David Prosser's Outlook: Between the Rock and a hard place

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The Independent Online

A rare piece of good news for Alistair Darling, the unluckiest Chancellor in living memory. Yesterday's public finances figures suggest the Treasury has been managing taxation and spending rather better than many economists had thought. As a result, public sector net debt remains below 37 per cent of GDP, well within the Government's sustainable investment rule, which sets a 40 per cent limit.

The Office for National Statistics did point out, however, that it still has not moved Northern Rock's debt into the public sector accounts, despite the mortgage bank's nationalisation earlier this year. It added that its preliminary estimates of the effect of doing so would push the magic figure up to 43.1 per cent.

Not to worry, of course, since Mr Darling has already said he won't take Rock into account when checking for compliance with the sustainable investment rule, since it will only be a temporary liability.

In that context, the testimony of Ron Sandler to the Treasury Select Committee this week must have been something of an irritation. Mr Sandler, the Government's man in Newcastle, warned that Rock's contribution to the red side of the public accounts could be less temporary than planned if house prices keep falling at the current rate.