Why the real scandal over our public finances is hidden under the carpet

The outrageous thing about the UK's public finances, says Simon Nixon, is how it has kept some enormous liabilities out of the official figures: PFI, Northern Rock and Network Rail, to name but three.

There's been a huge amount of attention over the past week on the UK public finances, but the real story has been overlooked. Yes, the leap in first-quarter public borrowing some £10bn more than expected as tax receipts fell off a cliff was a real shock. And yes, the Treasury's admission that it may scrap Gordon Brown's rule that government borrowing should not exceed 40% of GDP, while inevitable, was still a real blow to Brown's credibility. But the real scandal is not that the Government will miss some arbitrary target, but the way it has been able to keep some enormous liabilities out of the official figures.

These include huge debts incurred over the private finance initiative, £100bn of Northern Rock liabilities the Government assumed after nationalising the mortgage lender, debts of Network Rail and above all the public sector's unfunded pension liabilities. The Government does not disclose these. No one at the Treasury, National Audit Office or Office for National Statistics keeps a tally, nor do they make life easy for anyone trying to find out. But if you add up published liabilities of the various individual public sector pension schemes, you get a total of about £800bn.

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Simon Nixon

Simon is the chief leader writer and columnist at The Times and previous to that, he was at The Wall Street Journal for 9 years as the chief European commentator. Simon also wrote for Reuters Breakingviews as the Executive Editor earlier in his career. Simon covers personal finance topics such as property, the economy and other areas for example stockmarkets and funds.