Friday, March 24, 2006

Brown's Maxxed Your Credit Card

If yours is the average UK household, then you have £50,000 of personal debt (including mortgages). Personal debt has more than doubled under Gordon Brown, and we are now the most indebted households in Europe. Think about that next time you want to stay awake at night (see Credit Action for good overview).

Well, that's hardly Gordo's fault you say, which in some respects at least, is quite true. But what is squarely his fault is the additional debt he's run up on our behalf while we were somehow distracted into looking the other way.

The Budget gave updated estimates of his official borrowing binge. By 2010-11 public sector net debt will have climbed to £619bn. Every household in Britain will then owe £25,000 on behalf of the government.

But as we've blogged before, that declared £619bn is just the tip of the government's debt iceberg. To start with, there are all those unfunded public pension liabilities- government guaranteed index-linked pensions the rest of us can only dream about...and pay for. Quite indefensibly, they're not included in the official debt calculation. The best independent estimate says they now amount to a debt of £690bn, or another £29,000 per household.

Then there are all the payments we're now obligated to make under the Private Finance Initiative for those PFI schools and hospitals. The Budget projects payments out to 2030-31, and they go on even beyond that. The last proper estimate of their capitalised value came to £60bn: another £2,500 per household.

Then there's Network Rail's debt. Following the confiscatory renationalisation of RailTrack by Stephen Byers, that debt rightly belongs on the government's balance sheet. The scandalous fact that ministers have so-far strongarmed the official statisticians into keeping it off, doesn't alter the reality that taxpayers are liable. So that's another £20bn, or £1,000 per household.

And so it goes on. When you tot up the whole lot- on balance sheet and off balance sheet- the real total for government debt comes to £1.3 trillion. Which is about £55,000 per household.

In other words, Gordo has borrowed on your behalf even more than you've managed to borrow for yourself. You thought you owed £50,000, and it turns out you actually owe more than twice as much.

You're going to need some much stronger sleeping pills.


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