed on future generations, and it is the ONS's first attempt to draw together the "off-balance-sheet" liabilities that have been accumulated by the state. The figures imply a huge "intergenerational transfer" – broadly in favour of today's "baby boomer" generation at the expense of younger people and future generations.
The debt primarily consists of the cost of public sector and state pensions, and of payments promised to private contractors under private finance initiatives. It far exceeds any of the figures so far published for the national debt, the largest current estimate for which is £903bn. That is projected to rise to £1.3trn by 2015.
If the current generation of taxpayers wanted to remove the higher bills facing their children and grandchildren, they would now be paying around 30 per cent more in tax.
The ONS data strengthens the Government's hand in its attempt to pull down state spending.
The ONS itemised the public sector's main liabilities as:
* Future payments for the state old age pension: £1.1trn to £1.4trn
* Unfunded public sector pensions for teachers, NHS staff and civil servants: £770bn to £1.2trn
* Payments under private finance initiative contracts: £200bn
* Contingent liabilities (eg bank deposit guarantees): £500bn
* Nuclear power plant decommissioning: £45bn
* Impact of financial sector interventions: £1trn to £1.5trn
Leaving aside the possibility of another financial meltdown that would leave the taxpayer with the liabilities of a substantial part of the banking system, the figures suggest that the realistic total liabilities of the public sector could be as much as £3.8trn (£3,800,000,000,000).
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