lunes, 11 de julio de 2011

lunes, julio 11, 2011
July 10, 2011 3:59 pm

Accounting change to show extra public debt


Hundreds of billions of pounds of additional debt will appear on the government’s books on Wednesday when the Treasury publishes accounts drawn up on the same basis as those of companies.

After years of delay, the government will give the first glimpse of what the UK’s public finances would look like if the UK were a listed company such as Marks & Spencer or BT.
 
Counting the future liabilities of the accrued pension rights for public sector workers and the future costs of private finance initiative projects will inflate the apparent liabilities of the state and send the calculated net assets of government deep into the red.

The new accounting treatment – called whole of government accounts – will not, however, change the internationally comparable figures for government debt and borrowing, which are measured using national accounting standards.

The figures are being published to coincide with the Office for Budget Responsibility’s first assessment of the long-term health of the public finances.

The main change will be to include the future liabilities of already accrued pension rights for teachers, police and the NHS on the same basis as in the corporate sector. This is likely to add at least £800bn and probably closer to £1,200bn to the estimate of current government liabilities, depending on the discount rate chosen in the estimates. The current liabilities for future PFI payments will also add tens of billions more.

Experts welcomed the new transparency, but cautioned that the new liabilities shown did not represent debts that had arisen out of the blue. Future assets, such as the ability to collect tax and imprison people, who refuse are not counted in the new balance sheet.

Carl Emmerson, deputy director of the Institute for Fiscal Studies, said: “Unlike in Greece, where a new government uncovered significant debts that had been brushed under the carpet, any additional liabilities shown under new accounting rules are known and discussed.”

The new accounting standards have required the government to consolidate information from 1,500 public bodies, and report figures using the International Financial Reporting Standards followed by big businesses.

Crucially, the “whole of government accounts” are expected to include a net pension deficit for the UK public sector, which for companies drew attention to the high costs of final salary pension schemes.

Putting a comparable figure on the funding gap in the public sector is likely to exacerbate tensions over pension reform plans, which erupted into a strike by hundreds of thousands of teachers, lecturers and civil servants last month.

The enhanced disclosure of pension liabilities would “hold the government’s feet to the fire in a way that they will find uncomfortable”, said John Ralfe, an independent pensions consultant who has researched extensively the cost of state retirement promises.

Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales, said the UK was blazing a trail with the new transparency. “We truly believe that when WGA are published, this will help government to achieve its aims of providing improved data for fiscal planning,” he said.

Copyright The Financial Times Limited 2011.

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