Treasury accused - Peter Valentine

This will not be the first time that I have accused the Treasury, Chancellor et al of dodgy bookkeeping. My main attack was on the treatment of PFI deals where I tried in vain to find out what our extra borrowing would look like if these projects were accounted in the same way as is standard practice for business.
 
I commented that by treating the payments as ongoing revenue costs the true capital expenditure was ignored. This meant that we could report lower than real borrowing at the expense of dumping this year's costs onto future generations - trans generation I believe it is being called.
 
What I did not comment was the way in which pensions in the public sector are paid out of current contributions whereas the private sector has to calculate by actuarial means the future costs of today's employees and put money aside to meet those pensions as they fall due.
 
If the public sector adopted accrual accounting for pensions then it would again increase current costs but hopefully create real assets to meet those liabilities and avoid the massive trans generational movement we have today.
 
Well today Office for National Statistics reveals some of the massive public liabilities that are building up. Unfunded pensions in the public sector say £1 trillion, PFI liabilities £200 billion and of course meeting the State Old Age pension probably at least another £1 trillion.
 
What has been done has been done but if we are not to just collapse under the weight of rapidly increasing, but not yet admitted public debt, we need a dramatic change in our policies to ensure that more and more of those future liabilities are provided for today.
 
And I suggest that this is also required throughout the developed world, as so far we have balanced the books by relying on or stoking up economic growth. But as far as Europe and the USA are concerned that growth is unlikely to be sustained. Probably we have about 20 years to finalise sorting ourselves out and prepare our accounts to normal accounting standards.