What is the UK debt at this time of crisis?
Posted by michael on October 29, 2008
The government is talking about borrowing to get us out of this recession.
However I have seen various newspaper reports and heard people saying that we are borrowing too much. So what is the situation about the UK debt levels?
A report from the Centre for Policy Studies (described as a right leaning think tank) says that the Governments bank bail out plan could mean that the UK owes £100,000 for each household. The total debt would be £2,350 billion, some 60% more than the UK’s annual Gross Domestic Product (GDP).
What the Centre for Policy Studies have done is to take the Government debt as consisting of:
- Private Finance Initiative (PFI)
- unfunded public sector pension liabilities
- Network rail debt
- the Bradford & Bingley nationalisation
- £500 billion from the bank bail out
This brings the National debt to the totals mentioned above.
The PFI debt has concerned me for a while now. It is not clear to me exactly how much this debt actually is?This Government has used it to built new schools, new hospitals etc but it does not seem that we (the nation) has actually paid for them yet! These projects have been purchased by borrowing money from the private sector. We will be paying for these for many years to come!
Was the PFI method of improving the schools and hospitals a good move? It has certainly been good for the government, they can claim to have done so much to improve the UK.
A report from the Welsh Assembly (quoted below) shows a potential problem with the PFI debt (the spending on the schools and hospitals). A building project with a £66 million cost will actually cost the tax payers £326 million, the interest charges over the years will make total project cost FIVE times the amount spent to build the hospital.
On this basis the £200 billion PFI debt will cost the UK £1000 billion to clear these debts!
I know that some of these debts are due to be paid back, for example the B&B nationalisation and the bank bail out. So it is hard to get an actual UK debt value. But at this moment of time this would seem to be a realistic figure of the UK debt, although the timespan over which it is to be repaid obviously stretches into the future.
I welcome comments (and corrections) but please don’t make political points. This is about debt levels.
A quote from a report from the Welsh Assembly
‘The Western Mail has used information that exists within the Assembly to demonstrate that the cost of the project will be far from the £66 million that we were advised of two weeks ago; the project will actually cost the taxpayer £326 million, which is nearly five times the amount spent on the capital scheme.’
