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Government Accounts (WGA) and forecasts

posted 12 Apr 2016, 04:01 by Peter Webb

 and see re Devolution of tax and spending below.

Already very late it now looks as if they will not emerge until the summer due to a revaluation of Network Rail, a significant but one-off matter not needing to get in the way of the timely reporting of a particular period.  This is the picture: The “PGW guess” reflects trends and some references in the November Economic Review (OBR).

KEY ELEMENTS OF UK WGA (Whole of government Accounts)

£bn

PGW guess

2010-11

2011-12

2012-13

2013-14

2014-15

2014-15

2015-16

2020-21

Examples

 

Assets

Land & Buildings,

1,234.3

1,270.6

1,297.5

1,337.3

 

1,350

1,375

1500

     student loans, taxes due

 

Liabilities

Public sector pension schemes,

2,420.0

2,617.5

2,925.4

3,189.1

 

3,450

3,750

4500

     government borrowing

 

NET LIABILITY

TOTAL DEBT

1,185.7

1,346.9

1,627.9

1,851.8

0.0

2,100

2375

3000

 

Revenue

Taxation, local government

614.0

616.6

620.7

648.5

 

655

675

725

                  housing

 

Direct and other operating expenditure

624.9

715.1

717.3

718.0

 

725

725

775

 

Net financing cost

     Interest on debt

83.5

86.8

82.1

79.1

 

80

85

90

 

NET EXPENDITURE

DEFICIT

94.4

185.3

178.7

148.6

0.0

150

135

140

 That gives an  accumulation of debt over that period of £1,580bn.

 The accumulating cash "deficit" can be manipulated in any forecast year by advancing/retarding certain items. An instruction to 'prepare a forecast to give me the result I want'(echoes of Gordon Brown ?) is easily replaced, particularly with cash accounting, with 'prepare me a forecast reflecting the following key assumptions'. For example  the sale out of public ownership of RBS (Royal Bank of Scotland) could appear to balance the books only in 2020. This doesn't cure the underlying unviability (accumulating net expenditure deficit). So why do our leaders keep on behaving and talking  as if they don't understand that ? Why try to fool us by talking only of "the economy", bountiful as they hope that will be? That avoids any sense of responsibility for the Administration, and Management of the public finances.

 In the light of the ever-rising "deficit" fuelled debt with interest rates bound to rise sometime, and whatever the debt/GDP ratio, one feels inclined to ask when do they forecast bankruptcy ie the moment when lenders say "sorry, no more". And why the  positioning of the OBR? Its skills are presumably present within the Treasury but  claims of political independence are surely  illusory.

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