UK public debt soars to record £2 trillion

 

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Indy Politics

The total amount that taxpayers will have to pay to fund public-sector pensions in the future has risen to more than £1 trillion, the Government will announce today.

The Treasury is to release figures showing that public-sector pension liabilities have increased by 30 per cent in just two years to £1.1trn. It means that total public debt is now nearly £2trn.

At the same time officials from the Office for Budget Responsibility will paint a grim picture of public finances over the coming years. Their report is likely to conclude that there is now a widening gulf between what the Government will need to spend in future compared with what it raises in tax.

Treasury officials said the dramatic rise in pension liabilities was due to increasing life expectancy as well as a growth in public-sector wages and a rise in the number of employees. It also reflects new projections of interest rates and how much pensions will be worth in today's money over future years.

Ministers will use the figures in their arguments for public-sector pension reform. The new projections, they are expected to say, mean that unless a deal can be done with unions to reduce entitlements and increase contributions, general taxes will have to rise or other areas of government spending will be cut.

The new "Whole of Government Accounts" will, for the first time, bring together the country's finances in a similar way to a company balance sheet. It will include figures for the public-sector debt as well as "off balance sheet" liabilities like pensions and money owed for private finance initiative projects to build schools and hospitals. PFI liabilities are likely to be around £35bn.

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