14 July 2010

Britain's debt overhang

The Office of National Statistics has been permitted - at last - to publish its estimate of the "off-balance-sheet" liabilities that have been accumulated by the state. The ONS itemised the public sector's main liabilities as:
  • Future payments for the state old age pension: £1.1- £1.4 trillion
  • Unfunded public sector pensions for teachers, NHS staff and civil servants: £770 billion to £1.2 trillion
  • Payments under private finance initiative contracts: £200 billion
  • Contingent liabilities (eg bank deposit guarantees): £500 billion
  • Nuclear power plant decommissioning: £45 billion
  • Impact of financial sector interventions: £1- £1.5 trillion
The Independent comments that "the figures imply a huge inter-generational transfer - broadly in favour of today's baby boomer generation at the expense of younger people and future generations." Indeed it does, and all the more damnably since:
The baby boomers and their parents have also benefited from phenomena that are unlikely to be enjoyed by future generations, including: free university education, including maintenance grants; mortgage interest relief at the highest marginal rate of income tax; property booms that saw a massive transfer of wealth from the young to the old; free long-term care for the elderly; the proceeds of privatisations of state assets; and the demutualisation and distribution of reserves of the the former building societies and life offices.
And the political outcome of all that largesse was the Blair-Brown regime, which more than doubled the burden inflicted on posterity. It seems that only now is the country having to face up to the long-term social and economic consequences of the sense of entitlement arising from the perfectly understandable determination of the war-time generation not to be screwed as their parents were after World War I.

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