Although it is said the pen is mightier than the sword, this government is proving that the pen is also mightier than money.
In a series of accountancy sleights of hand, it is effectively manipulating the government’s books in a way which is seriously misleading the public.
The first concerns the Private Finance Initiative.
The government is at loggerheads with the Accounting Standards Board over the government’s determination to use PFI to shift a whole swathe of debt off balance sheet that ought properly to be accounted for as public-sector debt.
The principled stand of the ASB has forced it to look at other routes.
The financing of the Channel tunnel rail link is to be by way of a #3.8bn government-guaranteed loan. This loan will not, however, count as a government debt. It will simply be recorded as a ‘contingent liability’. So far as the private sector is concerned, though, it is a risk-free debt guaranteed by government. A clever wheeze.
The government claims to make a distinction between capital and revenue expenditure and has stated that no current expenditure will be financed by borrowing. It appears to have a wide definition of ‘capital’, which Labour ministers believe includes repairs to roads and schools. This is clearly revenue expenditure and does not fall within the accepted definition of capital.
Labour has been highly effective at manipulating the media. Our profession must not let that happen to the government’s books.
Nick Gibb is Conservative MP for Bognor Regis.
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