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Sancho Panza

Network Rail To Add £30Bn To Government Debt

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Telegraph 18/12/13

'Network Rail is to be reclassified as a public-sector company, adding £30bn to public sector net debt. The change to the status of the state-owned company that manages Britain’s railway network, will take place next September, the Office for National Statistics said.

The move is part of alterations that could add £112bn to how much the country officially owes.

Britain’s public sector net debt for the 2012/13 fiscal year, stood at £1.182 trillion, or 74pc of gross domestic product.

Some of the changes, such as Network Rail’s, are due to new European Union statistical rules, but others are part of an attempt to clean up how Britain’s public accounts are presented after the financial crisis.

"The existing measures are no longer fit for guidance, no longer fit for purpose," Iain Bell, a senior official at the ONS, said.

Starting next September, the ONS plans to replace its current headline measure - public sector net borrowing excluding financial sector interventions - with a new measure, public sector net borrowing excluding public-sector banks.

As well as the extra costs from Network Rail, £24bn comes from a changed treatment of the BoE's bond purchases and £58bn from no longer counting the government's stakes in RBS and Lloyds and its payments into a bank bailout fund as liquid assets.'

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Another £112bn on the national debt?! In effect, an additional ~£30bn a year on the primary deficit since 2009 . :blink:

If this is similar to the royal mail pensions transfer, they do it precisely because it adds to the debt but not the deficit. Ie with the Royal mail. Government gets a one off boost of £27bn of pension assets, (spread over 2 years, making the deficit in each year look £13.5bn smaller) and assumes >£40bn in liabilities over the next few decades.

Its what Clinton did in the 90s to achieve his so called 'surplus'. Raided social security. In no year when Clinton had a federal budget surplus did the federal debt not rise.

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Telegraph 18/12/13

'Network Rail is to be reclassified as a public-sector company, adding £30bn to public sector net debt. The change to the status of the state-owned company that manages Britain's railway network, will take place next September, the Office for National Statistics said.

The move is part of alterations that could add £112bn to how much the country officially owes.

Britain's public sector net debt for the 2012/13 fiscal year, stood at £1.182 trillion, or 74pc of gross domestic product.

Some of the changes, such as Network Rail's, are due to new European Union statistical rules, but others are part of an attempt to clean up how Britain's public accounts are presented after the financial crisis.

"The existing measures are no longer fit for guidance, no longer fit for purpose," Iain Bell, a senior official at the ONS, said.

Starting next September, the ONS plans to replace its current headline measure - public sector net borrowing excluding financial sector interventions - with a new measure, public sector net borrowing excluding public-sector banks.

As well as the extra costs from Network Rail, £24bn comes from a changed treatment of the BoE's bond purchases and £58bn from no longer counting the government's stakes in RBS and Lloyds and its payments into a bank bailout fund as liquid assets.'

When I read something like "Britain's public sector net debt for the 2012/13 fiscal year, stood at £1.182 trillion..." I wonder if we can indeed "grow" ourselves out of debt?

In an attempt to educate myself I was reading a little yesterday about steady-state economics and considering how so much of what is put forward as THE WAY out of this mess is still couched in narratives that have had their day like mortgages for hard working families (who live in Chelsea and Kensington ) whilst the hard working poor can move into bedsits when their families finally grow up and move out (heaven help them if they need to return home or want to come to visit with the grandchildren)

Yesterday on the link to the C4 prog with Willetts and Zoe Williams, Zoe Williams spoke about the government either hoping for a massive crash in house prices 2/3rd drop across the board or a massive systemic taxation change such as Land Value Tax.

There is I believe a growing body of people who believe that "growth" is not the way foward, that we have gone just about as far as we can go with narrowly defined "growth" economics where money is created as interest-bearing debt where there will always be more and more and more indebtedness.

So what are the chances of a transition into steady state economics, are we going there in any case whether we choose to do so or not? Would steady state economics start to close some of the gaping holes in our current structures which are deeply dividing the whole world into the haves and the have nots....and more ...

The view put forward by the

Center for the Advancement of the Steady-State Economy: Position Statement

Whereas:

1) Economic growth, as defined in standard economics textbooks, is an increase in the production and consumption of goods and services, and;

2) Economic growth occurs when there is an increase in the multiplied product of population and per capita consumption, and;

3) The global economy grows as an integrated whole consisting of agricultural, extractive, manufacturing, and services sectors that require physical inputs and produce wastes, and;

4) Economic growth is often and generally indicated by increasing real gross domestic product (GDP) or real gross national product (GNP), and;

5) Economic growth has been a primary, perennial goal of many societies and most governments, and;

6) Based upon established principles of physics and ecology, there is a limit to economic growth, and;

7) There is increasing evidence that global economic growth is having negative effects on long-term ecological and economic welfare…

Therefore, we take the position that:

1) There is a fundamental conflict between economic growth and environmental protection (for example, biodiversity conservation, clean air and water, atmospheric stability), and;

2) There is a fundamental conflict between economic growth and the ecological services underpinning the human economy (for example, pollination, decomposition, climate regulation), and;

3) Technological progress has had many positive and negative ecological and economic effects and may not be depended on to reconcile the conflict between economic growth and long-term ecological and economic welfare, and;

4) Economic growth, as gauged by increasing GDP, is an increasingly dangerous and anachronistic goal, especially in wealthy nations with widespread affluence, and;

5) A steady state economy (that is, an economy with a relatively stable, mildly fluctuating product of population and per capita consumption) is a viable alternative to a growing economy and has become a more appropriate goal in large, wealthy economies, and;

6) The long-run sustainability of a steady state economy requires its establishment at a size small enough to avoid the breaching of reduced ecological and economic capacity during expected or unexpected supply shocks such as droughts and energy shortages, and;

7) A steady state economy does not preclude economic development, a dynamic, qualitative process in which different technologies may be employed and the relative prominence of economic sectors may evolve, and;

8) Upon establishing a steady state economy, it would be advisable for wealthy nations to assist other nations in moving from the goal of economic growth to the goal of a steady state economy, beginning with those nations currently enjoying high levels of per capita consumption, and;

9) For many nations with widespread poverty, increasing per capita consumption (or, alternatively, more equitable distributions of wealth) remains an appropriate goal.

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If this is similar to the royal mail pensions transfer, they do it precisely because it adds to the debt but not the deficit. Ie with the Royal mail. Government gets a one off boost of £27bn of pension assets, (spread over 2 years, making the deficit in each year look £13.5bn smaller) and assumes >£40bn in liabilities over the next few decades.

Its what Clinton did in the 90s to achieve his so called 'surplus'. Raided social security. In no year when Clinton had a federal budget surplus did the federal debt not rise.

Yes, indeed. A very handy trick for flattering govt accounts.

Imagine instead that this additional borrowing had not been disguised. The UK would have been running a primary deficit of 10-12% continuously for the last five years!

Incomparably, the worst in Europe if not the entire developed world.

primary-budget-deficits.png

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They are creating a new head finance role At Treasury. Auditors qualified the 11/12 whole government accounts in July on six grounds.one was around the ONS network rail classififcation. I can't remember the others but around classifications of bodies and various other accounting practices, different standards, slow to prepare. In summary a total mess.

Edited by Ash4781

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