Fraser Nelson, in the Spectator's Coffee House blog, points out factual error after factual error in what Brown keeps saying about Britain's debt levels:
Brown: "In 1997 we came in and… the debt of the United Kingdom was 44%, 45% of national income, we cut that and it is now about, I think the figure yesterday was 37%, so that is a major cut in debt."Guido Fawkes chips in with:
Coffee House: This is – how you say? – untrue. HM Treasury says net debt was 41.3% in 1997-98 Yesterday the ONS said net debt was 43.3% (report here, ONS here) and no you can’t wish away Northern Rock. What strikes me is the straight poker face with which Brown delivers his made-up figures.
Brown: "We have the lowest levels of debt of any of the major countries."
Coffee House: Really? The Maastricht-definition debt (ie, standardised) collated by the OECD puts Britain’s debt/GDP ratio at 47% for this year. Netherlands (43%) Sweden (35%), Finland (34%) Spain (34%) Ireland (28%). Outside Europe: Canada (22%) Australia (6.7% surplus).
Gordon Brown's Sky interview, where he blamed investment bank's off-balance-sheet liabilities for the credit crunch, was an unconsciously revealing moment. What is the trillion pounds of debt in PFI contracts and unfunded state pensions if not Gordon's very own off-balance-sheet liability? Gordon and Ed Balls designed the world's biggest off-balance-sheet structure ... it will have to be paid down by generations to come. Brown's legacy will be that British children, and their children also, will be paying off Gordon's debt bubble.A bit more on this from Martin Bright (political editor, New Statesman) in March 2008:
Then there is the looming shadow of the government's Private Finance Initiative schemes, which were designed specifically to keep borrowing off the Treasury's balance sheet. These projects, which use private funding for large public projects such as schools and hospitals, will soon be included as part of the national debt to bring Britain in line with International Financial Reporting Standards. At the same time, liabilities from public sector pension schemes, which have been badly hit by the international credit crunch, will also contribute to the growing debt.
Some estimates suggest that the combined liabilities of pension and PFI schemes would bring the proportion of debt to 100 per cent of GDP.
What really matters is the attitude of global financial institutions to such profligacy, and investors' preparedness to put their money into new projects. In the new period of economic uncertainty, the British public would certainly begin to notice if plans for a shiny new hospital or school were put on ice. Already concerns have been raised about the slow progress of the government's PFI-funded Building Schools for the Future programme.
The real issue is that we don't know the full consequences of the slowdown for the public purse. New Labour has never been here before. A recent article by Paul Gosling in Public Finance magazine put it succinctly: "Underlying everything is a fog of uncertainty. The use of 'financial engineering' and the complex hedging of financial risk means there is very real confusion about exactly who has lost what from the sub-prime crisis - and that is affecting almost everything on the world's financial markets."